Fortnightly, 16 October 2019

Fortnightly, 16 October 2019

October 16, 2019
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FortnightlyReport

THE FORTNIGHTLY
A Review of Middle East Regional Economic & Cultural News & Developments

16 October 2019
17 Tishrei 5780
17 Safar 1441

Written & Edited by Seth J. Vogelman*

TABLE OF CONTENTS:

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Bombardier Commits to Spend NIS 500 Million in Reciprocal Purchases in Israel

2: ISRAEL MARKET & BUSINESS NEWS

2.1 Pointer Telocation Closes Acquisition by I.D. Systems
2.2 Rapyd Secures $100 Million in Funding to Fuel Global Fintech-as-a-Service Expansion
2.3 Strigo, Leading Customer Training Cloud, Raises $2.5 Million from Hanaco Ventures
2.4 5W Public Relations Expands Operations into Israel Market
2.5 Faurecia Opens Technology Platform in Tel Aviv Focusing on Cybersecurity
2.6 UK’s Tesco Invests In Israeli Cashierless Tech Startup Trigo Vision
2.7 PICO Venture Partners Closes $80 Million for Fund II
2.8 83North Announces Raising New $300 Million Fund
2.9 Appnext’s Recommendation Platform Ranked 3rd in India Following Facebook and Google
2.10 OTI Receives New Purchase Order for 5,000 Contactless Readers for the Smart ATM Market
2.11 XM Cyber Named 2020 TAG Cyber Distinguished Vendor
2.12 SKF Acquires Presenso
2.13 Sapiens Acquires Spain’s Calculo to Support Its Penetration of the Iberian Market

3: REGIONAL PRIVATE SECTOR NEWS

3.1 Non-Jordanian Ownership on Amman Stock Exchange Reaches 50.5%
3.2 arabot Raises $1 Million in Seed Funding to Accelerate AI Conversational Technology
3.3 COFE App Raises Seven Figures Series A Funding and Valuation Surges
3.4 Duck Donuts Announces Expansion into Saudi Arabia and the UAE
3.5 BECO Capital Closes Second Fund at $100 Million
3.6 BulkWhiz Closes Series A Round of Funding
3.7 UnitX Closes $2 Million Investment with Aramco’s Wa’ed Ventures Fund
3.8 Jones the Grocer to Expand Operations into Saudi Arabia
3.9 Egypt’s FilKhedma Raises Funding from Algebra Ventures and Glint
3.10 MedAngels Launches at Techne Summit
3.11 almentor.net Raises $4.5 million in Series A Investment Round
3.12 Egypt’s ExpandCart Raises $150,000 from Hong Kong Accelerator
3.13 IFC Invests $1 Million in Seed Fund Run by Flat6Labs Tunis
3.14 Volkswagen Postpones Turkey Plant Construction Due to Syria Incursion

4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Rabbis Join Call to Reduce Single-Use Plastic, Beginning with Jewish New Year
4.2 Key Wind Energy Project Inaugurated in Southern Jordan
4.3 University of Jordan Joins EU Waste Management Project
4.4 Dubai Municipality Launches Biogas Power Generation Plant
4.5 Egypt & World Bank Cooperate to Run Public Buses on Natural Gas

5: ARAB STATE DEVELOPMENTS

5.1 Lebanon’s PMI Sees Fastest Decline in Operating Conditions in September since June
5.2 Number of Total Registered New Cars in Lebanon Drops by 14.61% in Third Quarter
5.3 Germany Announces a Record €729.4 Million in Support of Amman
5.4 Jordan Advances in 2019 Competitiveness Report
5.5 Jordan’s Income from Tourism Reaches $4.4 Billion in First 9 Months of 2019

♦♦Arabian Gulf

5.6 Colliers International Says KSA’s GDP is Today 40% Reliant on Oil Exports
5.7 Egypt’s Growth Rate to Achieve 5.5% in FY 2019/20 Due to Strong Fiscal Reforms
5.8 Egypt’s Trade Balance Deficit Declines by 18.9% in July
5.9 Morocco’s Current Budget Deficit is MAD 21.8 Billion

♦♦North Africa

6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey’s Consumer Inflation Falls Sharply to Single Digits
6.2 Turkey Misses 2019 Budget Deficit Goal as Spending Surges
6.3 Turkish Retail Sales Fall for 12th Straight Month in August
6.4 Turkey’s Unemployment Rate Stands at 13.9% in July
6.5 Greece Slips Further in Terms of Global Competitiveness
6.6 Shorter Stays by Tourists Visiting to Greece But Their Spending Increases

7: GENERAL NEWS AND INTEREST

♦♦Israel

7.1 Shemini Atzeret/ Simchat Torah Celebrated
7.2 Academic Studies in Israel See More Computer Science and Less Law or Humanities

♦♦Regional

7.3 Academic Wins Tunisia Presidential Poll by a Landslide

8: ISRAEL LIFE SCIENCE NEWS

8.1 Gordian Surgical’s Closure System Used in Panama by PanaFarma
8.2 Biomica Advances to Pre-Clinical Studies in Inflammatory Bowel Disease Program
8.3 AngioDynamics Acquires Eximo Medical and its 355nm Laser Atherectomy Technology
8.4 BiondVax Receives €4 Million from the European Investment Bank for Influenza Vaccine Trial
8.5 Accelmed Launches Accelmed Ventures II, a New $100 Million Venture HealthTech Fund
8.6 TAleph Farms Successfully Completed the First Slaughter-free Meat Experiment in Space
8.7 DayTwo Receives Strategic Investment by Longliv Ventures, Cathay Innovation and Samsung
8.8 Israeli Researchers Discover New Way to Stop Spread of Bone Cancer
8.9 Medtronic to Buy Israeli Catheter Developer AV Medical for $30 Million
8.10 Therapix Biosciences Announces Positive Data from New Drug Candidate THX-210

8.11 MaxQ AI’s Software to be Integrated into Philips’ Computed Tomography Systems


8.12 ICL to Expand its Presence in the Plant-based Meat-alternatives Market

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Sapiens and FRISS Partner for Honest Insurance
9.2 Cymulate Empowers SMBs With Cost-effective Enterprise-grade Security Testing
9.3 Promo.com First Video Platform to Offer Direct Video Publishing to Instagram
9.4 AudioCodes Introduces Room Experience Solutions in Collaboration with Dolby
9.5 Cymulate, Launches Industry’s First Agentless APT Simulation to Validate Security Posture
9.6 New TV White Space Solution From RADWIN Drives Broadband to Remote Communities
9.7 SAM & Heights Telecom Offers Enterprise-Grade Security for Home Routers
9.8 Credorax Ranked Among the 2018 Deloitte Technology Fast 500 EMEA
9.9 Ripples Leverages Big-Data to Increase Beverage Sales & Consumer Engagement
9.10 Mellanox Propels NVMe/TCP and RoCE Fabrics to New Heights

10: ISRAEL ECONOMIC STATISTICS

10.1 Israeli Startups Raised Over $1 Billion in September
10.2 Number of Empty Homes in Israel Increases by 24% Since 2012
10.3 Record Number of Tourists Visit Israel in September
10.4 Record Number of Israelis Travel Abroad Over Jewish Fall Holiday Season
10.5 Bank of Israel Lowers its 2020 Growth Forecast

11: IN DEPTH

11.1 LEBANON: Moody’s Places Lebanon’s Caa1 Rating Under Review for Downgrade
11.2 IRAQ: The Economy, the Protest Movement and the Government
11.3 IRAQ: Iraq & China Launch ‘Oil for Reconstruction’ Agreement
11.4 EGYPT: Egypt & US Combine Efforts to Boost Family Planning Programs
11.5 MOROCCO: Outlook Revised to Stable from Negative on Budgetary Consolidation Efforts
11.6 CYPRUS: Fitch Revises Cyprus’s Outlook to Positive; Affirms at ‘BBB-‘

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Bombardier Commits to Spend NIS 500 Million in Reciprocal Purchases in Israel

Israel’s Ministry of Economy and Industry Foreign Investment and Industrial Cooperation Authority and Québec’s Bombardier have signed a new framework agreement for reciprocal procurement by the company in the Israeli economy in the coming years. Under the agreement, Bombardier will spend NIS 500 million in reciprocal procurement in Israeli industrial companies over the next five years.

The Industrial Cooperation Authority requires companies signing agreements with government agencies to spend 20% of the amount of their agreements on reciprocal procurement. Bombardier is the main supplier of Israel Railways. It conducts its business in Israel through Bombardier Israel, a local subsidiary.

The new agreement follows a series of agreements between Bombardier and government agencies, including Israel Railways and other mass transit companies. The agreement replaces an agreement from 10 years ago that expired. Under the previous agreement, Bombardier has already spent NIS 500 million on reciprocal procurement in Israel. Bombardier has supplied Israel Railways with hundreds of railway carriages. It is converting these carriages to electrical propulsion, and is supplying the new electric locomotives on the electrified railway line between Jerusalem and Tel Aviv. (Globes 02.10)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Pointer Telocation Closes Acquisition by I.D. Systems

Rosh HaAyin’s Pointer Telocation, a leading provider of telematic services and technology solutions for Fleet Management, Mobile Asset Management and Internet of Vehicles, has closed its previously announced acquisition by New Jersey’s I.D. Systems. The new combined company will be rebranded as PowerFleet, Inc. and will trade on the Nasdaq Global Market and Tel Aviv Stock Exchange (TASE) under the ticker symbol “PWFL”. This acquisition and new corporate branding positions PowerFleet as a global leader in providing enterprise-class wireless Internet of Things (IoT) and Machine to Machine (M2M) technology powering wireless solutions for the multi-trillion-dollar logistics, industrial vehicle and fleet management markets. To date, PowerFleet’s solutions have been selected by more than 1,500 customers and operate on more than 500,000 mobile subscriber units globally. (Pointer Logo 03.10)

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2.2 Rapyd Secures $100 Million in Funding to Fuel Global Fintech-as-a-Service Expansion

Rapyd announced a $100 million financing round led by Oak HC/FT with participation from Tiger Global, Coatue, General Catalyst, Target Global, Stripe and Entree Capital. Earlier this year, Rapyd raised $40 million in series B financing.

With this new investment, the company will continue to build out its unified cloud-based technology platform that helps businesses quickly integrate Fintech and payment capabilities into any commerce application. The funding will also be used to further build out the Rapyd Global Payment Network that helps businesses expand in local and cross-border markets by reaching more than four billion consumers with a broad range of local payment methods beyond credit cards. Rapyd is paving the way for the growing global wave of Fintech and commerce modernization being undertaken by e-commerce merchants, gig economy platforms, financial institutions and technology providers looking to enable highly localized customer experiences. Rapyd supports the expansion of local and cross-border businesses for any type of commerce or Fintech application from one unified platform by managing the complexity of connecting disparate local payment systems, integrating any type of local payment method, and ensuring local regulations and compliance requirements are met.

Tel Aviv’s Rapyd helps businesses create great local commerce experiences anywhere. The world’s most innovative ecommerce, technology firms, and marketplaces utilize our Fintech-as- a-Service platforms: Collect, Disburse, Wallet and Issuing to seamlessly integrate fintech and payment capabilities into their applications. By accessing the Rapyd Global Payment Network, businesses can access over 500 local payment types including bank transfers, e-wallets and cash in more than 100 countries. Now ecommerce, technology firms, and marketplaces can focus on growing new markets and reaching billions of consumers rather than building infrastructure. Investors include Oak HC/FT, Tiger Global, General Catalyst, Stripe, Target Global, Coatue, Entree Capital, IGNIA and TAL Capital. (Rapyd 03.10)

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2.3 Strigo, Leading Customer Training Cloud, Raises $2.5 Million from Hanaco Ventures

Strigo announced the close of a $2.5 million Seed Round, led by Hanaco Ventures, with participation from Greycroft. Since launching in 2017, Strigo has been at the forefront of an industry-wide surge towards customer training. For enterprise software, the proposition is clear: training has become a key driver for customer success. This insight is backed by the Technology Services Industry Association (TSIA), whose research finds that trained customers are 12% more likely to renew a service contract.

Strigo meets this growing market with a unique focus: to power excellent training. Devised as remote training – as close as possible to real-life – the cloud-based-platform is founded on a methodology of ‘learning by doing’. To date, Strigo has delivered over 1,500,000 hours of training for industry-leading clients including Docker, Elastic (ESTC) and VMware (VMW). Comprising a suite of hands-on pedagogical tools, Strigo is easily customized to deliver intuitive and effective product learning. The tools are built for versatility: clients adapt training to meet the ever-changing needs of customers. The results are striking: when a customer is engaged, they develop a deep relationship with the product. All the metrics point upwards, with Strigo’s clients reporting increased customer satisfaction and retention, and accelerated product adoption.

Tel Aviv’s Strigo is a customer training management (CTM) company that powers product training. Strigo’s browser-based environments come with built-in virtual labs, making hands-on training sessions far more efficient and easier to manage. With the new funding, Strigo’s team plans to expand the platform, develop new product capabilities, and expand into new markets. (Strigo 03.10)

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2.4 5W Public Relations Expands Operations into Israel Market

New York’s 5W Public Relations, one of the 15 largest independently-owned PR firms in the U.S., announced its expansion in the Israeli market, making the agency one of the leading providers of PR services in the US, specifically for the Israeli tech community.

5W Public Relations is a full-service PR agency in New York City, known for cutting-edge programs that engage with businesses, issues and ideas. With more than 150 professionals serving clients in B2C (Beauty & Fashion, Consumer Brands, Entertainment, Food & Beverage, Health & Wellness, Travel & Hospitality, Technology, Nonprofit), B2B (Corporate Communications and Reputation Management), Public Affairs, Crisis Communications and digital strategy, 5W brings leading businesses a resourceful driven approach to communication. (5WPR 02.10)

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2.5 Faurecia Opens Technology Platform in Tel Aviv to Focus on Cybersecurity

France’s Faurecia, one of the world’s leading automotive technology companies, has opened a technology platform in Tel Aviv, enabling it to accelerate its cyber security strategy. As vehicles are becoming increasingly connected and providing new user experiences, the reinforcement of passenger safety and data security is essential. Faurecia will thus develop its cybersecurity expertise through collaboration with local startups and major innovation clusters giving access to emerging trends and new technologies. This will enable Faurecia to propose complete end-to-end solutions integrated into vehicles, securing software, data and cloud connectivity. In addition to securing its solutions, Faurecia has also been working to globally assess and protect its network of industrial sites and offices from cyber security risks.

Furthermore, last May, Faurecia also realized an investment in Ramle’s GuardKnox, a world-leading automotive cybersecurity startup, identified through its Tel Aviv technology platform. This inauguration is part of Faurecia’s ongoing strategy to build up innovation ecosystems by relying on technology platforms which Tel-Aviv is the best-in-class in the cybersecurity field. (Faurecia 03.10)

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2.6 UK’s Tesco Invests In Israeli Cashierless Tech Startup Trigo Vision

Tesco, a British grocery multinational and the world’s third-largest food retailer, invested an undisclosed sum in Israeli startup Trigo Vision, which developed a computer vision platform for a checkout-free shopping experience that allows customers to grab items and go. The companies announced on 3 October that customers who use the Tesco app will be able to walk into a store, select items and leave without going through the checkout counter. The payment will be processed automatically.

The investment adds to Trigo’s recent $22 million Series A funding round led by Red Dot Capital, with participation from previous investors Vertex Ventures Israel and Hetz Ventures.

Founded in 2017, Tel Aviv’s Trigo Vision is a computer vision startup reshaping the retail experience. Trigo Vision uses ceiling-mounted cameras and 3D Space Mapping tech to identify items in a store selected by customers, and allows to automatically charge them. Trigo Vision’s technology streamlines retail operations, prevents shoplifting, provides invaluable retail insights and presents opportunities for new levels of customer engagement within retail environments. (Trigo 03.10)

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2.7 PICO Venture Partners Closes $80 Million for Fund II

Jerusalem-based early-stage venture capital firm PICO Venture Partners announced it closed $80 million in capital commitments for its second fund. Now PICO manages $130 million across two funds. Launched in 2015, PICO invests in early-stage startups seeking to upend broken business models in sizable industries.

