Document of The World Bank Report No: 65821-TN RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE SECOND HIGHER EDUCATION REFORM SUPPORT PROJECT LOAN APPROVED ON JUNE 15, 2006 TO THE GOVERNMENT OF TUNISIA 1 December 6, 2011 2 ABBREVIATIONS AND ACRONYMS ICT Information and Communication Technology ISET Institut Supérieur ded Etudes Technologiques (Institute of Technological Studies) LMD Licence-Master-Doctorat MHESR Ministry of Higher Education and Scientific Research PAQ Programme d’appui à la qualité (Quality Support Program) PDESAQ Programme de développement de l’enseignement supérieur et d’appui à la Qualité (Higher Education Development Program and Support to Quality) 3 Regional Vice President: Inger Andersen Country Director: Neil Simon Gray Sector Manager / Director: Steen Jorgensen Task Team Leader: Adriana Jaramillo 4 TUNISIA HIGHER EDUCATION REFORM SUPPORT II P075809 CONTENTS A. SUMMARY ........................................................................................................................... 1 B. PROJECT STATUS ............................................................................................................. 1 C. PROPOSED CHANGES ...................................................................................................... 3 ANNEX 1: Results Framework and Monitoring ....................................................................... 9 ANNEX 2: Reallocation of Proceeds ......................................................................................... 12 ANNEX 3: Request for Government......................................................................................... 13 5 Restructuring Status: Draft Restructuring Type: Level two Last modified on date : 5/3/2013 1. Basic Information Project ID & Name P075809: TN Higher Education Reform Support II Country Tunisia Task Team Leader Adriana Jaramillo Sector Manager/Director Mourad Ezzine Country Director Neil Simon M. Gray Original Board Approval Date 06/15/2006 Original Closing Date: 11/30/2011 Current Closing Date 11/30/2011 Proposed Closing Date [if applicable] 11/30/2013 EA Category B-Partial Assessment Revised EA Category B-Partial Assessment-Partial Assessment EA Completion Date 03/15/2006 Revised EA Completion Date 6 2. Revised Financing Plan (US$m) Source Original Revised BORR 19.20 19.20 IBRD 76.00 76.00 Total 95.20 95.20 3. Borrower Organization Department Location Ministry of Higher Education Tunisia 4. Implementing Agency Organization Department Location Ministry of Higher Education and Tunisia Scientific Research 7 5. Disbursement Estimates (US$m) Actual amount disbursed as of 10/14/2011 20.51 Fiscal Year Annual Cumulative 2010 9.02 13.67 2011 9.14 22.81 2012 20.19 43.00 2013 23.00 66.00 2014 10.00 76.00 Total 76.00 6. Policy Exceptions and Safeguard Policies Does the restructured project require any exceptions to Bank policies? N Does the restructured project trigger any new safeguard policies? If yes, please select from the N checklist below and update ISDS accordingly before submitting the package. 7a. Project Development Objectives/Outcomes Original/Current Project Development Objectives/Outcomes The Project’s development objective is to assist the Borrower in the implementation of its Program aiming at developing its higher education system by increasing the capacity in expanding access to said system, strengthening the efficiency and institutional performance of said system and improving the quality of higher education. 8 7b. Revised Project Development Objectives/Outcomes [if applicable] 9 TUNISIA HIGHER EDUCATION REFORM SUPPORT II RESTRUCTURING PAPER A. SUMMARY The Higher Education Reform Support II has experienced delays in disbursement, primarily due to the slow process followed for the assigning of civil works contracts under Component 1 and slow procurement procedures. The total amount of the loan is 61.3 million Euros (equivalent to US$76 million) and the initial civil works component represents more than 90% of the total loan amount. Of the initial eight sites agreed at appraisal, four have been completed at 60% as observed in the last supervision mission, as well as one restaurant and one student housing. Four other sites have been cancelled based on the assessment that it would be more efficient to accommodate new students without necessary building new sites. The four sites cancelled were the School of Music in Sfax (600 students), the Sports Institute in Sousse (600 students), The Institute of Science in Kasserine (3,000students); and the Institute of Science in Manouba (3,000 students). The cancellation of these sites has not changed the achievement of the increased access rate, and the Ministry has been able to meet its enrolment targets. With the cancellation of these sites and changes in the exchange rate there are approximately 20 million Euros from Component 1 to be reallocated. During the supervision mission of July 2010, the Bank and Government teams agreed on the restructuring of the project to allow the reallocation of these uncommitted funds into other project components. This was confirmed during the May 2011 supervision mission. The Government of Tunisia has given priority to restructuring this project given the importance that supporting the higher education system has in the current context. The reallocation of funds from Component 1 will enable the Government to revamp Higher Education Institutions, and better prepare them to provide students with the skills necessary to succeed in the labor market. Therefore, these unused funds will be reallocated to project components that are being well implemented and are disbursing satisfactorily. These components are: Modernize the Higher Education System by Strengthening Quality Assurance Mechanisms, Institutional Autonomy and Financial Sustainability and Grant Program to Improve Academic Quality and Institutional Performance (Quality Promotion Fund (PAQ). B. PROJECT STATUS This project is supporting the Higher Education Reform and has three components:  Component 1 Part A: Expand Access to the Public Higher Education System, 50 million Euros (US$62 million); 1  Component 2 Part B: Modernize the Higher Education System by Strengthening Quality Assurance Mechanisms, Institutional Autonomy and Financial Sustainability, 3.6 million Euros (US$4.4 million); and  Component 3 Part C: Grant Program to Improve Academic Quality and Institutional Performance (Quality Promotion Fund (PAQ)), 7.7 million Euros (US$9.6 million). Component 1 has made important progress in the last year, and during the last supervision mission held in May 2011, it was observed that the four construction sites have evolved very satisfactory, and that the student restaurant and student housing of Tataouine are completed. Components 2 and 3 have had satisfactory implementation, in particular component 3, with all of its funds committed by the mid-term review held in May 2009. In six rounds the Quality Promotion Fund (PAQ) has received 164 proposals for funding and 50 projects have been approved and are under satisfactory implementation. Clearly, the demand for PAQ funds has exceeded expectations and initial funds allocation. The 50 approved projects are reaching a third of all eligible higher education institutions in Tunisia. The graph below shows the distribution of grants and how they are aligned with national priorities. Figure 1: PAQ-G, Distribution of the winning projects according to their contributions to the expectation of national priorities Acquisition of computer and teaching materials 54% Modernisation of curricula, teaching material and upgrading 51% Employability, entrepreneurship and helpline 40% Development of degrees co-designed 14% Distance learning, online courses, information systems 31% Quality assurance (frame of reference, evaluation, management) 37% Certification of teachers or programs 40% 0% 20% 40% 60% Component 2 has also had satisfactory implementation, with 38% of its initial allocation committed. Notably the implementation of the Licence-Master-Doctorat (LMD) reform, aligned with the Bologna process1 has had impressive progress, positioning Tunisia at the forefront of countries following the Bologna guidelines. Equally important has been the introduction of contract-based budget allocation to universities. To date all universities and technical colleges have signed contract agreements with clear performance indicators, and are being monitored by the Ministry of Higher Education and Scientific Report (MHESR) and the National Committee 1 The Bologna Process is a mechanism set up to create a European Higher Education Area (EHEA) based on international cooperation and academic exchange that is attractive to European students and staff as well as to students and staff from other parts of the world. It includes Quality Assurance, and developing equivalency of degrees. 