Central Bank of Tunisia Circular No. 2020-04 to Banks and Financial Institutions dated February 24, 2020

CIRCULAR TO BANKS AND FINANCIAL INSTITUTIONS
No. 2020-04 dated February 24, 2020

Object: Determination of the conditions and procedures for releasing amounts related to benefiting from the State's assumption of the difference between the interest rate on investment loans and the average money market rate, within a limit of three percentage points, for loans granted by banks and financial institutions to small and medium-sized enterprises (SMEs).

The Governor of the Central Bank of Tunisia,
Having regard to Law No. 2016-35 dated April 25, 2016 establishing the status of the Central Bank of Tunisia, Having regard to Law No. 2016-48 dated July 11, 2016 on banks and financial institutions, Having regard to Law No. 2019-47 dated May 29, 2019 on improving the investment climate and notably its Article 21, Having regard to Government Decree No. 2019-1178 dated December 24, 2019, setting the conditions and procedures for benefiting from the State's assumption of the difference between the interest rate on investment loans and the average money market rate, within a limit of three percentage points, for loans granted by banks and financial institutions to SMEs, and notably its Articles 2, 8, 9, and 10, Having regard to the Central Bank of Tunisia Circular No. 2008-06 dated March 10, 2008 on the Information Center, Having regard to the opinion of the Compliance Control Committee No. 2020-04 dated February 18, 2020.

Decides:

Article 1 - An account named "State Assumption Account for the Difference between the Interest Rate on Investment Loans and the Average Money Market Rate in Favor of SMEs" is opened on the books of the Central Bank of Tunisia, in accordance with Article 9 of Government Decree No. 2019-1178 dated December 24, 2019 mentioned above.

Article 2 - The resources of the account referred to in Article 1 are used for paying amounts resulting from the State's assumption of the difference between the interest rate on investment loans and the average money market rate, within a limit of three percentage points, in favor of banks and financial institutions, for investment loans granted to SMEs during the period from January 1, 2019, to December 31, 2020, provided that the profit margin applied by banks and financial institutions does not exceed 3.5%.
The contract registration date is taken into account for determining the loan disbursement date.

Article 3 - SMEs operating in the agricultural sector and other productive sectors, excluding commerce, financial services, real estate development, hydrocarbons, and mining, benefit from the advantage, provided their investment cost (including creation and extension investments) ranges between one hundred fifty thousand (150,000) dinars and fifteen million (15,000,000) dinars, including working capital.

Article 4 - For leasing operations, the advantage is granted only for financing equipment, machinery, commercial vehicles, and real estate properties in connection with the creation and extension of SMEs referred to in Article 3.

Article 5 - The bank or financial institution, after approval of the investment loan disbursement, is responsible for submitting the request for the aforementioned advantage to the General Directorate of SME Promotion within the Ministry in charge of industry and SMEs.
The request for the advantage must be accompanied by the following documents:

• Certificate of investment declaration submission to relevant authorities,
• Investment presentation sheet specifying capital structure, participation rates, and financing scheme,
• Copy of the registered investment loan contract accompanied by an amortization schedule copy,
• Projected operating statement for at least the next five years,
• Audited financial statements by the statutory auditor for extension investments.

Article 6 - After obtaining the advantage approval decision, the bank or financial institution submits a file to the Central Bank of Tunisia comprising obligatorily:

• A copy of the advantage approval decision;
• A copy of the registered investment loan contract.
  The release of amounts resulting from the advantage in favor of banks and financial institutions is made from the resources of the account referred to in Article 1, upon submission of a drawing request containing the bank account details (RIB) and a detailed statement indicating recovered amounts and amounts resulting from the State's assumption of the difference between the interest rate on investment loans and the average money market rate within a limit of three percentage points, according to the model in Annex 1, during the first ten working days of each month.

Article 7 - The release of amounts for the advantage in favor of banks and financial institutions is carried out only after each due installment payable by the beneficiary enterprise is repaid, applying an interest rate from which the State-assumed margin has been deducted.
For amounts paid regarding due interests prior to the advantage approval decision, beneficiary enterprises may request reimbursement of amounts due under said advantage.
In this case, the bank or financial institution must submit to the Central Bank of Tunisia a request from the concerned enterprise along with proof of payment, according to the statement in Annex 1. These amounts are paid to the bank or financial institution, which transfers them to the concerned enterprise within 48 hours following their crediting to the banks' or financial institutions' accounts.

Article 8 - The benefit of the advantage is maintained in case of early repayment of one or more installments before the deadlines set in amortization schedules, based on a contract addendum and updated amortization schedule, copies of which are communicated by the bank or financial institution to the Central Bank of Tunisia.

Article 9 - Banks and financial institutions must inform the Central Bank of Tunisia whenever they observe any of the following situations:

• Registration of a delay in repaying an installment by the beneficiary enterprise,
• Rescheduling of investment loans subject to the advantage or submission of the enterprise to financial restructuring,
• Exercise by the bank or financial institution of a claim for payment of the subject investment loan.

Article 10 - Banks and financial institutions declare monthly to the Information Center the investment loans subject to the advantage, according to credit form codes specified in Annex 2.

Article 11 - Banks and financial institutions must instruct their statutory auditors to prepare an annual report on compliance with this circular, including a statement of granted advantages detailed by beneficiary enterprise. This report is transmitted to the Central Bank of Tunisia within a period not exceeding three months from the end of each year.

Article 12 - Banks and financial institutions take all adequate measures to publicize the advantage provided by the law on improving the investment climate, as well as the conditions and procedures set forth in this circular.

Article 13 - This circular enters into force from the date of its publication.

The Governor,
Marouane El ABASSI

Annex No. 1 to the Circular to Banks and Financial Institutions No. 2020-04 dated February 24, 2020
Detailed Statement of Amounts Resulting from the State's Assumption of the Difference between the Interest Rate on Investment Loans and the Average Money Market Rate within a Limit of Three Percentage Points

Reference of the Advantage Approval Decision	Fiscal ID of Beneficiary Enterprise	Legal Name of Beneficiary Enterprise	Loan Amount	Installment Repayment Date	Applied Margin	Interest Rate	Recovered Installment Amount for Interests	Amount Assumed by the State	Totals

Annex No. 2 to the Circular to Banks and Financial Institutions No. 2020-04 dated February 24, 2020
Credit Form Codes Subject to the State Assumption Advantage for the Difference between the Interest Rate on Investment Loans and the Average Money Market Rate in accordance with Law No. 2019-47 dated May 29, 2019 on Improving the Investment Climate

KFCRED	LIBELLE (Description)
301	Subsidized CMT 3% (Law No. 2019-47)
901	Subsidized CLT 3% (Law No. 2019-47)
471	Subsidized Movable Leasing 3% (Law No. 2019-47)
931	Subsidized Real Estate Leasing 3% (Law No. 2019-47)