Instead of focusing on specific sectors, PICO looks for execution-driven Israeli entrepreneurs who utilize technology to modernize processes and unlock greater efficiency in the marketplace. PICO believes that this sector-agnostic and business-centric approach is the key to successfully identifying and investing in startups with the greatest potential for growth. So far, PICO invested in 15 portfolio companies to date including Vroom, an online platform for buying and selling pre-owned vehicles. PICO led Vroom’s initial investment round and has been supporting the company in follow-on rounds. PICO also led the initial investment round in Tel Aviv’s Spotinst, which is a cloud automation and optimization startup that reached more than 1,500 enterprise customers across 52 countries in just three years. (PICO 06.10)

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2.8 83North Announces Raising New $300 Million Fund

83North has completed an oversubscribed $300 million fund raising, bringing total capital under management to over $1.1 billion. Building upon the success of its existing funds, 83North will deploy the new capital with the best and brightest consumer and enterprise technology companies led by aspiring European and Israeli entrepreneurs.

Headquartered in London and Tel Aviv, the 83North team has worked with the region’s most ambitious founders to create market-leading technology businesses. The new capital demonstrates the on-going appeal of the firm’s unique model: providing a breadth of expertise and on-the-ground support in Europe, Israel and the United States. 83North has an unrivalled ability to help founders successfully scale their businesses across these three markets. (83North 07.10)

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2.9 Appnext’s Recommendation Platform Ranked 3rd in India Following Facebook and Google

Appnext has been ranked among the leading media partners in the AppsFlyer Performance Index for H1/19. Appnext is ranked #7 in global growth and as the 3rd recommendation platform in shopping and non-gaming in India, right after the giant duopoly of Facebook and Google. AppsFlyer Performance Index is the industry-standard that offers mobile app marketers a comprehensive report card on the performance of mobile media sources, with the latest edition being the most segmented to date covering 23 billion installs and 45 billion app opens of over 15,000 apps.

During the past year, Appnext has grown its business evolving from in-app to on-device placements, introducing established partnerships with top OEMs. This shift, together with an aggressive zero-tolerance for fraud approach, enabled a dramatic increase in quality, performance and ROI, offering an unmatched app discovery experience to users throughout their daily mobile journey. Appnext recently signed several strategic agreements to be announced soon to reinforce its growth momentum and expanded its global presence by opening an office in Indonesia to accelerate the company’s continued growth throughout SEA.

Bnei Brak’s Appnext is the largest on-device and in-app discovery platform, powering 2B app recommendations via over 20 daily interactions along users’ mobile journey. Through its direct partnerships with top OEMs, operators and app developers, Appnext creates a discovery experience in over 10,000 mobile touchpoints, utilizing its ‘Timeline’ technology that predicts the app users are likely to use next. Appnext’s recommendations are helping app marketers reach more engaged users and get their apps discovered, used and re-used. (Appnext 07.10)

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2.10 OTI Receives New Purchase Order for 5,000 Contactless Readers for the Smart ATM Market

On Track Innovations (OTI) has received a new purchase order for 5,000 units of OTI’s Uno-8 advanced secure contactless NFC readers. These units will be used for the global Smart ATM market. By adding an OTI EMV-certified contactless reader, smart ATMs are provided with the ability to seamlessly and securely identify the account owner by communicating wirelessly with their smart devices, enabling an uninterrupted, simple, convenient and secure banking service for the customer.

Rosh Pina’s On Track Innovations (OTI) is a global leader in the design, manufacture and sale of secure cashless payment solutions using contactless NFC technology. OTI’s field-proven innovations have been deployed around the world to address cashless payment and management requirements for automated retail and petroleum markets. OTI distributes and supports its solutions through a global network of regional offices and alliances. (OTI 07.10)

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2.11 XM Cyber Named 2020 TAG Cyber Distinguished Vendor

XM Cyber was chosen by TAG Cyber as a Distinguished Vendor in this year’s 2020 Security Annual. XM Cyber is part of an industry collective supporting the democratization of cybersecurity research and advisory materials. The 2020 Security Annual is part of an annual series from TAG Cyber that is published each September since 2016. The massive report offers expert guidance, analysis, and education on fifty different aspects of the cybersecurity ecosystem.

Herzliya’s XM Cyber provides the first fully automated breach and attack simulation (BAS) platform to continuously expose attack vectors, from breach point to any organizational critical asset. This continuous loop of automated red teaming is completed by ongoing and prioritized actionable remediation of security gaps. In effect, HaXM by XM Cyber operates as an automated purple team that combines red team and blue team processes so organizations are always one step ahead of the attack. (XM Cyber 07.10)

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2.12 SKF Acquires Presenso

Sweden’s SKF has signed an agreement to acquire Presenso, a company that develops and deploys artificial intelligence (AI)-based predictive maintenance software. Presenso’s AI capability enables production plants to find and act on anomalies that were previously difficult to detect, automatically and without the need to employ data scientists. Presenso’s competence will be used to strengthen SKF’s Rotating Equipment Performance offer.

Presenso is based in Haifa, Israel. The acquisition is subject to certain regulatory approvals and is expected to be completed during Q4/19. Presenso has raised $3 million to date from EDP, the investment arm of Energias de Portugal, Nexstar Partners, Janvest and angel investment groups including Afterdox and SeedIL. The company has 30 employees in its Haifa office. The office will continue to operate under and be responsible for all SKF’s AI initiatives. (SKF 07.1

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2.13 Sapiens Acquires Spain’s Calculo to Support Its Penetration of the Iberian Market

Sapiens International Corporation has entered into a definitive agreement to acquire Calculo, a leading vendor of insurance consulting and managed services, and a core solution to the Spanish market. Calculo’s team of experts, one of the largest core insurance system teams in Spain, will help Sapiens continue its global expansion by entering the large Iberian market.

Sapiens will continue to invest in and support Calculo’s products, including the e-Tica core system and other solutions for existing and new customers, while offering Sapiens’ leading products based on market segment (life & pension and property & casualty) and different tiers. Sapiens’ solutions will also be provided to Spanish global customers. The acquisition’s primary goal was expansion into the Spanish market in the long term. Calculo’s expected full-year 2019 revenue is approximately $10 million, with break-even profitability. This transaction is expected to be accretive to profits by the end of 2020. Sapiens will pay a cash consideration based on valuation of less than one time revenues.

Holon’s Sapiens International Corporation empowers insurers to succeed in an evolving industry. The company offers digital software platforms, solutions and services for the property and casualty, life, pension and annuity, reinsurance, financial and compliance, workers’ compensation and financial markets. With more than 35 years of experience delivering to over 450 organizations globally, Sapiens has a proven ability to satisfy customers’ core, data and digital requirements. (Sapiens 10.10)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Non-Jordanian Ownership on Amman Stock Exchange Reaches 50.5%

The value of shares that were bought by non-Jordanian investors on the Amman Stock Exchange (ASE) in September 2019 stood at JOD42.1 million, representing 25.7% of the overall trading value, while the value of shares sold by them amounted to JOD46.9 million. As a result, the net of non-Jordanian investments in September 2019 showed a negative value of JOD4.8 million, whereas the net of non-Jordanian investments showed a positive value of JOD5.3 million during the same month of 2018.

The value of shares that were bought by non-Jordanian investors since the beginning of the year until the end of September 2019 was JOD266.3 million, representing 24.0% of the overall trading value, while the value of shares sold by them amounted to JOD313.6 million. As a result, the net of non-Jordanian investments showed a negative value of JOD47.3 million, whereas the net of non-Jordanian investments showed a positive value of JOD33.2 million for the same period of 2018.

As for Arab investors, figures showed that their purchases since the beginning of the year until the end of September 2019 amounted to JOD138.7 million, or 52.1% of the overall purchases by non-Jordanians, while the non-Arab purchases amounted to JOD127.7 million, constituting 47.9% of the total purchases. Arab investors sales reached JOD206.3 million, 65.8% of non-Jordanians total sales, while the non-Arab sales amounted to JOD107.3 million, representing 34.2% of the total sales by non-Jordanians. Non-Jordanian investors’ ownership in companies listed at the ASE represented 50.5% of the total market value, 35.2% for Arab investors and 15.3% for non-Arab investors. (ASE 03.10)

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3.2 arabot Raises $1 Million in Seed Funding to Accelerate AI Conversational Technology

Amman’s arabot, which offers seamless online solutions and services using AI technology, raised a $1 million seed round led by Riyad TAQNIA Fund (RTF), with participation from existing investors. The funds will be used for continued regional expansion and further investment in its proprietary AI chatbot technology platform & Arabic natural language processing (NLP). The new investment round from Riyad TAQNIA Fund will position arabot as a trusted brand for AI chatbots in the region, offering seamless interactivity and delivering personalized experience to improve customer engagement.

arabot was started with the mission to reimagine both the design and processes within the digital customer’s experience, efficiently serving customers and allowing businesses to simultaneously handle thousands of conversations in real-time, automating processes and reducing operational costs. arabot has already seen rapid growth Year-Over-Year, with its recent achievement of being named one of the 100 Arab start-ups, which are shaping the Fourth Industrial Revolution (4IR) in MENA. The company was selected by the World Economic Forum (WEF) from nearly 400 applicants hailing from 17 countries across the Middle East. (Arabot 03.10)

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3.3 COFE App Raises Seven Figures Series A Funding and Valuation Surges

Kuwait’s COFE App, the coffee-centric marketplace app, successfully raised seven figures Series A funding without disclosing the exact amount of the investment, after receiving a valuation of $ 25 million by top private sector firms. COFE App’s series A funding round has added a stellar consortium of regional and international strategic investors to the brand’s illustrious list of partners. The funds secured during this round will support COFE App’s worldwide expansion plans, as well as put greater emphasis on their tech innovation strategy.

Given that COFE App has already up-scaled its tech capacity to accommodate multiple markets, the Series A funding has put the brand on a definitive path to global expansion. The new investment round has enabled COFE App to capitalize on its position as a leader in the coffee marketplace, helping the company take its integration of everything coffee related to an even greater number of users. COFE App is now ready to serve coffee communities around the world.

COFE App brings together tradition and technology. In a region where coffee is more than just a beverage, COFE is at the very heart of its conversations. As a lifestyle app, COFE calls for innovation in how people access this much-loved beverage. Created by a team of COFE fueled tech engineers from around the world, COFE App offers its consumers an immersive user experience. An app that makes the COFE ordering easy, efficient and engaging. (COFE 08.10)

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3.4 Duck Donuts Announces Expansion into Saudi Arabia and the UAE

North Carolina based donut franchise Duck Donuts announced the signing of two master franchise agreements that will allow the firm to develop and sub-franchise in Saudi Arabia and the UAE. According to the agreement, Anjal Arabia Trading & Contracting Co. is set to open 10 locations across Saudi Arabia over the next five years. The first location – which is expected to open in early 2020 – will be located in Riyadh. In the UAE, Gold Peak Coffee Shop LLC also signed a master franchise agreement to bring Duck Donuts to the UAE, beginning with Dubai.

-Monimove, a digital trade finance firm

-Norbloc, a shared KYC (know your customer) system using blockchain

-Gamechanger, a keyboard banking system

-Bankbuddy, a chatbot for the finance industry

Duck Donuts said its moves into Saudi Arabia were motivated, in part, by Saudi Vision 2030. Duck Donuts currently operates 83 locations across 26 American states and two countries. (Duck Donuts 03.10)

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3.5 BECO Capital Closes Second Fund at $100 Million

Dubai based venture capital firm BECO Capital successfully closed its second fund at $100 million, significantly more than its initial target of $80 million. BECO invests in early stage tech start-ups, primarily with founding and engineering teams based in the Middle East. To date, the firm has made 22 investments across two funds, which have collectively raised over $1 billion in follow-on capital and created over 9,000 jobs.

BECO Fund I has seen 4 exits to-date, the most recent of which include Uber’s acquisition of Careem in March 2019, and Cisco’s acquisition of Voicea in August 2019, which previously acquired Beco’s portfolio company Wrappup in April 2018. BECO Fund II includes support from several Fund I investors and is anchored by RIMCO Investment and the International Financial Corporation (IFC). Al Waha Venture Capital Fund of Funds out of Bahrain is the first regional sovereign wealth fund to back BECO and is one of a number of sovereign wealth funds who have also participated. (AB 02.10)

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3.6 BulkWhiz Closes Series A Round of Funding

BulkWhiz closed its Series A round of funding, led by BECO Capital and including MSA Capital, 500 Startups and Faith Capital. This round will enable BulkWhiz to continue to personalize the grocery shopping experience for its customers and streamline the grocery e-commerce value chain for greater efficiencies. It will also be used to continue to build BulkWhiz proprietary AI, new channels and new markets. BulkWhiz has built its own proprietary AI technology to take advantage of the transforming global ecommerce landscape, focused on bulk buying as we move towards an IoT future of connected devices. .

Dubai’s BulkWhiz, launched in 2017, expanded rapidly to cover the UAE, witnessing an over 30% monthly growth rate. In 2018, BulkWhiz became the first woman led business in the UAE to become part of the Harvard Business School Curriculum, covering learnings on entrepreneurship, leadership, negotiation and work life balance from and for the region. (BulkWhiz 10.10)

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3.7 UnitX Closes $2 Million Investment with Aramco’s Wa’ed Ventures Fund

UnitX, an AI and supercomputing startup spin-out company from King Abdullah University of Science and Technology (KAUST), and a barrier-breaking cloud-based supercomputing provider that helps enterprises deploy AI at scale, has secured $2 million of co-investment from the KAUST Innovation Fund and Saudi Aramco’s Wa’ed Ventures fund. This injection of joint funding will support UnitX in its quest to democratize supercomputing and help enterprises of all sizes leverage technologies such as high-performance data analytics to make data-driven decisions, reduce IT spending, innovate and become globally competitive.

UnitX democratizes supercomputing via partnerships with institutions that have spare supercomputing capacity and by making it available in an easy-to-use cloud model to its clients in traditionally underserved industry verticals, in Saudi Arabia and beyond. Their product, the UnitX Sentient docks ready-to-deploy applications and workflows for Artificial Intelligence/Machine Learning (AI/ML), that can be launched, with the click of a button, on the most suitable computer hardware such as public clouds, a client’s on premise clusters or the latest supercomputers in the UnitX partner network. UnitX’s proprietary AI algorithms select the best resources for each end user. The use of container technology ensures that each software application is docked on the platform in a manner that is hardware-agnostic while ensuring total security. (KAUST 10.10

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3.8 Jones the Grocer to Expand Operations into Saudi Arabia

Australian food retailer Jones the Grocer has signed a deal with Naif Alrajhi Investment to expand into Saudi Arabia. The first Jones the Grocer flagship store will be located on the ground floor of Fairmont Ramla Serviced Residences in Riyadh. The site will feature gourmet grocery retail, a halal charcuterie, a bakery and patisserie and Jones the Grocer’s hallmark artisan cheese room. As well as the traditional Jones the Grocer stores, the rollout across the kingdom will also include the Grocer Express, a compact gourmet ‘grab and go’ offer tailored for high traffic travel and commercial hubs.