2 of Evaluation. This reform, geared to promote University Autonomy and increase accountability on the use of resources, is likely to show important results in terms of quality and relevance of Tertiary education services in Tunisia, and is aligned with OECD type of University reforms. Component 1 initially proposed financial support to eight university sites. Later on the MHESR cancelled four of the sites. Total committed amounts are 46% of the initial allocation. Currently there are two sites completed and four sites for which construction is underway, and completion of works is expected by September 2011 and March 2012. Below is the summary table with disbursements and commitments as of September 30 2011. From this table it results that there are 27 million Euros to reallocate. 3 Table 1: Status of Loan Commitments and Disbursements as of October 13, 2011 (in 1000 €) Disbursements Unpaid Remaining Balance as of Loan Total (1) + (2) Categories as of 10/13/10 Commitments Commitments 12/18/ 2010 Allocation (A) + (3) = (B) (1) (2) (3) (A) - (B) 1. Civil Works 34,360 8,793 9,865 1,176 19,834 14,526 2. Equipment 11,879 906 42 4,726 5,674 6,205 3. Consultants Services 1,473 167 40 5 212 1,261 4. Training 589 69 0 110 179 410 5. PAQ 7,952 5,773 1,440 0 7,213 739 6. Unallocated 3,927 0 0 0 0 3,927 Total 60,180 15, 708 11,387 6, 017 33,112 27,068 C. PROPOSED CHANGES C.1 The PDO remains unchanged and is as follows: to assist the Borrower in the implementation of its Program aiming at developing its higher education system by increasing the capacity in expanding access to said system, strengthening the efficiency and institutional performance of said system and improving the quality of higher education. The restructuring of the project does not entail changes to the PDO. Based on consultations with all Higher Education Institutions, and the MHESR shareholders, each of the project components was revised and additional and improved activities were proposed. The activities were proposed taking into account the need to improve the employability of university graduates, modernize universities and support institutions in underserved areas. As explained above, with the cancellation of four of the original eight sites and changes in the exchange rate, there are approximately 27 million Euros from Component 1 to be reallocated. Proposed changes and reallocations for each of the three project components are detailed below. C.2 Results/indicators are detailed in Annex 1. C.3 Components 4 Component 1: Expand Access to Public Higher Education System The Ministry of Higher Education proposed to cancel the construction of four new sites. This was based on the assessment that it would be more efficient to accommodate new students without necessary building new sites. The four sites cancelled were the School of Music in Sfax (600 students), the Sports Institute in Sousse (600 students), The Institute of Science in Kasserine (3,000students); and the Institute of Science in Manouba (3,000 students). The cancellation of these sites has not changed the achievement of the increased access rate, and the Ministry has been able to meet its enrolment targets. In addition to the cancellation of these sites and changes in the exchange rate there are approximately 27 million Euros from this component to be reallocated. Proposed changes are to allocate 9.2 million Euros (18,2 MDT) to equip engineering schools and research laboratories in selected universities. The sites were identified through a call for proposals launched by the MHESR in September 2010- and confirmed in May 2011-based on the needs to increase enrollments in science and engineering programs which are badly needed to improve the innovation capacity in Tunisia. Institutions had to demonstrate that the modernization of their engineering and science programs were part of their Institutional Development Plans, and that the civil works component were fully funded by the Institutions themselves. With the commitment from institutions, and project funds being used only to procure equipment, the delays experienced in the past will be overcome. Thus the project funds will be used to purchase equipment as follows: Table 1 : Proposed Use of Reallocated Amount for Component 1 Amount(1000 DT) Laboratory Equipment for National School of Engineers of Gabes 4 500 Laboratory Equipment for National School of Engineers of Tunis 1 200 Laboratory Equipment for National School of Engineers of Sfax 2 300 Laboratory Equipment for Science Faculty of Sfax 1 000 Laboratory Equipment for Science Faculty of Tunis 1 200 Laboratory Equipment for Science Faculty of Monastir 1 100 Laboratory Equipment for National School of Engineers of Monastir 1 100 Laboratory Equipment for Science Faculty of Bizerte 400 Laboratory Equipment for Polytechnic School of Tunis 150 Laboratory