Launched in 1996, Jones the Grocer set the benchmark for select Australian gourmet food stores. Opening its flagship Sydney store, Jones the Grocer presented a dynamic new approach, seamlessly fusing the growing cafe scene with a premium retail offering. Gourmet food products, often restricted to restaurants, became accessible for everyday living. Jones the Grocer now has 25 stores across UAE, Australia, Singapore, Cambodia, China, Qatar and Thailand. (AB 02.10)

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3.9 Egypt’s FilKhedma Raises Funding from Algebra Ventures and Glint

New Cairo’s FilKhedma has closed its second investment round led by Algebra Ventures and California’s Glint Consulting, which will be used to grow its presence in the market. Launched in 2014 and currently serving Cairo, FilKhedma is an online marketplace for home maintenance and improvement services such as plumbing, carpentry, electricity, air conditioning, painting and appliances. The startup already serves thousands of customers with nine on-demand services and with a repeat order rate greater than 75%. It is looking to expand its offering and its geographic reach with the undisclosed funding round from Algebra Ventures and Glint, which comes after raising a first round from KiAngel last year. It will also help attract more talent to its operations, development and marketing teams, and significantly grow its user base.

Cairo’s Algebra Ventures claims to be the largest VC firm in Egypt, having raised a total of $40 million in December of last year to invest in tech startups. The fund has already backed food discovery platform elmenus and online grocery startup GoodsMart. (Disrupt Africa 02.10)

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3.10 MedAngels Launches at Techne Summit

Med-Angels, the first Mediterranean-wide network of angel networks, was officially launched on 30 September at Bibliotheca Alexandrina, in Alexandria, Egypt. The event took place in the context of Techne summit, the Mediterranean startup event organized by Markade in September 2019.

Founded by Egyptian investor and founder of Techne Summit, Tarek El Kady, the network gathered multi-country Angel Investment Networks, as well as regional enablers, funds and diaspora investors from France, Spain, Greece, Tunisia, Morocco, Egypt, Lebanon, Slovenia, Croatia, among others.

After the official launch, the event hosted a panel titled: Accelerating Investors and Entrepreneurs through the Mediterranean, featuring presidents and executives from angel networks of six counties, including Nazeh Ben Ammar, President of Carthage Business Angels (Tunisia); Loay El-Shawarby, co-founder of Alex Angels (Egypt); Marcel Dridje, President of Sophia Business Angels (France); Albert Colomer, President of Business Angels Network Catalunya (Spain); moderated by Keith Wallace, Managing Partner, at DeInvesteerders Club. Ivan Jovetic, the president of Montenegro Business Angels Network (MEBAN) as well as Nicholas Rouhana and Corine Kiame from Lebanese IM Capital and representing the angel networks Sedars and Lebanese Women Angel Fund took part in the event remotely. (MedAngels 03.10)

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3.11 almentor.net Raises $4.5 million in Series A Investment Round

Sawari Ventures, Egypt’s leading venture capital firm, led a $4.5 million Series A investment round for e-learning platform almentor.net, with participation from Egypt Ventures, Endure Capital and angel investor Mohamed El Amin. This brings the total funding raised by the company to $ $8 million to date.

almentor.net was launched in 2016 with a mission to address the lack of online personal development content for Arabic-speakers. The platform offers a catalogue of exclusive training videos and expert talks, introducing unique knowledge development solutions for the region in areas including health, technology, humanities, entrepreneurship and business management. almentor.net plans to use the funding to accelerate course development and expand the roster of mentors who are recruited through a vigorous selection criterion, with a 10% acceptance rate in order to maintain the highest quality offered in the market. (Sawari Ventures 08.10)

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3.12 Egypt’s ExpandCart Raises $150,000 from Hong Kong Accelerator

Egyptian e-commerce startup ExpandCart has secured $150,000 in funding after being selected into the Hong Kong-based Betatron accelerator. ExpandCart is a comprehensive, cloud-based e-commerce platform, similar to Shopify but designed specifically for the Arabic language and the Middle East and North Africa (MENA) region. The startup is one of eight from around the world to be accepted into the fifth cohort of the three-month Betatron accelerator, which invests $150,000 in each company. The program, which ends in December, is designed to accelerate business growth and help each startup move towards its next funding round.

All participating startups have been allocated a lead mentor from Betatron’s network of venture capitalists and selected industry experts, and will also receive hands-on mentorship and support in areas such as sales, marketing, tech development, UI/UX, legal, and accounting. Betatron said it received 1,301 applications from across the world for the program, with the other startups selected hailing from Hong Kong (2), Singapore (3), the Philippines and the United States. (Disrupt Africa 09.10)

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3.13 IFC Invests $1 Million in Seed Fund Run by Flat6Labs Tunis

World Bank Group member IFC has invested $1 million into the Anava Seed Fund, an accelerator and early-stage fund managed by Flat6Labs Tunis, to help support tech entrepreneurship and female entrepreneurs in particular, in Tunisia. The IFC, which supports investment programs in Egypt and has also directly backed African tech startups such as Vezeeta and Twiga Foods, said the investment would also boost Tunisia’s nascent venture capital ecosystem.

The funding will be used by Flat6Labs Tunis to increase the size of the Anava Seed Fund to $10 million to support up to 100 tech startups. With half of the IFC’s contribution coming from the Women Entrepreneurs Finance Initiative (We-Fi), it is also set to directly assist female entrepreneurs. As part of the We-Fi program, IFC will also work with Flat6Labs to support women entrepreneurs and help overcome the challenges they face through a gender-led strategy, fostering greater inclusion and opportunities. (Disrupt Africa 02.10)

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3.14 Volkswagen Postpones Turkey Plant Due to Syria Incursion

German carmaker Volkswagen decided to delay their decision to build a factory in Turkey, due to international criticism of the Turkish military incursion into Syria. Volkswagen was poised to announce a $1.1 billion investment in Turkey to build cars, including the Passat and Skoda Superb models. Turkey had been seeking investment from abroad, which has slumped in recent years, to help bolster economic growth following a currency crisis last year. Volkswagen set up a subsidiary in the western Turkish province of Manisa at the start of October. It paid a quarter of a planned $160 million in capital into the unit.

Volkswagen has said it is in the latter stages of talks with the Turkish government over the establishment of the factory. The carmaker has also considered Bulgaria as an alternative but indicated that Turkey is the leading candidate.

The investment by Volkswagen has proven controversial because of Turkey’s record on human rights and democracy under President Erdogan. The Turkish president, who has tightened his grip on the country’s politics, economy and judiciary, could use the factory as proof of the success of his government even as Turks grapple with an economic downturn. European Union countries suspended arms sales to Turkey this week in protest at the military incursion into Syria, which it says threatens to further destabilize the region. Volkswagen is in final talks, but negotiations have snagged over high tax rates on motor vehicle purchases. (Ahval 15.10)

All participating startups have been allocated a lead mentor from Betatron’s network of venture capitalists and selected industry experts, and will also receive hands-on mentorship and support in areas such as sales, marketing, tech development, UI/UX, legal, and accounting. Betatron said it received 1,301 applications from across the world for the program, with the other startups selected hailing from Hong Kong (2), Singapore (3), the Philippines and the United States. (Disrupt Africa 09.10)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Rabbis Join Call to Reduce Single-Use Plastic, Beginning with Jewish New Year

Thirty Israeli rabbis have signed a letter calling on Israelis to reduce their use of disposable plastic items as much as possible, beginning with the autumn religious holiday season. Their letter notes that Israel is a world leader in the consumption of single-use plastic and that 90% of beach trash is made of plastic. The discarded plastic “comes back to our plates in fish, salt, and even the water we drink,” the letter says. “Research shows that we consume an average of five grams of plastic every week and small particles of plastic have even been found in mother’s milk.” Israel is the second biggest per capita consumer of single use plastic in the world, it was recently claimed.

The rabbis appealed to their communities to remember the rules of bal tash’hit, which prohibits needless destruction and waste and are derived from a verse in Deuteronomy 20:19-20 which forbids the cutting down of fruit trees during war. They also quote a commentary on Ecclesiastes 7:13, which says, “See to it that you do not spoil and destroy my world; for if you do, there will be no one to repair it.” (NoCamels 29.09)

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4.2 Key Wind Energy Project Inaugurated in Southern Jordan

Jordanian Minister of Energy and Mineral Resources Zawati inaugurated on 15 October the Fujeij wind power project in the southern Governorate of Ma’an, with a capacity of 89 MW. Funded and implemented by the Korea Electric Power Corporation (KEPCO), the $180 million project will generate 24% of wind power on the national grid. The Fujeij project will increase the combined capacity of wind projects, which contribute 372 MW to the electrical grid, bringing the total combined capacity of renewable energy to 1423 MW, she added.

Several months ago, when the plant was completed and connected to the national electricity grid, Negev Energy Co. obtained the necessary permits, including a permanent electricity production license from the Electricity Authority and the Ministry of Energy, and began the commercial operation of the solar thermal power plant in Ashalim for the duration of the franchise.

The minister said political will and legislation and laws in place were behind attracting major international companies to carry out renewable energy projects in the Kingdom, using the build–own–operate (BOO) model, thereby reflecting the successful partnership between the public and private sectors. KEPCO said energy cooperation with Jordan, which began in 2008, culminated in three projects, including the second and third power generation projects, and the Fujeij wind power venture. The project will save the Hashemite Kingdom around $14 million, replacing natural gas and reducing carbon emissions by 158,500 tons. (Petra 15.10)

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4.3 University of Jordan Joins EU Waste Management Project

The University of Jordan (UJ) is to participate in the co-financed EU project CEOMED, which is working towards the sustainable management of open market waste. The project, which involves six partners from five different countries — Spain, Italy, Greece, Jordan and Tunisia — with a total budget of €3.1 million, aims to reduce municipal waste generation, promote source-separated collection, and ensure the optimal exploitation of organic components by recovering energy and recycling nutrients. The project will train concerned local stakeholders, such as consumers, sellers, the informal waste-collecting sector, scholars, farmers and technical and administrative staff, to contribute to improving waste management, according to the statement.

Furthermore, the project will lead to the design of new waste management plans in the cities of Amman and Sfax in Tunisia that focus on and address the waste produced from fruit and vegetable wholesale markets. Following a circular approach, the organic fraction of waste from markets will be treated with anaerobic digestion, a biological process. The produced material will be used as fertilizer in farms that provide fresh produces to the local markets.

The project is estimated to benefit the managers of two local markets in Amman and Sfax, with over 900 businesses using the markets daily to buy and sell fresh products, 2000-3000 customers, 90 technical and administrative staff from the municipalities of Amman and Sfax and farmers who use the fertilizer produced from the organic waste. (JT 10.10)

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4.4 Dubai Municipality Launches Biogas Power Generation Plant

The Dubai Municipality has launched a high-tech biogas power generation plant at the Warsan Sewage Treatment Plant. The project, a first-of-its-kind in Dubai, uses biogas to produce clean energy. It will be implemented in cooperation with Veolia, a French water and energy company. According to Dubai Municipality, the project hopes to reduce the annual operating costs of the sewage treatment plant by using the biogas – which is the by-product of wastewater treatment – and using it in the facility.

The process is expected to reduce CO2 emissions at Warsan by 31,000 tonnes each year, equivalent to the emissions of 7,000 homes. Additionally, the project will convert 58,000 cubic meters per day of biogas into electricity. This project is considered as Dubai’s commitment to the directives of COP 21 summit and is guided by the Dubai Clean Energy Strategy 2050, which seeks to make Dubai the world’s least carbon footprint city by 2050. The 25 year project will begin in 2021. The project is a private-public partnership between Dubai Municipality and Veolia. (AB 03.10)

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4.5 Egypt & World Bank Cooperate to Run Public Buses on Natural Gas

Egypt’s Ministry of Investment and International Cooperation announced on 3 October that four government ministers held a meeting with the World Bank Group Support for Pollution Management and discussed plans to reduce pollution from their respective ministries’ projects. During the meeting, the ministers focused on improving the public transportation system in Cairo, through cooperation with the World Bank, in order to finance the replacement and the renovation of public buses to be operated either by natural gas or electricity, aiming to reduce emissions and air pollution. Today, there are 3,500 buses in Cairo that are powered by gasoline or diesel, which emit more air pollution. These buses, as well as taxis, will be gradually changed to run on natural gas within five years. Also, there will be electric cars to avoid pollution. (EO&G 09.10)

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5: ARAB STATE DEVELOPMENTS

5.1 Lebanon’s PMI Sees Fastest Decline in Operating Conditions in September since June

September 2019 witnessed the fastest deterioration in the private sector’s business conditions in Lebanon. Economic growth in Lebanon was capped between 0% and 0.5% by Sept.2019, as indicated by the PMI level while inflation eased. The BLOM Purchasing Managers’ Index (PMI) shows private sector activity stalled at an average of 46.8 by Sept. 2019, capped below the 50-mark separating contraction from growth. Meanwhile, inflation eased to 2.77% by August 2019, down from last year’s 6.29% mainly owing it to a 10.7% annual downtick in oil prices to $64.8/barrel.

The first 9 months of 2019 carried political, economic and social headwinds. The formation of a government came by end Jan. 2019 after prolonged delays, in parallel to Moody’s downgrade of Lebanon’s rating to Caa1. Moreover, the budget for 2019 was not endorsed by parliament until the end of July, and by August 2019, Fitch Solutions had downgraded Lebanon’s rating to CCC from B- while Standard & Poor’s Global Ratings affirmed its long- and short-term foreign and local currency sovereign credit ratings for Beirut at B-/B, saying the country’s outlook remains negative. In fact, Lebanon’s sovereign ratings have been driven by macroeconomic fundamentals and political risks.

According to the latest data, the number of real estate transactions which may include one or more realties, dropped by a yearly 18.30% to stand at 31,131 transactions by August 2019. By the same token, the total number of construction permits also dropped by an annual 14.8% to 7,954 permits by Aug. 2019, which reflects the persisting slowdown in the sector. In turn, average interest rates on loans in LBP and in USD that reached highs of 11.13% and 9.9% by July 2019, compared to 9.97% and 8.57%, respectively, in December 2018 contributed to the crowding out of the private sector. Lebanon’s balance of payments (BOP) deficit reached an all-time high in July 2019, but slid by August 2019 on the back of BDL’s initiative. The cumulative BOP deficit recorded $5.3B in the first 7 months of the year, up from July 2018’s $757.2M. In fact, 2019’s BOP deficit is a result of the prolonged delay in forming a government and the endorsement of the austerity draft budget to unlock CEDRE funds, coupled with the negative publicity on Lebanon’s credit rating to-date which weighed down on the already frail foreign investors’ confidence.

However, the central bank (BDL) launched an initiative towards the end of July to attract deposits, by which it offered commercial banks attractive rates on their fresh dollar deposits. The initiative resulted in the first monthly surplus of 2019 that amounted to $72.5M in July, compared to a deficit of $548.9M registered in July 2018. Moreover, in August 2019, Lebanon’s BOP recorded a surplus of $921.5M compared to a deficit of $408.1M in August 2018. BDL’s net foreign assets (NFAs) declined on the back of settling Eurobonds maturing in April and May. The NFAs of Commercial banks and of BDL fell by $2.7B and $2.59B by July 2019, respectively, noting that BDL’s decline in NFAs was largely driven by the $500M and $650M payments of maturing Eurobonds on 23/04/2019 and 20/05/2019, respectively.

The willpower to reform was expressed by policy makers announcing that Lebanon was in a state of economic emergency, followed by meetings being held with officials in France and the US to unlock CEDRE funds, which can in turn, help break the vicious cycle of BOP deficit and attract capital inflows back into the economy.

The trade deficit grew and continued to fuel the BOP. As per the latest Customs statistics, the trade deficit widened from $10.14B by July 2018 to $10.24B by July 2019 on the back of a yearly 3.67% uptick in total imports to $12.34B, while total exports added an annual 19.2% to $2.1B over the same period, as per the Customs’ data. On the fiscal front, Lebanon’s public debt grew while the fiscal deficit narrowed. The cash-basis deficit totaled $2.42B in H1/19, down from H1/18’s $3B deficit. Correspondingly, the total primary balance registered a surplus of $308.9M by June 2019 compared to a $155.4M deficit in the same period last year. Nonetheless, gross public debt continued to grow, climbing by a yearly 3.4% to hit $85.7B by June 2019 and it further rose to $86B by July 2019. On the monetary policy front, BDL’s initiative further supported the currency peg replenishing its foreign assets. Despite the negative developments on the Balance of Payments front, BDL managed to replenish its foreign assets which stood at $37B (excluding gold) by June 2019, constituting a coverage of 22 months of imports of goods and around 75% of LBP deposits at commercial banks. Moreover, BDL’s foreign assets recorded a monthly 4.3% uptick (equivalent to $1.6B) to $38.7B by August 2019, with the $1.6B increase largely attributed to BDL’s re-incentivizing commercial banks to attract fresh dollars as deposits into the country. The central bank enabled banks to offer attractive yields close to 14% on their fresh USD deposits and it offered them 2% loans in LBP in return for their dollars, which will be placed at the central bank at a rate close to 10.5%.

Therefore commercial banks’ total assets added 3.89% year-to-date (YTD), to $259.18B by July 2019. This increase is due to a 13.52% YTD growth in Deposits with BDL to $147.8B, while total outstanding loans to the private sector retreated by 6.82% YTD to $54.89B by July 2019. In turn, total private sector deposits increased by 1.12% YTD to reach $172.35B by July 2019, such that the dollarization ratio of Private sector deposits grew from 70.62% in December 2018 to 71.73% in July 2019. Overall, Fitch’s August rating report said the downgrade reflects intensifying pressure on Lebanon’s financing model, increasing risks to the government’s debt-servicing capacity. Fitch highlighted that downward pressure on banking sector deposits and central bank foreign reserves and measures by the central bank to attract inflows illustrate increased stress on financing the economy. The government is largely relying on financing from the central bank. (BLOM 03.10)

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5.2 Number of Total Registered New Cars in Lebanon Drops by 14.61% in Third Quarter

The slump in the Lebanese car market persists in the first 9 months of 2019, as the number of new registered commercial and passenger cars retreated yearly by 24.61% from 27,801 by September 2018, to stand at 20,959 cars by September 2019 according to the data provided by the Association of Lebanese Car Importers (AIA). Specifically, the breakdown of the AIA’s statistics revealed that the number of newly registered passenger cars dropped by 23.83% year-on-year (y-o-y) to settle at 19,865 cars. In turn, the number of new registered commercial vehicles contracted by a yearly 26.40% to 1,094 cars. According to BlomInvest Bank, the top selling brands were Kia, Nissan, followed by Toyota, and Hyundai which held the respective shares of 15.2%, 11%, 10.88% and 10.4% of all newly registered passenger cars. (AIA 14.10)

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5.3 Germany Announces a Record €729.4 Million Donation in Support of Amman

Germany, the second-largest bilateral donor to Jordan, provided a record €729.4 million in support to the Hashemite Kingdom. Germany’s ambassador to Amman stated that the total includes €400 million for budget support, water and education. In addition, Germany will offer €100 million of humanitarian aid and further support in the military and security field.

Since 2012, the German government has supported the Government of Jordan in dealing with the enormous challenges related to the influx of Syrian refugees. It has considerably increased support to more than half a billion euros of annual funding. Most projects are being implemented by Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ), KfW Development Bank and the Federal Institute for Geosciences and Natural Resources (BGR) as well as international and local institutions. (JT 07.10)

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5.4 Jordan Advances in 2019 Competitiveness Report

Jordan was ranked 70th in the World Economic Forum’s 2019 Global Competitiveness Report, rising three spots, compared to 2018, and scoring 1.6 points. The report classifies 141 countries by a set of indicators related to macroeconomic activities. On the institutional level, the report stated that the Jordanian economy improved by 4 points, citing progress on many sub-indicators, namely the budget transparency index, which picked up by 53 ranks, making the Kingdom 24 on the list this year. In the health sector, Jordan’s position improved by 33 points due to improvement on the life expectancy sub-index. Goods markets’ efficiency rose by 27 points due to the positive change in the index of non-tariff standards, where Jordan ranked 59 on the list in 2019, compared to 102 last year. (Petra 13.10)

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5.5 Jordan’s Income from Tourism Reaches $4.4 Billion in First 9 Months of 2019

Jordan’s tourism revenues rose by 9% over the first nine months (January-September) of 2019 to total of $4.4 billion, according to official figures. The Central Bank of Jordan said that the rise in the Kingdom’s revenue was driven by a 7% increase in the total number of tourists compared with the same period in 2018 to reach 4.1 million tourists. On the monthly level, preliminary data released by the Bank showed that the Kingdom’s tourism income for the month of September rose to $486.9 million up by 7.7% compared with the corresponding month of 2018. (Petra 14.10)

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►►Arabian Gulf

5.6 Colliers International Says Saudi Arabia’s GDP is 40% Reliant on Oil Exports

Saudi Arabia’s GDP is currently 40% reliant on oil exports and the global shift toward renewable energy has prompted the need to transform its economy, according to Colliers International. Colliers noted that the cornerstone of the Saudi’s Vision 2030 project is to reduce the country’s reliance on oil to 11% by 2030 and to reduce the state’s role from 11%to 5% in the same time frame. Key sectors that will enable this transformation include the mining of minerals, manufacturing, retail/wholesale trade, healthcare and construction. The Saudi Kingdom recognizes that a large part of the $4 trillion required for this transformation must be through foreign direct investments and is, therefore, preparing to relax foreign participation regulations accordingly.

Colliers added that in the next 10 years, the population of Saudi will grow by 5m to almost 40m, of which almost 70% will be under the age of 44. It asserted that this demographic change will likely impact lifestyles, preferences and spending habits. This transformation is shifting the Kingdom’s industrial mix away from oil dependency, while the cultural shifts are paving the way for entertainment and leisure activities to serve an evolving population. These changes have affected various real estate sectors across the entire value chain, from project conceptualization, construction, to operation and branding. In terms of the entertainment market, Colliers showed that the estimated size of relevant entertainment market in the Kingdom by 2030 is SAR 61.4b.

Regarding the e-Commerce, Colliers mentioned that according to the Euromonitor, approximately 33% of the Kingdom’s population made online purchases in 2014. This number increased to approximately 46.5% in 2018, with the trend to be maintained. Meanwhile, it attributed this increase to the tech-savvy nature of the younger generation. It also highlighted that the growth of regional websites such as Noon.com and Amazon’s Souq.com is catalyzing the already increasing online purchases. Euromonitor has forecasted a compound annual growth rate (CAGR) of 19.2% in internet retail sales between 2018 and 2023, while total retail sales are expected to grow at a CAGR of 5.2% over the same period. (DNE 07.10)

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5.7 Egypt’s Growth Rate to Achieve 5.5% in FY 2019/20 Due to Strong Fiscal Reforms

Egypt’s strong reforms on the fiscal and energy fronts can help its growth rate reach 5.5% in FY 2019/20, according to the World Bank (WB) annual report. The bank’s projection for Egypt came in Sync with the Egyptian government’s own announced target of 5.6% growth for this year.

The WB explained that it disbursed $62.3 billion in 2018 in loans, grants, equity investments, and guarantees to partner countries and private businesses in developing countries. Sub-Saharan Africa took the lion’s share of these expenditures with $18.4 billion, while the Middle East came in second with $8.2 billion. For the Middle East and North Africa, the report mentioned that growth in the region is anticipated to be a modest 1.5% in 2019, down from 1.6% in 2018, largely due to weaker global growth and global financial market volatility. (WB 14.10)

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5.8 Egypt’s Trade Balance Deficit Declines by 18.9% in July

Egypt’s trade balance deficit reached $4.21 billion last July, compared to $5.18 billion in the same month last year, a decrease of 18.9%, according to the Central Agency for Public Mobilisation (CAPMAS). CAPMAS added in its monthly bulletin of “Foreign Trade Data,” that the exports value decreased by 5.7%, dropping to $2.22 billion in July 2019, down from $2.35 billion during the same month of the previous year.

The CAPMAS attributed this decrease to the drop in value of some commodities, including crude oil by 9.3%, petroleum products by 32.6 %, fertilizers by 15.5 %, and furniture by22.6%. On the other hand, the export value of some commodities increased in July 2019, versus the same month of the previous year, including ready-made clothes by 9.7%, plastics in primary forms by 21.4%, pastries and various food preparation by 8.1%, in addition to fresh fruits by 31.5%. CAPMAS also showed that import value recorded $6.42 billion in July 2019, down from $7.53 billion in July 2018, a decrease of 14.8%.

The CAPMAS attributed the decrease in the value of imports to the decreased value of some commodities such as petroleum products by 24.6 %, raw materials of iron or steel by 37.2 %, plastics in primary forms by 6.2 %, and cars by 10.0 %. It also revealed that the imports of some commodities increased in July 2019, versus the same month the previous year such as meat by 153.5%, corn by 10.8%, soybeans by 19.9%, and individual telephone sets by 23.6%. (CAPMAS 14.10)

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5.9 Morocco’s Current Budget Deficit is MAD 21.8 Billion

Morocco’s Ministry of Economy and Finance has released its half-yearly report on the execution of the 2019 Financial Law. According to the report, Morocco has a deficit of MAD 21.8 billion as of June 2019. When taking into account the 2019 Finance Act, however, Morocco achieved a surplus of MAD 13.3 billion during the same period.

Morocco’s 2019 Finance Act was approved in the winter of 2018. The project is based on a national growth rate of 3.2%, a contained inflation rate of less than 2%, and a constant budget deficit of 3.3%. The plan gives priority to bolstering social policies that focus on education, employment, and health. The other goals of the project are to stimulate private investment, pursue institutional and structural reforms, and preserve macroeconomic balances. Since its implementation, the project has raised taxes on cigarettes, decreased some notary fees, raised vehicle circulation fees, and increased the subsidy fund.

Total state resources reached MAD 236.4 billion during the first half of 2019. This figure is comprised of ordinary revenue (52.7%), medium and long-term debt receipts (26.8%), Special Accounts of the Treasury receipts (20%), and the revenues of the state services managed autonomously (0.5%). Total state expenses for the first half of 2019 amounted to MAD 223.1 billion. This figure is comprised of ordinary state expenses (54.7%), capital expenditure (14.5%), Special Accounts of the Treasury emissions (17.9%), and debt amortization (12.6%). Total state resources outweighed total state expenses in Morocco for the first six months of the year. Based on these figures, the 2019 Finance Act has generated a surplus of resources over expenses. The surplus amounts to MAD 13.3 billion. (MWN 07.10)

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey’s Consumer Inflation Falls to Single Digits in September

Turkish inflation fell sharply to 9.26% in September after slowing to 15% in August, the Turkish Statistical Institute said on 1 October, leading to predictions that the central bank could reduce interest rates. This decline could be attributed to factors including fiscal and monetary actions coordinated by the central bank and government, containing food price inflation and voluntary price-cutting by the private sector.

A new economic program unveiled by the minister on 30 September revised the estimate for 2019 inflation down to 12%, from 15.9%. Consumer price inflation fell from a high of 25.2% a year ago, to 15% in August. Meanwhile, the producer price index slowed to 2.45% in September from 13.45% in August. PPI reached a peak in September last year of 46.15%.

Following a currency crises in August 2018, triggered by a diplomatic row with the United States, the Turkish government has tried to curb rising prices to help reinvigorate consumer spending and encourage banks to reduce interest rates on loans. (TUIK 03.10)

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6.2 Turkey Misses 2019 Budget Deficit Goal as Spending Surges

Turkey’s budget deficit almost tripled in September from a year ago, meaning the shortfall for the first nine months of 2019 exceeded the government’s year-end target. The deficit for September widened to TL 17.7 billion ($3 billion), the largest gap since April, from TL 5.96 billion in the same month of 2018, the Treasury and Finance Ministry announced. In the first nine months of the year, the budget deficit totaled TL 85.8 billion compared with the government’s target for 2019 of TL 80.6 billion. The deficit was TL 56.7 billion in January to September last year.

Turkey’s budget balance deteriorated markedly after the government increased spending to reverse an economic slump. Revenues have failed to keep pace after the government cut taxes and companies made fewer profits. Spending increased by an annual 21% to TL 80.8 billion in September alone, the data showed. Revenue rose by 3.3% to TL 63.1 billion, failing to keep pace with annual inflation for September of 9.3%. The budget deficit has also widened this year despite the government bolstering revenue by drawing on tens of billions of liras in central bank profits and emergency reserves. (Ahval 15.10)

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6.3 Turkish Retail Sales Fall for 12th Straight Month in August

Retail sales volume at constant prices declined by an annual 4.3% compared with August 2018, when a currency crisis ripped through the economy. Sales of non-food items, excluding fuel, dropped by 5.8%. Sales of food, drink and tobacco decreased by 5%, the Turkish Statistical Institute announced on 15 October. Electronic goods and furniture sales slid by an annual 21%. Sales of automotive fuel rose by 0.4%, the institute said. Retail sales volume climbed by 0.3% compared with July, according to the data.

Turkey’s government is seeking to stimulate the economy with cheap loans from state-run banks, tax breaks and plans to help troubled companies restructure their debts. But economic data suggests that the downturn, caused by the weaker lira and low consumer confidence, is persisting. (Ahval 15.10)

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6.4 Turkey’s Unemployment Rate Stands at 13.9% in July

Turkey’s unemployment rate stood at 13.9% this past July, the Turkish Statistical Institute (TUIK) announced on 15 October. The unemployment rate rising 3.1% over July 2018. The number of unemployed people aged 15 and above rose 1.06 million to 4.59 million as of July compared to July 2018.

The non-agricultural unemployment rate also rose 3.6%age points to 16.5%, year-on-year in July.

While youth unemployment, including those aged 15-24 was 27.1% with a 7.2% rise, the unemployment rate for those aged 15-64 was 14.2% with 3.2% rise. In June, the country’s unemployment rate was 13%, with 4.25 million unemployed people aged 15 and above. (TUIK 15.10)

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6.5 Greece Slips Further in Terms of Global Competitiveness

While the improvement of macroeconomic indicators and the gradual restoration of financial stability are necessary for increasing Greek economy’s competitiveness, by themselves they are not enough, and high private debt and continuing distortions in the labor market and commodity markets are weighing heavily on Greek competitiveness, according to this year’s competitiveness report by the World Economic Forum.

Although Greece emerged from the bailouts in August 2018 and its economy has started growing again, its global index position has slipped two places to 59th out of 140 countries. Greece’s worst performance is in terms of its credit system (115th, from last year’s 114th), due to the high rate of bad loans and low financing of small and medium-sized enterprises. The other major problem is Greece’s labor market, where it ranks 111th, from 107th last year. Among the partial indexes where Greece has constantly had a low ranking in recent years is in employers’ social security contributions, which come to 28.3% of employers’ earnings (up from 28% last year). The main field of improvement for Greece has been macroeconomic stability, where it climbed from 83rd to 64th spot. (eKathimerini 09.10)

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6.6 Shorter Stays by Tourists Visiting to Greece But Their Spending Increases

Visitors are spending less time but more money in Greece, according to new data from the Institute of the Greek Tourism Confederation (INSETE) concerning the 2016-18 period, which also suggested that the sector is heavily dependent on five markets. Foreign visitors’ average stays shrank by 1.8% over those three years to seven-and-a-half days per trip, but expenditure per visitor rose 1.1% to €519.6 by 2018, and average daily spending grew 3% to €69. In the same three-year period, incoming tourism registered a 21% jump in arrivals, while overnight stays increased 19% and revenues leapt 23%, according to data from the Bank of Greece and other sources processed by INSETE.