Equipment for Institute of Education and Continuing Education 1 150 Laboratory Equipment for Science Faculty of Gafsa 900 ICT Equipment for 20 institutions 1 500 Unallocated Laboratory Equipment 1 750 Total for Component 1 18 250 5 Component 2: Modernize the Higher Education System by Strengthening Quality Assurance Mechanisms, Institutional Autonomy and Financial Sustainability There are no changes proposed for this component, however the initial allocation to complete all the activities required an update and some details of activities vis à vis the very generic description provided in the initial PAD were required. Based on the progress made in implementing key elements of the Reform, such as the LMD, the Contract-based funding, and the Development of Quality Assurance System, the MHESR has estimated that more resources are needed to continue with the sound implementation of these initiatives. In this regard, and based on the description of the project in Schedule 2 of the Legal Agreement signed on July 16, 2006, were it is stated the following: “Carrying out studies, provision of technical assistance and training activities, equipment and materials, and organization of study tours for: developing and strengthening the capacities of the National Evaluation Committee to transform it into a national institution for higher education evaluation and quality support with a view to establishing a comprehensive accreditation and quality assurance system, including: (a) the development of an action plan to assist MOHE in establishing said system; (b) the design of a strategy and the strengthening of management capacity to ensure financial sustainability of said system;� The MHESR has estimated that transforming the National Evaluation Committee into a comprehensive accreditation and quality assurance system requires that an agency at the central level be in place, and that in each university a Quality Assurance Unit be set up. In addition, the implementation of the LMD reform requires that teaching staff be trained and new curriculum development is necessary. Given the importance of improving employability of graduates, the development of curriculum in partnership with industry and private sectors is being emphasized, as well as the development of entrepreneurial skills for all students. Lastly, the use of new technologies and in particular ICT is being underscored in the new proposed activities. Thus, it is proposed to reallocate an additional 6.6 million Euros (13.1 MDT) to this component. The table below shows the details of how the funds will be used. Table 2 : Proposed Use of Reallocated Amount for Component 2 Amount (1000 DT) Development and strengthening of the National Evaluation Committee (CNE) to develop into a National 2.1 Assessment, Quality Assurance and Accreditation Forum (INEASQA) at the central and university levels 1 197 2.1.1 Establishment of quality assurance system 176 2.1.2 Develop expertise in quality assurance 130 Strengthening quality committees in 14 universities 2.1.3 891 Revision of higher education curricula to match international standards and be more relevant to the needs of the 2.2 labor market 7 980 2.2.1 Co-designed partnerships between academic and professional licenses of Applied and Professional Masters2 2 231 2.2.2 Reinforcement of cross training for entrepreneurship 698 2 The co-designed degrees are programs designed in partnership with private sector and industry, to better meet the needs of the labor market. 6 University Teaching Project: Professional development of university education and strengthening the dissemination of 2.2.3 educational culture, learning and digital 394 2.2.4 Development of a performance assessment of students and universities 900 Strengthening of professionalization (project benefiting the UVT and 30 academic institutions) 2.2.5 479 2.2.6 Strengthening the certification of teachers in ICT systems 1 800 2.2.7 Strengthening teacher training in the field of language (English) 380 2.2.8 Strengthening Project engineering online training 401 2.2.9 Project to train trainers (DGES) 698 2.3 Strengthening capacity to implement reforms of the Ministry of Higher Education 403 2.3.1 Development and evaluation of projects 403 2.4 Strengthening the technical capacity and management of higher education institutions 1 745 2.5 Capacity Building for Project Management 1 799 2.5.1 Management training of BEPP staff to increase its capacity at central and university level 779 2.5.2 Strengthening management capacity and monitoring of the project and components 1 020 Total 13 