However, Greece is particularly dependent on the German, British, French, US and Italian markets, which in the last three years accounted for 40% of revenues and 50% of arrivals. Although Germany and Britain are far ahead of the other three, the momentum seen in all five markets highlights the significance of visitors’ origins to tourism in Greece. (eKathimerini 09.10)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Shemini Atzeret/ Simchat Torah Celebrated

On 20/21 October, or 22 Tishri, the day after the seventh day of Sukkot, the holiday of Shemini Atzeret is observed in Israel and by world Jewry. In Israel, Shemini Atzeret is also the holiday of Simchat Torah. Outside of Israel, where extra days of holidays are held, only the second day of Shemini Atzeret is Simchat Torah. These two holidays are commonly thought of as part of Sukkot, but that is technically incorrect; Shemini Atzeret is a holiday in its own right and does not involve some of the special observances of Sukkot. Shemini Atzeret literally means “the assembly of the eighth (day).” Rabbinic literature explains the holiday this way: our Creator is like a host, who invites us as visitors for a limited time, but when the time comes for us to leave, He has enjoyed himself so much that He asks us to stay another day. Another related explanation: Sukkot is a holiday intended for all of mankind, but when Sukkot is over, the Creator invites the Jewish people to stay for an extra day, for a more intimate celebration.

Simchat Torah means “Rejoicing in the Torah.” This holiday marks the completion of the annual cycle of weekly Torah readings. Each week in synagogue a few chapters from the Torah are read publicly, starting with Genesis, Chapter 1 and working around to Deuteronomy, Chapter 34. On Simchat Torah, the last Torah portion is read, then proceeds immediately to the first chapter of Genesis, emphasizing that the Torah is a circle and never ends.

The completion of the readings is a time of great celebration. There are processions around the synagogue carrying Torah scrolls and of high-spirited singing and dancing. As many people as possible are given the honor of an aliyah (reciting a blessing over the Torah reading); in fact, even children are called for an aliyah blessing on Simchat Torah. In addition, as many people as possible are given the honor of carrying a Torah scroll in these processions. Shemini Atzeret and Simchat Torah are holidays on which work is not permitted.

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*REGIONAL:

7.2 Academic Studies in Israel See More Computer Science and Less Law or Humanities

According to recently released data by the Israel’s Council for Higher Education, the supervisory body for universities and colleges, between 2013 and 2018 the number of students who enrolled for computer science and math degrees has risen by approximately 53%, rising from 10,924 to 16,780.

In Israel, tech workers accounted for 8.7% of the national workforce in 2018, up from 8.3% in 2017, according to a report published in August by the government’s tech investment arm, the Israel Innovation Authority. The IIA recorded some 300,000 filled full-time tech positions in the country in 2018. By mid-2019, this number increased to 307,000. The number of students who enrolled in engineering degrees in Israel has increased by approximately 10% between 2013 and 2018, from 31,867 to 35,041.

Many multinational companies keep Israeli offices; companies including Intel, Nvidia, Amazon and Samsung have stepped up their recruitment efforts in Israel in the past year sending wages up to around 2.5 times the average local wage.

Enrollment in the humanities, on the other hand, has decreased substantially. According to the council’s data, in 2013, 40,925 students were enrolled in humanities undergraduate programs, while in 2018, only 34,324 students were studying fields such as literature, philosophy and history. Likewise, 16,189 students were enrolled in law programs in Israel in 2013, compared to just 12,223 in 2018.

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7.3 Academic Wins Tunisia Presidential Poll by a Landslide

On 13 October, conservative academic Kais Saied won a landslide victory in Tunisia’s presidential runoff, sweeping aside his rival, media magnate Nabil Karoui. The results said Saied won almost 77% of the vote, compared to 23% for Karoui. News of the victory triggered celebrations at the retired law professor’s election campaign offices in central Tunis, as fireworks were set off outside and supporters honked car horns. The political newcomers — one dubbed Tunisia’s “Berlusconi” the other nicknamed “Robocop” — swept aside the old guard in the first round, highlighting voter anger over a stagnant economy, joblessness and poor public services in the cradle of the Arab Spring.

The poll, Tunisia’s second free presidential elections since the 2011 revolt, follows the death of President Beji Caid Essebsi in July. Saied campaigned upon the values of the 2011 revolution, based on opposition to westernized and corrupt elites, and in favor of radical decentralization. (AFP 13.10)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Gordian Surgical’s Closure System Used in Panama by PanaFarma

Gordian Surgical announced that its exclusive distributor in Panama – PanaFarma – has won the tender to supply Panama’s social security hospitals with the TroClose1200 access-closure system for a two-year period. As a commercial-stage medical device company with growing international sales of its innovative TroClose 1200 access-closure system for laparoscopic surgery, this translates to the sale of a few thousand products to Panama.

Misgav’s Gordian Surgical a commercial-stage medical device company with growing international sales for its TroClose 1200, a port access-closure system that offers surgeons a simple, secure, and safe solution to open and close the abdominal wall during laparoscopic (minimally invasive) procedures. Gordian has FDA clearance and CE mark for its TroClose1200. Gordian Surgical was established in 2012 at Trendlines Incubators Israel in the framework of the Incubator Incentive Program of the Israel Innovation Authority. (Gordian Surgical 02.10)

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8.2 Biomica Advances to Pre-Clinical Studies in Inflammatory Bowel Disease Program

Biomica, a subsidiary of Evogene, announced the initiation of pre-clinical studies for BMC321 & BMC322, two rationally-designed microbial consortia aimed to reduce inflammation for the treatment of Inflammatory Bowel Disease (IBD). Biomica’s program aims to develop a novel microbiome-based drug for IBD that triggers multiple mechanisms for the reduction of intestinal inflammation. This is the second program Biomica has advanced to pre-clinical studies, following the initiation of preclinical studies in its oncology program. IBD including ulcerative colitis and Crohn’s disease are chronic, debilitating, non-infectious, inflammatory diseases of the digestive tract. The incidence of IBD is increasing and the overall response to current available treatments is limited to 40-60%.

Biomica’s IBD discovery campaign involved implementing a large comparative analysis of hundreds of stool samples obtained from IBD patients. This analysis resulted in the detection of an array of microbial functions associated with states of inflammation and remission as well as in the identification of specific bacterial strains carrying these functions. These strains and functions have been combined to design Biomica’s consortia BMC321 & BMC322. The tolerability and efficacy of BMC321 & BMC322 are currently being evaluated in pre-clinical studies using multiple IBD animal models.

l Rehovot’s Biomica is an emerging biopharmaceutical company developing innovative microbiome-based therapeutics utilizing a dedicated Computational Predictive Biology platform (CPB). Biomica aims to identify and characterize disease-related microbiome entities, and to develop novel therapeutics based on these understandings. The company is focused on the development of therapies for antibiotic resistant bacteria, immuno-oncology, and microbiome-related gastrointestinal (GI) disorders. (Biomica 02.10)

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8.3 AngioDynamics Acquires Eximo Medical and its 355nm Laser Atherectomy Technology

Latham, NY’s AngioDynamics, a leading provider of innovative, minimally invasive medical devices for vascular access, peripheral vascular disease and oncology, has acquired Eximo Medical, an early commercial stage, medical device company, and its proprietary 355nm wavelength laser-technology platform for $46 million in up-front consideration with up to $20 million of contingent consideration related to certain technical and revenue milestones. The transaction is being funded exclusively through the use of cash on hand.

This transaction expands AngioDynamics’ existing Vascular Interventions and Therapies (VIT) product portfolio by adding Eximo’s proprietary laser technology, which has received 510(k) clearance for use in the treatment of Peripheral Artery Disease (PAD). The Eximo technology complements AngioDynamics’ leading thrombus management and venous insufficiency technologies.

Differentiated from other legacy medical devices, Eximo’s laser technology is the only system capable of delivering short, high-powered pulsed-laser energy in 355nm wavelength without compromising the integrity of its fiber optic cables during atherectomy procedures. The technology addresses the risk of perforation through tissue selectivity, addresses the risk of embolization to the patient through the availability of aspiration and is indicated to provide treatment for In-Stent Restenosis (ISR), which is the gradual re-narrowing of the artery after a blockage has been previously treated with a stent.

Rehovot’s Eximo is an early stage Israeli company with a novel hybrid technology for superior tissue resection invascular and gastrointestinal endoluminal applications. B-Laser, Eximo’s proprietary single-use catheter, combines the best of the leading technology solutions: optical fibers that deliver short laser pulse, aspiration and other innovative solutions. (AngioDynamics 03.10)

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8.4 BiondVax Receives €4 Million from the European Investment Bank for Influenza Vaccine Trial

BiondVax Pharmaceuticals received €4 million from the European Investment Bank (EIB). These funds are the final tranche of the previously announced co-financing agreement signed in June 2017 and extended in April 2019 from €20 million to €24 million. The €24 million financing has been provided by the EIB in support of construction of BiondVax’s pilot manufacturing facility in Israel and the ongoing pivotal, clinical efficacy, Phase 3 trial of BiondVax’s M-001 Universal Flu Vaccine candidate in Europe. Together with the $20 million raised in the July 2019 rights offering to shareholders, BiondVax expects its existing cash resources will enable funding of operational and capital expenditure requirements to the end of the Phase 3 trial.

The pivotal, clinical efficacy, Phase 3 trial aims to assess safety and effectiveness of the M-001 vaccine alone in reducing flu illness and severity in approximately 12,000 adults aged 50 years and older, with at least half aged 65 and older. An aggregate of 4,094 people was enrolled in the trial’s first cohort prior to the 2018/19 flu season, and approximately 8,000 participants are being enrolled in the trial’s second cohort (2019/20 flu season) in 85 sites in seven countries in Eastern Europe.

Jerusalem’s BiondVax is a Phase 3 clinical stage biopharmaceutical company developing a universal flu vaccine. The vaccine candidate, called M-001, is designed to provide multi-strain and multi-season protection against current and future, seasonal and pandemic influenza. BiondVax’s proprietary technology utilizes a unique combination of conserved and common influenza virus peptides intended to stimulate both arms of the immune system for a cross-protecting and long-lasting effect. (BiondVax 07.10)

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8.5 Accelmed Launches Accelmed Ventures II, a New $100 Million Venture HealthTech Fund

ccelmed is establishing Accelmed Ventures II, a new venture capital fund with the goal of raising and managing approximately $100 million. The fund will invest in Israeli and global pre-revenue health tech startups, including medical devices and digital health. This is the fourth fund established by the Accelmed group, which currently manages over $300 million through Accelmed Ventures and the private equity fund, Accelmed Partners.

The new fund is being launched in parallel to the fruition of portfolio companies in Accelmed Ventures I, the Group’s current venture capital fund, which was established in 2011 together with Migdal Group. Accelmed accomplished several exits to date, the most recent being that of Eximo Medical, its portfolio company based in Rehovot, Israel, which was purchased by AngioDynamics for $66 million. Eximo was established by Accelmed in 2012, under the Targeted Innovation model framework. The FDA-cleared B-Laser system developed by Eximo performs laser catheterization for the treatment of blood vessel occlusions with initial revenues in Europe and the US.

Another portfolio company, Endospan, from Herzliya, Israel, that develops and markets Nexus, a graft-based stent system for the treatment of arterial aneurysms using catheterization as an alternative for surgery, has recently signed an acquisition option agreement with US based CryoLife for up to $450 million, pursuant to receiving FDA approval in the US. Under the agreement, CryoLife purchased marketing rights of the system in Europe, where it already received CE clearance.

Herzliya’s Accelmed is a US/Israel-based group of funds managing over $300 million for investment in health tech companies in the fields of medical device and digital health. Accelmed Ventures, the VC arm of Accelmed, is focused on building and growing companies that are developing innovative health tech technologies for unmet medical needs in areas such as diabetes, heart diseases, oncology and obesity. (Accelmed 07.10)

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8.6 Aleph Farms Successfully Completed the First Slaughter-free Meat Experiment in Space

Aleph Farms has successfully taken “one small step for man and one giant leap for mankind” in producing meat on the International Space Station, 339 km. away from any natural resources. Through an international collaboration set to reach new heights with 3D Bioprinting Solutions (Russia), which develops implementations of 3D bioprinting technologies, Meal Source Technologies (USA) and Finless Foods (USA) – Aleph Farms is making a significant progress toward fulfilling its promise: to enable on Earth unconditional access to safe and nutritious meat anytime, anywhere, while using minimal resources.

Aleph Farms’ production method of cultivated beef steaks relies on mimicking a natural process of muscle-tissue regeneration occurring inside the cow’s body, but under controlled conditions. Within the framework of this experiment on 26 September on the Russian segment of the ISS, a successful proof of concept has been established in assembling a small-scale muscle tissue in a 3D bioprinter developed by 3D Bioprinting Solutions, under micro-gravity conditions. This cutting-edge research in some of the most extreme environments imaginable, serves as an essential growth indicator of sustainable food production methods that don’t exacerbate land waste, water waste, and pollution. These methods aimed at feeding the rapidly growing population, predicted to reach 10 billion individuals by 2050.

Rehovot’s Aleph Farms is a food company and global leader in the cultivated meat industry. Comprised by a passionate and devoted team of professionals, the company is making tangible impact in solving humanity’s greatest challenges today, including climate change and food shortages. At Aleph Farms, high-quality food products are produced with full transparency throughout every step of the process. (Aleph Farms 07.10)

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8.7 DayTwo Receives Strategic Investment by Longliv Ventures, Cathay Innovation and Samsung

DayTwo announced the addition of Longliv Ventures, a member of CK Hutchison Holdings Group, the global VC partnership Cathay Innovation and Samsung NEXT as strategic investors and partners. Longliv Ventures, Cathay Innovation and Samsung NEXT will participate in the company’s Series B financing, announced in June of this year. Longliv Ventures will invest $5 million in this round.

DayTwo is the only evidence-based, actionable, microbiome platform in the market today. They are in a privileged position to leverage their first-rate scientific experience, clinical trials in Israel and the United States as well as tens of thousands of customers, and proven business models with providers, employers, and payers. This deep and broad foundation, coupled with the recent financing round, enables DayTwo to address the large and pressing clinical need of diabetes management and to bring food-as-medicine to global markets for people with type 2 and prediabetes. The partnerships with Longliv ventures and Samsung NEXT catalyze DayTwo’s go-to-market initiatives in Europe and Asia.

DayTwo’s food-as-medicine approach is based on the original research conducted at The Weizmann Institute of Science, published in the journal Cell in 2015. The Cell paper demonstrates how the gut microbiome, in conjunction with other clinical and personal parameters, can enable personalized dietary interventions that can successfully balance post-meal glucose response.

Founded in 2015, DayTwo has offices in Tel Aviv and San Francisco, with 85 employees. The company completed the first half of 2019 with tens of thousands of consumers, hundreds of providers in the DayTwo network of clinical professionals, as well as employers and plans that became members of its network. DayTwo also launched a strategic partnership with the world’s second largest HMO, Clalit Health Services, which now offers the DayTwo glycemic control solution to its 4.5 million members. (DayTwo 03.10)

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8.8 Israeli Researchers Discover New Way to Stop Spread of Bone Cancer

Researchers at Rehovot’s Weizmann Institute of Science have discovered a new method to keep bone cancer from spreading which has shown promising results in a study on mice. The researchers have discovered molecular interactions between Ewing sarcomas and proposed a treatment that prevents its spreading. Ewing sarcoma is a bone cancer that appears primarily in teenagers. The new possible treatment could prove crucial, as it is hard to treat once it spreads to distant organs.

Their study showed a link between the Ewing sarcoma oncogene and glucocorticoid receptors. They tested the hypothesis that these receptors boost the growth of Ewing sarcoma. A series of studies supplied evidence that this is indeed the case. The primary medical significance of these findings is that they open the door for a new treatment for Ewing sarcoma. When the researchers implanted human Ewing sarcoma cells into mice, the tumors grew slower when the mice were treated with an approved drug that blocks the synthesis of glucocorticoids. If research in human patients confirms the study’s findings, it may offer new hope to young patients with this malignancy, especially in cases when the sarcoma has metastasized beyond the bone.

The fact that the study made use of drugs that have already been approved for other purposes should facilitate the implementation of this approach. The team’s findings were published recently in the Cell Reports scientific journal. (WIN 02.10)

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8.9 Medtronic to Buy Israeli Catheter Developer AV Medical for $30 Million

Calcalist reported that Dublin headquartered medical device maker Medtronic has agreed to buy Tel Aviv-based medical device developer AV Medical Technologies for $30 million. Founded in 2012, AV Medical develops catheters for dialysis patients undergoing routine angioplasty procedures. The company has previously signed a distribution agreement with Medtronic for its Chameleon balloon catheter, cleared by the U.S. FDA in 2015. The acquisition negotiations launched once AV Medical had demonstrated commercial potential and went on for months. AV Medical will continue to operate in Israel and its ten employees will become part of Medtronic’s local team.

In July, Calcalist reported that Medtronic had signed a partnership agreement with Israeli stroke detection startup Viz.ai. In September 2018, Medtronic acquired Israel-based surgical robotics company Mazor Robotics for $1.34 billion in cash. Earlier that year, it acquired medical visualization company Visionsense for $65 million. (Calcalist 15.10)

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8.10 Therapix Biosciences Announces Positive Data from New Drug Candidate THX-210

Therapix Biosciences announced positive results in its pre-clinical study evaluating THX-210, a proprietary novel pharmaceutical preparation containing non-psychoactive cannabinoid cannabidiol (CBD) and palmitoylethanolamide (PEA). This study is consistent with Therapix’s pipeline to develop cannabinoid based therapies. THX-210 is intended for the treatment of epilepsy, as well as inflammatory conditions.

The study consisted of in vitro tests which examined potential synergy between CBD and PEA. The study was performed in hepatocytes model of fat accumulation, where each compound was tested in a range of concentrations. In these tests, PEA had shown no effect of its own, while the effect of CBD was enhanced by the addition of PEA, lowering the required effective concentration of CBD. Thus, THX-210 has demonstrated superior efficacy as compared to the effect of CBD alone.

Givatayim’s Therapix Biosciences is a specialty clinical-stage pharmaceutical company led by an experienced team of senior executives and scientists. Their focus is creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. (Therapix 15.10)

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8.11 MaxQ AI’s Software to be Integrated into Philips’ Computed Tomography Systems

MaxQ AI announced that the company’s Accipio intracranial hemorrhage (ICH) and stroke software will be integrated on Philips’ computed tomography (CT) systems. The integration of Accipio’s AI-powered solutions into Philips CT systems will support the detection of ICH to augment caregivers in identifying and prioritizing patients suffering from stroke, traumatic brain injury, head trauma, and other life-threatening conditions.

MaxQ AI’s ACCIPIO® ICH and Stroke Platform utilizes deep learning technologies to analyze medical imaging data such as non-contrast head CT images. The results provide deep clinical insight and actionable data in minutes that will enable physicians across the world to make faster assessments in any location, at any time. Accipio Ix enables automatic identification and prioritization of non-contrast head CT images with suspected ICH. Accipio Ax provides automatic slice-level annotation of suspected ICH. Both Accipio Ix and Ax are FDA Cleared and CE Approved. The Accipio platform will be available with new Philips CT systems and as an upgrade to previously installed Philips CT systems throughout U.S. and E.U. markets. The first deployments are expected to take place in 2020.

Tel Aviv’s MaxQ AI is at the forefront of Medical Diagnostic AI. They are transforming healthcare by empowering physicians to provide “smarter care” with artificial intelligence (AI) clinical insights. Their team develops innovative software that uses AI to interpret medical images and surrounding patient data. (MaxQ AI 15.10)

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8.12 ICL to Expand its Presence in the Plant-based Meat-alternatives Market

ICL is planning to expand its manufacturing capacity and R&D support capabilities for its ROVITARIS® alternative protein technology for the meat alternatives market. ROVITARIS® is a proprietary technology developed by ICL, which supports the production of allergen free plant-based food. The product has excellent formability and can be adapted to virtually any meat, poultry or seafood substitute application to significantly improve taste and texture. ROVITARIS® has excellent freeze & thaw stability, which results in reduced costs for food manufacturers. One of the key advantages of ROVITARIS® technology is its flexible use in conjunction with a broad variety of vegetable protein sources. ICL continues to develop new protein sources and to differentiate its offerings for its customers. Upcoming launches and line expansions include textured vegetable crumbles, which will augment ICL’s existing offerings of pulse-based (pea and fava) proteins.

Using ROVITARIS® technology, food manufacturers can create plant-based meat alternatives that are virtually indistinguishable from their traditional meat counterparts. The flexibility of the technology enables the creation of customized applications and flavor profiles. ROVITARIS® provides solutions for burgers, hot dogs, deli meats, nuggets and fish sticks, providing on-trend innovation in the form of alternative protein solutions for vegan, vegetarian, and flexitarian consumers.

Tel Aviv’s ICL is a global specialty minerals and chemicals company operating bromine, potash, and phosphate mineral value chains in a unique, integrated business model. ICL extracts raw materials from well-positioned mineral assets and utilizes technology and industrial know-how to add value for customers in key agricultural and industrial markets worldwide. ICL focuses on strengthening leadership positions in all of its core value chains. It also plans to strengthen and diversify its offerings of innovative agro solutions by leveraging ICL’s existing capabilities and agronomic know-how, as well as the Israeli technological ecosystem. (ICL 15.10)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Sapiens and FRISS Partner for Honest Insurance

Sapiens International Corporation has expanded its growing ecosystem by partnering with the Netherlands’ FRISS, a market leader in AI-powered fraud and risk solutions for the property & casualty (P&C) insurance industry. This partnership is part of Sapiens’ strategy to help its customers better mitigate risk and reduce fraud, improve the customer journey for low risk policies and claims, and make innovative insurtech solutions easily available to its customers.

Powered by a unique combination of out-of-the-box risk and fraud indicators, and artificial intelligence, FRISS’ solutions analyze policy applications, renewals, quotations and claims for high risks, fraud and compliance, to drive profitable growth. FRISS will be seamlessly integrated into Sapiens P&C solutions to support the entire policy/claim lifecycle and empower staff to make the best decisions during quotation, claims handling and investigations. First focus will be to complete the seamless integration of the claims solution, followed by workers’ compensation and underwriting.

Holon’s Sapiens International Corporation empowers insurers to succeed in an evolving industry. The company offers digital software platforms, solutions and services for the property and casualty, life, pension and annuity, reinsurance, financial and compliance, workers’ compensation and financial markets. With more than 35 years of experience delivering to over 450 organizations globally, Sapiens has a proven ability to satisfy customers’ core, data and digital requirements. (Sapiens 02.10)

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9.2 Cymulate Empowers SMBs With Cost-effective Enterprise-grade Security Testing

Cymulate announced an affordable offering for small to medium-sized businesses to assess and optimize their overall security posture in minutes by continuously testing defenses with the latest threats’ in the wild. Cymulate’s new offering provides SMBs with regular, comprehensive security testing, bolstering their cyber defenses by gaining immediate security exposure score and mitigation tips within minutes with comprehensive technical and executive-level reports and prioritizing remediation using the exposure score to measure the potential impact of a simulated attack. It also maximizes limited security resources and tests resilience against the latest immediate threats including strains of ransomware, Trojans, crypto-miners, worms, APTs and phishing campaigns.

Cymulate is offering SMBs a one month free trial, followed by a three-tiered package, priced per number of employees. Visit Cymulate for more info.

Rishon LeZion’s Cymulate is a SaaS-based breach and attack simulation platform that makes it simple to know and optimize your security posture any time, all the time and empowers companies to safeguard their business-critical assets. With just a few clicks, Cymulate challenges your security controls by initiating thousands of attack simulations, showing you exactly where you’re exposed and how to fix it—making security continuous, fast and part of every-day activities. (Cymulate 02.10)

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9.3 Promo.com First Video Platform to Offer Direct Video Publishing to Instagram

Promo.com is now the first video platform to let users seamlessly publish videos directly to Instagram business profiles at a click of a button. With more than 1.2 million users, Promo.com launched the capability to help users leverage Instagram videos to grow their online reach and businesses. This new offering is now live for all Promo.com users and will allow them to leverage Promo.com’s role as a Facebook and Instagram Marketing Partner. The new Instagram integration helps Promo.com users publish their videos directly to Instagram and add to the existing publishing integrations that include Facebook, YouTube and Twitter.

Promo.com’s video platform is being used by businesses and agencies around the world to easily create marketing videos for every single digital channel. The easy-to-use platform constantly evolves to meet the ever-growing video needs in a rapidly changing video-focused world.

Promo.com is the #1 video creation platform for businesses and agencies. Promo.com helps businesses of all sizes to leverage great visual content to promote anything they want online in smart, effective ways. Promo.com offers access to over 15 million premium video clips and images, ready-made templates, pre-edited licensed music, and a user-friendly editor. Promo.com is an official Facebook & Instagram Marketing Partner, and a YouTube Creative Partner. Promo.com is a privately held company with offices in Tel Aviv, NYC, and Warsaw. (Promo.com 02.10)

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9.4 AudioCodes Introduces Room Experience Solutions in Collaboration with Dolby

AudioCodes is partnering with Dolby to introduce Room Experience solutions that enhance meetings with excellent audio quality, post meeting analytics, and action item follow up. AudioCodes’ expertise in unified communications solutions and extensive partnerships with leading vendors, along with a global community of business partners, deliver unmatched technology proficiency and a comprehensive portfolio of networking solutions, personal productivity devices, and management applications under the AudioCodes One Voice offering. Complete with global presence and broad set of complementary professional services, AudioCodes brings a compelling proposition to businesses of all sizes, from large enterprises to small companies.

Part of the AudioCodes Room Experience solutions is AudioCodes Meeting Insights, an enterprise solution that is designed to easily capture, organize and share corporate meeting content assets using AudioCodes state-of-the-art Voice.AI technology. Capturing information from multiple sources spanning both in-room and remote participants connected from multiple locations, Meeting Insights seamlessly delivers multi-modal and real-time access to key meeting moments, decisions taken and resulting action items. The result is a robust solution that holds crucial information that would otherwise be lost.

Lod’s AudioCodes is a leading vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services. AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world. (AudioCodes 07.10)

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9.5 Cymulate, Launches Industry’s First Agentless APT Simulation to Validate Security Posture

Cymulate revealed its Agentless APT (Advanced Persistent Threat) Simulation, which replicates the most authentic experience of how such an attack would penetrate an organization’s network and identifies gaps across the entire kill chain. Cymulate’s Agentless APT Simulation enables security teams to preview how hackers can reach their company’s crown jewels, helping red teams to test and validate, while assisting blue teams to proactively remediate gaps and optimize the attack surface, keeping APT risk to a minimum.

Rishon LeZion’s Cymulate is a SaaS-based breach and attack simulation platform that makes it simple to know and optimize your security posture any time, all the time and empowers companies to safeguard their business-critical assets. With just a few clicks, Cymulate challenges your security controls by initiating thousands of attack simulations, showing you exactly where you’re exposed and how to fix it—making security continuous, fast and part of every-day activities. (Cymulate 08.10)

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9.6 New TV White Space Solution From RADWIN Drives Broadband to Remote Communities

RADWIN announced its new disruptive TV White Space (TVWS) solution. RADWIN’s TVWS solution utilizes unused TV channels in the 470-698MHz band to connect unserved rural customers to the digital world. Leveraging upon RADWIN’s broadband wireless access innovative technologies, the new TVWS solution operates in non-line-of-sight scenarios and penetrates trees and foliage over extensive distances. The new TVWS solution complements RADWIN’s existing carrier-grade sub 6GHz portfolio and is supported by RADWIN’s OSS tools to address all operational aspects of the network lifecycle.

There are entire populations across the globe that live in remote areas who have no connection to the internet. Fixed wireless is one way to deliver broadband, however in many rural areas there are obstacles to direct line-of-sight connectivity. With this newly-launched TVWS solution, service providers can connect unserved remote communities to the information age, help bridge the digital gap and generate new revenue streams. Rural communities can significantly improve their lifestyle and boost productivity by accessing an unlimited array of online broadband services from healthcare, education, government services to entertainment.

Tel Aviv’s RADWIN is the global provider of broadband wireless solutions that deliver blazing fast broadband with unparalleled reliability. Incorporating cutting-edge technologies, RADWIN’s solutions are equipped with powerful OSS tools that support all operational aspects of the network lifecycle and enable operation in the toughest conditions including interference and nLOS. Deployed in over 170 countries, RADWIN’s solutions power applications including backhaul, access, private network connectivity and broadband on the move for rail and metro trains. (RADWIN 14.10)

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9.7 SAM & Heights Telecom Offers Enterprise-Grade Security for Home Routers

SAM Seamless Network announced a new container-enabled security layer to its platform in conjunction with Heights Telecom. This unique capability gives ISPs and service providers with total control and management of security, parental control and network management applications via their existing infrastructure. SAM and Heights Telecom have garnered participation from key industry players to deliver their container-enabled platform to ISPs. As a CPE vendor that utilizes Broadcom’s chipsets, Heights Telecom has already integrated with SAM’s platform in more than 350 thousand gateways.

Positioned within the container infrastructure, SAM’s platform seamlessly adds a security layer to any router’s existing architecture and is designed not to interfere with the router’s firmware. The security agent is embedded as part of the firmware with security hooks, enabling it to protect the router, its services and any future vulnerability found. The containerized layer includes a host of special features such as the ability to limit the CPU and RAM consumption of an app.

Tel Aviv’s SAM provides a software-based security solution that integrates seamlessly with any platform and protects local area networks by securing the gateway and all of its connected devices. Installed remotely on existing gateways, SAM doesn’t require any additional hardware or a technician to provide comprehensive network security. The solution is offered as a service, allowing users to have the enterprise-grade protection including virtually patching vulnerabilities such as KRACK and other high-level, targeted attacks. Tel Aviv’s Heights Telecom is a CPE and home networking products manufacturer, creating software for operators using a containerized SW platform allowing to easily add services with best performance, user experience and connectivity. (SAM Seamless Network 14.10)

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9.8 Credorax Ranked Among the 2018 Deloitte Technology Fast 500 EMEA

Credorax has been included in the 2018 Deloitte Technology Fast 500 ranking for EMEA. An industry benchmark, the ranking recognizes Credorax as one of the fastest-growing technology companies in the Europe, Middle East and Africa (EMEA) region in 2018. The Deloitte Technology Fast 500 Ranking is an objective industry ranking focused on the technology ecosystem. It recognizes technology companies that have achieved the fastest rates of revenue growth in the EMEA region over the past four years. Winners were selected based on percentage fiscal-year revenue growth from 2014 to 2017.

Overall, this year’s Technology Fast 500 list for the region features winners from 18 countries, with an average growth rate of 969% in 2018. Growth for individual companies on the list ranged from 131% to 19,900%. Credorax was listed among 23 companies selected as fast-growing in Israel.

Credorax is a smart payments provider and licensed bank providing cross-border processing for eCommerce and omni channel payments. Their core gateway technology, Source, has been developed in-house to provide a streamlined payments experience so smart and secure, that merchants can reach their full business potential simply by better managing their payments. Credorax merchants can accept 140 payment methods and get paid in their currency of choice. (Credorax 14.10)

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9.9 Ripples Leverages Big-Data to Increase Beverage Sales & Consumer Engagement

Ripples has introduced a new set of big-data analytics to its platform creating a new category for food and beverage marketers, called Beverage-Top Media. The new big-data analytics allow brands to gauge the social media impact of different content delivered on top of beverages, as well as provide businesses with content-based recommendations to increase sales at the point of consumption.

Customers including Chandon, Cupcake Vineyards and Coffee Cartel have already leveraged Ripples’ technology to engage with consumers, reporting significant social media results and business success.

The new Ripples customized performance reports include content analysis such as Industry, geography and seasonal-based content statistics with recommendations to help businesses maximize traffic and drive sales at the point of consumption, as well as Ripples Content recommendations to drive consumer engagement on social media. Bev-Top Media is powered by the Ripple Maker AM and Ripple Maker PM IoT devices. The Ripple Maker AM, designed for morning beverages, uses natural coffee extract to customize any foam-topped cup of coffee. The Ripple Maker PM help brands increase customer engagement via night-time beverages. Using natural malt and carrot-based extract, foam-topped beers and cocktails become canvases for brands and businesses to connect with consumers. The Ripple Maker also includes a constantly updated content library, and businesses can add their own exclusive original content.