124 Component 3: Grant Program to Improve Academic Quality and Institutional Performance (Quality Promotion Fund (PAQ)) Given the high demand for these funds, and the successful implementation of this Competitive Fund, the Government of Tunisia is proposing to have three more rounds of proposals with three particular objectives: a) to promote innovation and employability of graduates; b) to support institutions in underserved areas; and c) to modernize research centers. Based on the same competitive mechanism used until now and the peer reviewing mechanism, as well as the Implementation and Operational Manual, there will be an additional 10 million Euros (20 MDT) allocated to this component. The distribution for each call of proposals is as follows: Table 3 : Proposed Use of Reallocated Amount for Component 3 Amount (1000 DT) Competitive Programme : Innovation and Employability Component 9 000 Competitive Programme: Education Quality Improvement of schools in underserved areas 6 000 Competitive Programme: Modernization and Strengthening of management capacity of universities and research centers 5 000 Total 20 000 With these changes, the description of Component 1 will be revised as follows in the Loan Agreement to take into consideration the cancellation of four sites: “Part A: Expand Access to the Public Higher Education System 7 Carrying out a program of works for the construction of about four (4) new higher education and research institutions, one university restaurant and one university student housing, including the supervision of construction activities, and the provision of library books and information materials, didactic, scientific and information and communication technology equipment for said institutions, and provision of laboratory and information and communication technology equipment for about twenty three (23) other higher education and research institutions.� The performance indicators will also be revised to take into account the cancellation of four sites and will be amended as follows: “Performance Indicators Except as the Borrower and the Bank shall otherwise agree, the Performance Indicators for the Project shall be: 1. Increased access to higher education by about 13,000 education places as evidenced through the construction of four (4) new higher education and research institutions, one university restaurant and one university student housing, by the Project Closing Date; 2. Revised legal and regulatory framework governing the Borrower’s higher education system granting increased autonomy to universities by November 2013; 3. Strengthened capacity of the National Evaluation Committee, including enhanced ability to complete evaluations of the academic and operational performance and quality of higher education and research institutions; 4. PAQ is fully operational and at least one (1) round of Competitive Block Grants has been awarded and under implementation by Mid-term Review; and 5. Improved performance of Project implementation entities through improved management of the schedule set forth in the Procurement Plan as follows: (a) 60% of contracts signed within the schedule set forth in said Plan for the year 2007; 8 (b) 75% of contracts signed within the schedule set forth in said Plan for the year 2008; and (iii) 90% of contracts signed within the schedule set forth in said Plan for the year 2009.� 9 C.4 Financing Current Proposed in € million US$ million € million Achievement "Reliquat" Total Component 1 Part A: Expand access to the public higher education system 62,0 50,0 25,7 8,6 34,3 Component 2 Part B: Modernize the higher education system by strengthening quality assurance mechanisms, institutional autonomy and financial sustainability 4,4 3,6 1,5 7,9 9,4 Component 3 Part C: PAQ for Competitive Block Grants and Management Capacity Grants for Sub- projects under Part C of the Project 9,6 7,7 7,4 10,2 17,5 Total 76,0 61,3 34,6 26,7 61,3 C.5 Reallocations Category of Expenditure Allocation in Euros % of Financing in Euros Current Proposed Current Proposed 1. Works 35 000 20 905 80% 100% 2. Goods and Equipment 12 100 16 546 100% 100% 3. Consultants services 1 500 2 159 100% 100% 4. Training 600 3 832 100% 100% 5. PAQ for Competitive Block Grants and Management Capacity Grants for Sub-projects under Part C of the Project 8 100 17 858 100% 100% 6. Unallocated 4 000 0 10 Total 61 300 61 300 C.6 Closing date. Given the new activities proposed the revised closing dates is proposed to be November 30, 2013. C.7 Implementation schedule Figure 2: Proposed Implementation Schedule for Reallocated