Ripples is the world’s leading bev-top media company that offers the Hospitality and Food & Beverages industries creative solutions to increase consumer engagement, strengthen customer loyalty and build brand awareness. With the Ripples Ripple Maker, businesses serving foam-topped drinks can create personal interactions with their customers. Images can be customized and branded and can be updated daily to support ongoing promotional activities, leading to positive real-time interactions, location-based social media shares and long-term brand awareness. Ripples includes a constantly updated content library, and recently introduced new big data analytics tools which allow brands to measure the impact of bev-top on sales, as well as on customer engagement for social media. (Ripples 10.10)

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9.10 Mellanox Propels NVMe/TCP and RoCE Fabrics to New Heights

Mellanox Technologies announced acceleration of NVMe/TCP at speeds up to 200Gb/s. The entire portfolio of shipping ConnectX adapters supports NVMe-oF over both TCP and RoCE, and the newly-introduced ConnectX-6 Dx and BlueField-2 products also secure NVMe-oF connections over IPsec and TLS using hardware-accelerated encryption and decryption. These Mellanox solutions empower cloud, telco and enterprise data centers to deploy highly-efficient, NVMe flash storage platforms using both TCP/IP and RoCE.

Mellanox, the leader in high-performance networking, offers a complete portfolio comprising ConnectX SmartNICs and BlueField IPUs. The innovative portfolio delivers cutting-edge NVMe-oF capabilities over both TCP and RDMA transports, enabling superior performance, higher return on investment, and lower total cost-of-ownership than other network adapters. The now-shipping ConnectX-6 Dx and upcoming BlueField-2 IPU support hardware cryptographic acceleration of IPSec and TLS for both RoCE and TCP, making them the world’s fastest and most secure NVMe-oF SmartNICs.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand smart interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications, unlocking system performance and improving data security. (Mellanox 15.10)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israeli Startups Raised Over $1 Billion in September

Globes reported that Israeli startups raised over $1 billion in September, according to press releases issued by companies that have completed financing rounds. The figure may be more as some companies prefer to remain in stealth and not to publicize the investments they have received.

After raising $3.9 billion in the first half of the year, according to IVC, Israeli tech companies have now raised $5.9 billion since the start of 2019, including $650 million in July, a further $350 million in August and a whopping $1 billion in September. This figure is on course to beat last year’s record tech company fund raising, when according to IVC-ZAG, Israeli companies raised $6.4 billion, up from $5.24 billion in 2017.

September was a busy month for startup financing rounds ahead of the holidays with B2B credit company Fundbox leading the way by raising $326 million – $176 million in equity and $150 million in debt financing. Other major financing rounds include fintech company Tipalti, which raised $76 million – $60 million in equity and $16 million in debt financing. Open source security platform Snyk raised $70 million, digital health company Healthy.io raised $60 million and drug development company PolyPid raised $50 million. 3D printing company XJet raised $45 million, and drone defense company D-Fend raised $28 million. (Globes 02.10)

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10.2 Number of Empty Homes in Israel Increases by 24% Since 2012

The Central Bureau of Statistics announced that at the end of 2018, 170,300 housing units in Israel, or 6.5% of the total, were unoccupied. The number of empty housing units rose by 4% over the past year, continuing a trend that began several years ago. For example, the number of unoccupied housing units in 2012 was 137,200, so the number increased 24% between 2012 and 2018.

This was due to various reasons. Some of the housing units are in poor condition and are located in areas with little demand, so it is not worthwhile for their owners to renovate them. Others were in legal proceedings or disputes between heirs. In other cases, the properties belong to single people who have died, and the property rights have not yet been transferred. There are also luxury housing units owned by foreign residents who use them only on vacations and holidays.

Most of the empty housing units are located in the large cities, with 18,600 unoccupied housing units, 11% of the nationwide total, in Tel Aviv; 15,100, 9%, are in Jerusalem; and 12,400, 7%, are in Haifa, while Netanya is in fourth place. Other leading cities in unoccupied housing units are Holon (5,600), Beer Sheva (4,400), and Petah Tikva (4,100). (CBS 03.10)

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10.3 Record Number of Tourists Visit Israel in September

From January to September 2017, 3.297 million tourists visited Israel, a 13% increase over the 2.917 million who entered the country during the same time period the previous year. Total revenue from incoming tourism in September came to $581 million, and $4.728 billion from the beginning of the year. Some 356,500 tourists arrived in Israel by air in September, a 40% increase compared with the same month last year and a 41% increase over 2017. Some 48,400 arrived by land in September, a 78% increase over last year and an 84% increase over 2017. (Various 04.10)

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10.4 Record Number of Israelis Travel Abroad Over Jewish Fall Holiday Season

The Israeli Airports Authority estimates incoming and outgoing traffic at Ben Gurion Airport in Israel’s holiday season at 2.4 million passengers, including 1.1 million Israelis spending all or part of the holiday season overseas. This amounts to a quarter of the 4.6 million tourists who visited Israel during the entire past year. The ministry says that the contribution to the Israeli economy of the tourists who visited over the past year is $6.4 billion. The leading destination for those leaving for foreign vacations in September 2019 is Turkey, followed by Greece, Italy, the US and Russia. For many, Turkey is a place to catch a connection flight, but the number of vacationers remaining in Turkey in their vacations has recently grown. An estimated 100,000 tourists from North America will spend the holidays in Israel. (IAA 03.10)

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10.5 Bank of Israel Lowers its 2020 Growth Forecast

On 7 October, the Bank of Israel Research Department released its updated macroeconomic forecast. The Research Department projects that in 2019, GDP will grow by 3.1%, similar to the previous forecast, while the growth forecast for 2020 was reduced to 3%, compared with 3.5% in the previous forecast, due to the global economic slowdown’s expected effect on exports, and the assumption that the government will take steps to reduce the deficit. The Bank of Israel Research Department expects the inflation rate to rise gradually, reaching 1.2% in 2020. In view of the developments in inflation, the exchange rate and the global economy, the Research Department assesses that the interest rate will remain unchanged or will be reduced during 2020. (BoI 07.10)

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11: IN DEPTH

11.1 LEBANON: Moody’s Places Lebanon’s Caa1 Rating Under Review for Downgrade

On 1 October, Moody’s Investors Service (Moody’s) placed the Caa1 issuer rating of the Government of Lebanon under review for downgrade.

The decision to place the rating under review for downgrade reflects the recent significant tightening in external financing conditions and the reversal in the bank deposit inflows that are essential in enabling Lebanon to meet the government’s financing needs. Together, these have aggravated already worsening balance of payments dynamics. Anticipated external financial assistance has not yet been forthcoming and capital market access at sustainable rates remains elusive. The government’s greater reliance on the Banque du Liban’s (BdL) drawdown on foreign exchange reserves to meet upcoming foreign-currency bond maturities risks destabilizing the BdL’s ability to sustain the currency peg and ensure financial stability over the longer term under current balance of payment trends.

The review, which may extend beyond the usual 90 days, will allow the rating agency to take stock of the government’s progress in adopting the 2020 budget as planned before the end of the year, and the extent to which that unlocks confidence-enhancing external support packages via CEDRE (Conference Economique pour le développement, par les réformes et avec les entreprises) investments and/or secures financial support from traditional Gulf Cooperation Council (GCC) allies, which in turn would ease immediate liquidity risks and be conducive to a broader growth recovery over the longer term.

The review will assess whether Lebanon is likely to be able to obtain external financial assistance or renewed capital market access at sustainable rates, without which a significant share of usable liquid foreign exchange resources–adjusted for the banks’ negative net foreign asset position–will likely be consumed by debt service payments in 2019 and 2020, potentially destabilizing the currency peg and/or prompting a debt rescheduling or other credit negative liability management exercise, the increased risks of which may warrant repositioning the rating at a lower level.

Moody’s has also placed Lebanon’s (P)Caa1 senior unsecured Medium Term Note Program rating on review for downgrade and affirmed its (P)Not Prime other short-term rating.

RATINGS RATIONALE

Rationale for Initiating the Review for Downgrade::Significant Tightening In External Financing Conditions Aggravate Worsening Balance Of Payments Dynamics

Domestic and geopolitical risk manifestation in the form of sectarian tensions resulting in government deadlock, tightened United States (Aaa stable) sanctions against Hezbollah, and renewed regional tensions with neighboring Israel (A1 positive), have led to a significant tightening in external financing conditions. Sovereign risk premia in international capital markets have widened over the past few months, with EMBI spreads rising to 1,300 basis points over US Treasuries in mid-September, from about 820 basis points in early July.

Meanwhile, waning depositor confidence has led to a reversal in bank deposit inflows, which in the past have been resilient and which are essential in enabling Lebanon to meet its annual government financing needs at over 30% of GDP. Starting May 2019, year over year deposit growth has turned negative, further undermining a key funding source for the government. Depositor uncertainty has also been evident in an increasing deposit dollarization rate, to 71.8% as of July 2019, and in very high deposit interest rate differentials to international short-term LIBOR reference rates.

Since November 2018, the BdL has been drawing down its foreign exchange reserves in order to meet the government’s maturing foreign-currency liabilities. In the seven months up to July 2019, the country’s balance of payments position has continued to deteriorate, with net foreign assets of the financial sector declining by a further $5.3 billion, having already declined by $4.8 billion in 2018. According to Moody’s estimates, the BdL has a usable foreign exchange buffer of about $6-10 billion left to draw from (based on the net foreign assets accumulated in the past and when adjusting the stock of foreign exchange reserves for banks’ negative net foreign asset position) in order to maintain confidence in the peg and preserve financial sector stability. This compares with the government’s foreign currency debt service at about $5 billion in 2020, in addition to the upcoming $1.5 billion November 2019 maturity.

In the event of continuing impaired access to international capital markets, a further drawdown of the BdL’s foreign exchange reserve buffer to meet maturing foreign-currency debt obligations risks undermining the BdL’s ability to sustain the currency peg and ensure financial stability over the longer term. Standard reserve adequacy metrics for countries with a large banking system, an open capital account and a currency peg indicate that, at $31.1 billion in July 2019, foreign exchange reserves have declined to minimum prudent levels. These metrics compare the FX reserve coverage of non-resident deposits in foreign currency which has fallen below 100% and the coverage of broad money aggregates (M3) by the stock of net foreign assets which has fallen below 20%.

Anticipated External Financial Assistance Has Not Yet Been Forthcoming, the Continuing Absence of Which May Precipitate a Credit Negative Liability Management Exercise

Despite a history of securing external support, the $11 billion CEDRE investment package (equivalent to 3-4% of GDP per year disbursed over five years that was committed to in April 2018 during the Paris IV international donor conference) has yet to be disbursed. Nor has mooted additional support from GCC allies been forthcoming to-date.

The review will allow the rating agency to take stock of the government’s progress in adopting the 2020 budget as planned before the end of the year, as well as the implementation of the 2019 budget passed in July this year, as part of the conditionality attached to the disbursement of the investment package directed to the electricity, transport and water/irrigation sectors that would be conducive to a broader growth recovery over the longer term. The review will also allow the agency to assess the government’s progress in securing financial support from traditional GCC allies which in past instances of financial stress have contributed significantly to maintaining depositor confidence and in easing immediate liquidity pressure.

In the absence of market access or external financial support disbursements, usable liquid foreign exchange resources – adjusted for the commercial banks’ negative net foreign asset position – will likely be consumed by debt service payments in 2019 and 2020, potentially destabilizing the currency peg and/or prompting a debt rescheduling or other liability management exercise that may constitute a default under Moody’s definition, the increased risks of which may warrant repositioning the rating at a lower level.

Environmental, Social, Governance Considerations

Environmental considerations impact Lebanon’s credit assessment in particular through the tourism industry which competes with other Mediterranean resorts. Signs of water shortages will become more evident due to increased demand from agriculture and industry.

Social considerations are one of the key credit drivers for the sovereign in light of the sectarian fragmentation creating a track record of protracted party negotiations and government stalemates, impacting our domestic political risk assessment which is one of the key event risk drivers.

Sectarian fragmentation also impacts governance which is partially alleviated by the BdL’s non-partisan policy focus including on behalf of the government, providing key credit support for our assessment of Lebanon’s institutional strength.

What Could Change the Rating Down

Moody’s would downgrade the rating if the review were to conclude that Lebanon’s fiscal, liquidity, bank deposit and balance of payments dynamics will likely continue to weaken, potentially destabilizing the currency peg and/or increasing the risk of an imminent debt rescheduling or other liability management exercise that may constitute a default under Moody’s definition. Such a conclusion would be prompted by, but not necessarily restricted to, the government’s inability to comply with the conditionality attached to the disbursement of CEDRE investments – including the adoption of the 2020 budget before the end of this year – or failing to secure anticipated bilateral support from other lenders, for instance in the GCC, sufficient to ease immediate liquidity pressures.

What Could Lead to Confirmation of the Rating at the Current Level

Lebanon has a history of full and timely debt repayment despite severe economic and political turmoil. Moody’s could confirm the rating at the current Caa1 rating level if the review were to conclude that functioning government policy and forthcoming external financial assistance disbursements would likely ease immediate external and liquidity risks, and support the growth outlook. (Moody’s 01.10)

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11.2 IRAQ: The Economy, the Protest Movement and the Government‎

Ahmed Tabaqchali, CIO of Asia Frontier Capital (AFC) Iraq Fund, posted in Iraq Business News that in early October Iraq, Baghdad in particular, erupted in massive demonstrations, that at ‎the time of writing led to over 110 civilian deaths and over 6,000 casualties. ‎Demonstrations demanding the provision of services, economic prosperity and an end to ‎corruption have been a feature of the Iraqi scene since 2010. However, they have grown ‎in tempo, peaked in last year’s Basra’s demonstrations, and reignited again in October ‎as a young and angry population ran out of patience with the government’s sclerotic ‎pace of reform.‎

The government’s heavy-handed and over the top response to the protests, very much ‎like last year in Basra, has angered the youth and transformed the protests into riots. ‎ While a worrying development that risks an escalation of violence and potentially a ‎much larger conflict, these protests will likely run out of steam due to a combination of ‎carrot, stick and fatigue, just like last year’s then deadly protests. ‎

The carrot element began to take shape with the government’s initial package of ‎handouts in the form of payments, training programs and subsidized loans for the ‎unemployed youth, as well as subsidized housing for the country’s poor. The scope of ‎these would be enlarged significantly over the course of the next few weeks as the ‎government tries to appease an increasingly skeptical youth movement.