Amount 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Program to strengthen autonomy of institutions & centers Building program universities inland regions Employability and Innovation Programme Business intelligence BEPP Interface with observatories BEPP BEPP Training Five training promotion managers (ISCA) Communication Assessment and project appraisal Reforce the implementation of PARES II ICT certification Training Pedagogy / teaching DGES Training in personal projects (UVT) Cross training entreuprenat (UVT) Co-construction (DGRU) Quality committees at universities Workshp International (INEASQA) Equipement (INEASQA) Manuals and procedures (INEASQA) Texts and workshops (INEASQA) ICT laboratory equipment Faculties and engineering colleges Equipment Numbers represent months of project implementation 1: November 2011 19: May 2013: deadline for commitments 25: November 2013: closing date 11 12 ANNEX 1: Results Framework and Monitoring TUNISIA: HIGHER EDUCATION REFORM SUPPORT II Project Development Objective (PDO): The development objective of the project is to support the implementation of the Government’s program to develop the higher e ducation system by increasing the capacity and efficiency in expanding access and improving the quality of education and institutional performance. Revised Project Development Objective: Same as above. D=Dropped Cumulative Target Values** C=Continue Baseline Data Source/ Responsibility PDO Level Results Unit of Measure Frequency for Data Core Indicators* N= New (May 2010) Methodology FY11 FY12 FY13 Collection R=Revised Indicator 1: R Number of 4 institutions are - 2 4 Annual Progress DBE-BEPP Improve access to higher institutions under preparation. institutions institutions report education by creating completed the 6,000 places through the construction. 2 institutions are construction of 6 new higher education under construction institutions. Indicator 2: D - Done. A decree for - - - - - Coordination Revise the legal and granting university Unit regulatory framework to the public status better support institutional autonomy. was promulgated under the Project. Indicator 3: C Establishment The decree for Finalize the - - Annual Progress DGRU-INEPQ Develop the National of the Forum creating the establishment 13 Evaluation Committee of National INEAAQA was of the INEAQA report (CNE) into a National Assessment, enacted under the by the end of Authority for Evaluation Quality Project. the first half of and Quality Promotion Assurance and (INEQP) as part of Accreditation 2011. developing a (INEAQA). comprehensive quality assurance system for higher education. Indicator 4: C Number of 164 proposals for - - Additional Annual Progress DGRU-PAQ Establish and effectively PAQ proposals funding have been one round report operate the Quality received and received, and 41 of PAQ Promotion Fund (PAQ). approved by 2 projects have been windows: approved, covering completed. Quality and 1/3 of all eligible Management. higher education institutions. INTERMEDIATE RESULTS Intermediate Result (Component 1): Expand access to public higher education institutions. Revised Intermediate Result (Component 1): Same as above Intermediate indicator 1: C Number of 346,079 (number of (number of (number of Annual Progress BEPP Increase of spaces regular students) students) students) report available in public students. universities. Intermediate indicator 2: C Number of 4 institutions are - 2 4 Annual Progress DGSC Number of newly new under preparation. report constructed institutions institutions. financed under the 2 institutions are Project. under construction Intermediate Result (Component 2): Modernize the higher education system by strengthening quality assurance mechanisms, institutional autonomy and financial sustainability. Revised Intermediate Result (Component 2): Same as above. 14 Intermediate indicator 1: D - Done. A study on - - - - - BEPP Implementation of strengthening the workshops to strengthen capacity of central the capacity of central administration. administration was conducted, and the workshop was organized under the Project. Intermediate indicator 2: C Measures A plan for capacity Design a study Conduct and Organize Annual Progress Coordination Measures taken in order taken. development for on complete the capacity report Unit to reinforce the capacity MoHE is under strengthening study. development of the MoHE. preparation. the capacity of activities MoHE. based on the study. Intermediate indicator 3: R/N Number of 100% of institutions (number of (number of (number of Annual Progress DGRU Modernized institutions have adopted the institutions institutions institutions report implementation of the using ICT LMD system under using ICT using ICT using ICT LMD system (number of infrastructure the Project. infrastructure infrastructur infrastructur institutions using effectively for for the e for the e for the modernized mode of the delivery of delivery of delivery of delivery of delivery of their curriculum. curriculum) curriculum) curriculum) curriculum). Intermediate indicator 4: C Number of 13 institutions. (number of (number of (number of Annual Progress DGRU Adoption of program- institutions institutions) institutions) institutions) report based budgeting (GPO) adopting GPO. (number of institutions using GPO). Intermediate indicator 5: C Number of External evaluation (number of (number of (number of Annual Progress NEC-INEQP Complete the INEQP institutions is scheduled in 35 institutions) institutions) institutions) report (National Authority for that accept the institutions. Evaluation and Quality external Promotion) evaluations of evaluation. 5% of all existing higher education institutions. Intermediate Result (Component 3): Provide grants to improve academic quality and institutional performance. 15 Revised Intermediate Result (Component 3): Same as above. Intermediate indicator 1: D - Done. - - - - - DGRU-PAQ Quality Promotion Fund (PAQ) put in place and operations. Intermediate indicator 2: C Number of PAQ-Quality: 41 (number of (number of (number of Annual Progress DGRU-PAQ Number and amount of PAQ projects projects and 15.75 projects) projects) projects) report financed under the PAQ and its amount million DT was (approved, committed and (approved, approved disbursed). committed and PAQ-Management: disbursed). 14 projects and 3.86 million DT was approved. *Please indicate whether the indicator is a Core Sector Indicator (see further http://coreindicators) **Target values should be entered for the years data will be available, not necessarily annually. 16 ANNEX 2: Reallocation of Proceeds 1. Proceeds for Tunisia, Higher Education Reform Support II, Loan No. 075809 will be reallocated as follow: (Figures are in Euros) Allocation % of Financing Current Revised Current Revised 1. Works 35 000 20 905 80% 100% 2. Goods and Equipment 12 100 16 546 100% 100% 3. Consultants services 1 500 2 159 100% 100% 4. Training 600 3 832 100% 100% 5.PAQ for Competitive Block Grants and Management Capacity 8 100 17 858 100% 100% 6. Unallocated 4 000 0 Total 61 300 61 300 2. This project is supporting the Higher Education Reform and has three components: 1. Expansion of access to public higher education, US$ 62 million 2. Modernization of the Higher Education system and strengthening of quality assurance mechanisms and institutional autonomy, US$ 4.4 million 3. Quality Promotion Fund (PAQ) to improve academic quality and institutional performance US$9.6 million Components 2 and 3 have had satisfactory implementation, in particular component 3, with all of its funds committed by mid-term review held in May 2009. In six rounds PAQ has received 164 proposals for funding and 50 projects have been approved and are under satisfactory implementation. Clearly the demand for PAQ funds has exceeded expectations and initial funds allocation. The 50 approved projects are reaching a third of all eligible higher education institutions in Tunisia. The graph below shows the distribution of grants and how they are aligned with national priorities. Component 2 has also had satisfactory implementation, with 38% of its initial allocation committed. Notably the implementation of the LMD reform, aligned with the Bologna process has had impressive progress, positioning Tunisia in the forefront of countries 17 following Bologna guidelines. Equally important has been the introduction of contract- based budget allocation to Universities. To date all Universities and Technical Colleges have signed contract agreements with clear performance indicators, and are being monitored by the Ministry and the National Committee of Evaluation. This reform geared to promote University Autonomy, and increase accountability on the use of resources is likely to show important results in terms of quality and relevance of Tertiary education services in Tunisia, and is aligned with OECD type of University reforms. 3. The proposed reallocation is necessary to assign additional funds to components that are experiencing satisfactory implementation. 4. This will be the first extension of the project. 18 ANNEX 3: Request for Government 19 20 21