These handouts, whichever shape they take, would be overshadowed by the ‎government’s plans for an expansionary budget for 2020, which would be on a much ‎larger scale than that communicated by the government to the IMF over the summer.‎

The government has ample resources to implement all of these, as it has achieved a 31-‎month budget surplus of $27.5 billion by the end of July 2019 as shown by the Ministry ‎of Finance’s latest data. Though, the impetus for it to act is driven by effects of the ‎multi-year protest movement that had a profound effect on how the 2018 election was ‎fought and the current government formation, as it led to the beginning of the break-up ‎of the ethno-sectarian monolithic blocs that were dominant over the past 16 years and ‎which were at the root of Iraq’s past instability.‎

An expansionary 2020 budget on the heels of 2019’s expansionary budget would likely ‎fuel consumer spending and potentially lead to a stronger than expected consumer-led ‎‎3-4 year economic recovery. Which could become a sustainable multi-year economic ‎expansion should the government begin to implement a much-needed reconstruction ‎and investment spending program in the non-oil economy.‎

The early signs of a consumer led economic recovery can be seen from the latest ‎economic data for 2018 as reported by the Central Bank of Iraq (CBI) in its recently ‎released “Annual Statistical Bulletin for 2018”. The Bulletin showed that Iraq’s imports ‎were up +18% in 2018, on the back of the recovery of +13% that began in 2017, ‎following the severe declines from 2014-2016 which were caused by the twin shocks of ‎the ISIS war and the collapse in oil prices crushing the economy, and with-it Iraq’s ‎domestic demand for goods.‎

The revival in imports in 2017 and 2018 is likely to be a function of a recovery of ‎government spending and a tentative recovery in consumer spending with the resultant ‎increase in demand for imports- as the country is heavily reliant on imports to satisfy ‎domestic demand. Importantly, the growth in imports of machinery and transport ‎equipment argue well for the health of the underlying economic activity as can be seen ‎from the chart below.‎

Confirming this recovery, is the data on “New Vehicle Sales” as reported by the ‎International Organization of Motor Vehicle Manufacturers, which were up +60% in ‎‎2018 on the back of +35% increase in 2017. The recovery, while from a very low base, ‎is nevertheless encouraging.‎

The market’s action during the demonstrations has been mostly subdued as the curfews ‎and the government’s shutting of the internet had a negative effect on activity and ‎prices drifted lower with the market, as measured by the Rabee Securities RSISX USD ‎Index (RSISUSD), declining by about −0.7% month-month as of the time of writing.‎

However, September ended on a promising note, as the market was up +0.8% for the ‎month and down −4.1% for the year. Average daily turnover declined −7% month-‎month and displaced last month as the third lowest level over the last five years. ‎ Foreign investors continued to be net buyers, consistent with the trend of the last few ‎months, although at lower total levels, in-line with the decline in total turnover as can ‎be seen in the chart below.‎

Index of Net Foreign Activity on the Iraq Stock Exchange

During September, the market’s dynamics followed through with the improvement ‎discussed last month as the banking sector continues to be led by the National Bank of ‎Iraq (BNOI) which was up +39.1%, with other leading banks trailing behind, such as the ‎Bank of Baghdad (BBOB) up +3.4%, Commercial Bank of Iraq (BCOI) up +2.1%, while ‎Mansour Bank (BMNS) was down −1.5%. However, it should be noted that the rallies in ‎the banks were all on low turnover in-line with the market’s overall exceptionally low ‎turnover. The return of liquidity will determine the true direction of the group- whether ‎sellers will overwhelm buyers sending prices lower, or if buyers will overwhelm sellers, ‎sending prices higher. The discriminating nature of the market, discussed here over the ‎last two months, argues for the later. (IBN 10.10)‎

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11.3 IRAQ: Iraq & China Launch ‘Oil for Reconstruction’ Agreement

Salam Zidane posted in Al-Monitor on 10 October that Baghdad has forged a 20-year deal to supply Beijing with oil in exchange for Chinese investments in projects to repair Iraq’s war-damaged infrastructure.

When Iraqi Prime Minister Adel Abdul Mahdi led a delegation to China in September, Baghdad and Beijing activated an “oil for reconstruction” and investment program. Under the arrangement, Chinese firms worked in Iraq in exchange for 100,000 barrels per day.

Iraq has said it needs more than $88 billion to develop and mend its rickety infrastructure after three years of combating the Islamic State (IS). Speaking to the press, Abdul Mahdi said that, including this new deal, about 20% of Iraq’s daily oil production is being exported to China. “We agreed [with Beijing] to set up a joint investment fund, which the oil money will finance,” he said, adding that Iraq requires that China not monopolize implementing projects inside Iraq but rather will work in cooperation with international firms.

Such an agreement isn’t new. In 2015, when Abdul Mahdi served as oil minister under then-Prime Minister Haider al-Abadi, Iraq signed up for China’s Belt and Road Initiative in a deal founded on the principle of oil in exchange for construction, investment and development. Back then, China was awarded 100 projects. Yet the agreement was halted due to the political and security tensions that resulted in a ministerial reshuffle.

Iraq has been rocked by demonstrations in recent weeks, and the prime minister has again called for Cabinet changes. The situation could affect the current deal as happened before, though nothing official had been announced.

Chinese investments in Iraq total $20 billion, mainly in the energy sector via a consortium with international firms or independently to develop power plants. Moreover, annual trade between the two countries exceeds $30 billion, with a total of $15 billion in Iraqi oil exports.

The current Iraqi government started turning its back on US companies following a $15 billion power deal with Germany’s Siemens to rehabilitate the infrastructure — leaving behind General Electric, which has operated in Iraq for years, and failing so far to sign a $53 billion deal with ExxonMobil to implement the “southern megaproject.”

Iraq is in the process of approving a law regulating the work of a reconstruction council, which will be chaired by the prime minister and tasked with overseeing projects worth more than $210 million. This would imply that the ministries and provincial governments are kept away from such projects to combat corruption and make Chinese companies’ jobs easier.

Electricity Minister Louay al-Khateeb wrote on 24 September on his Facebook page, “China is our primary option as a strategic partner in the long run. We started with a $10 billion financial framework for a limited quantity of oil to finance some infrastructure projects.” He noted, “The Chinese funding tends to increase with the growing Iraqi oil production, to be used differently from the previous policies, through construction, investments and operationalization of the reconstruction council.”

Iraq has taken the first steps toward putting this deal into force by opening bank accounts, and a Chinese delegation will visit Iraq soon to learn about strategic projects such as the suspension railway and Nasiriyah International Airport, and to reach an agreement regarding their implementation. Speaking to Al-Monitor, Abdul Hussein al-Hanin, adviser to the prime minister, said, “The China-Iraq deal stretches over 20 years. Under the deal, Baghdad shall export to China 3 million barrels a month at the world price, currently estimated at $180 million.”

Hanin, who was part of the Iraqi delegation, went on to say, “Iraq is currently selling its oil and obtaining the money one or two months later. Under this deal, however, the money will be in the form of projects that the Chinese firm carries out inside [Iraq].” He added, “The projects were identified based on three priorities. First is building and modernizing the highways and internal roads with their sewage systems. Second is the construction of schools, hospitals, and residential and industrial cities, and third is the construction of railways, ports, airports and other projects.” The Iraqi government signed the agreements with China unbeknownst to parliament.

Haybat al-Halbousi, head of the parliamentary Energy Committee, told Al-Monitor, “Parliament and the Energy Committee know nothing about the agreements signed with China. We will assume our monitoring role in hosting officials in the upcoming days to learn about the nature of these agreements.” He noted, “There will be a firm parliamentary stance and parliament will pass the agreements if they serve Iraqi interests.” He denounced the government for ignoring parliament in such major deals.

The government could face a new problem, namely the oil-rich provinces rejecting the implementation of projects in non-oil-rich provinces. Subsequently, internal tensions could be ignited and hinder such projects, similarly to what happened with the petrodollar project that allows oil-producing provinces to obtain $5 per barrel produced. Sabah Alwah, a former adviser to the Iraqi Ministry of Oil, told Al-Monitor that Iran pressured Iraq to go to China in an attempt to embarrass the United States, has issued trade sanctions against countries doing business with Iran and in a trade conflict with China. Hence, China could relinquish its projects in Iraq if Beijing and Washington improve their relations.

He underlined that it’s a good move to use oil sales to develop infrastructure, rather than obtaining loans from foreign countries or granting foreign companies a share of the projects’ revenues. He said Iraq is still committed to OPEC’s efforts to limit supply — yet Iraq reached record oil output in August of 4.88 million barrels per day. Iraq has had booming oil revenues for years. Yet its budget has suffered from phantom projects and extortion, which pushed international firms away and prevented them from investing there. Now, Chinese companies could face the same fate.

Salam Zidane is an Iraqi journalist specializing in economics. He has written for several local and international media sources such as Al-Jazeera and The New Arab. (Al-Monitor 10.10)

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11.4 EGYPT: Egypt & US Combine Efforts to Boost Family Planning Programs

mira Sayed Ahmed posted on 8 October in Al-Monitor that the Egyptian parliament recently approved amendments to a deal signed with USAID that would provide $10 million for Egypt’s family planning program.

Pursuing its efforts to put the brakes on overpopulation, the Egyptian Cabinet approved on 18 September the amendment of the grant deal previously signed between Egypt and the United States targeting family planning programs. Under the amendment, the United States Agency for International Development (USAID) is to provide a new sum of $10 million and $50,000 as an additional contribution to support the Egyptian government’s efforts in enhancing the quality of family planning and reproductive health services.

In September 2017, Egyptian Minister of Investment and International Cooperation Sahar Nasr and USAID Mission Director Sherry F. Carlin signed a six-year grant deal with the key aim of making Egypt’s family planning programs more effective and sustainable by improving the quality of services offered to citizens. According to the deal, USAID is to offer $6 million to the Ministry of Health and Population, with a total contribution of $29 million by the end of the agreement in 2022.

In August 2019, both sides agreed to amend the deal by adding $10 million and $50,000 as an additional contribution. According to the Egyptian Cabinet’s statement, this increase came as an additional contribution from USAID to improve reproductive health in Egypt, since this sector is huge. This is the amendment that was officially approved by the Cabinet in September.

At the signing ceremony of the deal in August, Nasr said that such agreements confirm the strategic and historical relationship between the two countries. This move, she continued, goes in tandem with the initiative of President Abdel Fattah al-Sisi to invest in the human element through grants directed to higher education, scientific research, health care and family planning. “Cooperation with the United States is based on the priorities and needs of the Egyptian people,” the minister remarked at the ceremony.

According to Nasr, USAID has been an economic partner for the Egyptian government for decades. The total value of USAID contributions to Egypt amounted to about $30 billion, while the volume of US investments in Egypt amounted to about $22 billion by the end of December 2018. Carlin stressed at the ceremony in August that such grants reflect continued commitment of USAID to work with the Egyptian government toward achieving a more prosperous economic and social future for Egyptians.

Speaking to Al-Monitor, parliament member Fayka Fahim said the issue of family planning is one of the key challenges facing the country. Therefore, fostering strategic partnerships with other countries in this domain is of paramount importance, she said. “Egypt has already taken many steps forward. But we still need both technical and financial support to set up more family planning clinics, especially in rural areas,” Fahim added.

In May 2018, USAID released a statement to announce another grant deal with Egypt’s Health Ministry with the aim of curbing fertility rates. “Responding to a request by the Government of Egypt to contribute to Egypt’s family planning efforts, USAID Mission Director Sherry F. Carlin joined Minister of Health and Population Dr. Ahmed Emad Rady to launch a new program to strengthen Egypt’s family planning in response to Egypt’s rapid population growth,” the statement read.

According to the statement, USAID shall provide technical assistance and training to the Ministry of Health and Population to give an extra boost to its Family Planning and Reproductive Health Program, a matter that will help improve contraceptive use and reduce fertility over time. The program targets nine governorates in Upper Egypt and areas of Cairo and Alexandria. The statement quoted Carlin as saying that the new family planning program is part of the $30 billion that the American people have invested in Egypt through USAID since 1978. “We know that USAID family planning programs have made tremendous impact in the past. We stand poised again to be a part of the solution to the rapid growth in Egypt’s fertility rate,” Carlin said in the statement.

The issue of overpopulation has always been a headache for the Egyptian government. Therefore, both the Ministry of Social Solidarity and the Ministry of Health are stepping up efforts to improve family planning services.

According to the Central Agency for Public Mobilization and Statistics (CAPMAS), birth rates declined by 6.8% in 2018. The total number of births in 2018 reached 2.3 million compared to 2.5 million a year earlier. In September 2018, the Ministry of Social Solidarity also launched a family planning campaign dubbed “Two is Enough,” with the aim of challenging the deeply-rooted traditions that support having large families. “We — the Social Solidarity Ministry — focus on involving civil society in our campaign. The two-year campaign coordinates with 92 nongovernmental organizations [NGOs],” Randa Fares, the campaign coordinator at the Social Solidarity Ministry, told Al-Monitor.

Fares elucidated that the Health Ministry is cooperating with USAID, while the Social Solidarity Ministry is coordinating with NGOs. “All sectors should be involved to reach the desired target,” she stressed. “We still need more clinics nationwide; we still need more campaigns, particularly in rural areas. We started the journey, but it is not that easy.”

Amira Sayed Ahmed is a Cairo-based freelance journalist and full-time editor of local news at The Egyptian Gazette, Cairo’s oldest English-language daily. She has been involved in writing about political, social and cultural issues in Egypt since 2013. (Al-Monitor 08.10)

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11.5 MOROCCO: Outlook Revised to Stable from Negative on Budgetary Consolidation Efforts

Rating Action

On 4 October 2019, S&P Global Ratings revised its outlook on Morocco to stable from negative. At the same time, we affirmed our ‘BBB-/A-3’ long-term and short-term foreign and local currency sovereign credit ratings on Morocco.

Outlook

The outlook is stable, balancing our expectation of further fiscal consolidation and gradual improvement in the current account position over the next two years against risks to economic growth from domestic structural shortcomings or external shocks, for example, due to a slowdown in world trade.

We could raise the rating if budgetary consolidation prospects materially improve or the ongoing transition toward a more flexible exchange rate that targets inflation significantly bolsters Morocco’s external competitiveness and ability to withstand macroeconomic external shocks. We could also raise the ratings if Morocco’s ongoing economic diversification strategy results in less volatile and higher rates of economic growth.

Conversely, we could lower the rating if the government deviates from its fiscal consolidation plan, resulting in substantially higher government debt compared with our forecast; real GDP growth rates significantly undershoot our expectations; or external imbalances widen, resulting in a significant increase in the economy’s gross financing needs.

Rationale

The outlook revision reflects our expectation that Morocco’s budgetary position should gradually improve, supported by the government’s comprehensive budgetary strategy and privatization proceeds over the forecast period, to reach 3% of GDP in 2022. This year, the government expects to address the shortfall in tax revenues mainly by making savings in current spending. We don’t expect the public sector wage hike announced in the spring to affect the budgetary outcome, because it had already been included in the 2019 budget. Additional savings will come from lower-than-budgeted spending on subsidies for liquefied petroleum gas (LPG). For example, the government put in place a hedging strategy, which shields its spending on subsidies for LPG against potential increases in LPG prices during 2019.

Moreover, the government’s strategy of promoting private sector activity includes the establishment of schemes similar to public-private partnerships, including concessions to private sector investors, which should allow the government to reduce public investment outlays and build on its assets (such as sea ports and real estate). Given the government’s commitment to privatize some assets from 2019-2024, we expect the change in net general government debt – our preferred indicator of fiscal flows – to decline as of 2019.

We believe that the ongoing shift in Morocco’s underlying economic structure, driven by substantial foreign direct investment and a more resilient agricultural sector, both underpinned by the government’s strategy to promote private sector activity and limit or – in some sectors – reduce the government’s role in the economy, benefits economic growth prospects and stability. As a result, overhauling the economic structure, along with higher economic growth, should in our view lead toward gradually reduced economic vulnerability from persistent current account and budget deficits. We believe that the IMF-approved precautionary and liquidity line from December 2018 underpins the country’s macro-financial stability, and economic and budgetary policy objectives.

The ratings on Morocco are supported by moderate government debt and manageable current account deficits, despite a deterioration in 2018, amid relatively stable policymaking. The ratings remain constrained by GDP per capita lower than that of similarly rated sovereigns, significant economic reliance on agriculture, high social needs, and a relatively slow approach to budgetary consolidation.

Institutional and economic profile: Economic growth to decelerate this year, while economic diversification is set to continue

Morocco’s GDP per capita remains one of the lowest of the sovereigns rated in our ‘BBB’ category.

We forecast real GDP growth will be about 2.8% in 2019, absent any significant shocks in the external and domestic business environments, before gradually firming during 2020-2022. Economic growth remains vulnerable to volatility in agricultural output and the ongoing economic slowdown in Europe, and growth excluded parts of the Moroccan population before.

We expect real GDP growth in Morocco at about 2.8% in 2019, reflecting a slowdown in Europe, as well as decelerating growth in the country’s agricultural output. The government has been reducing the economy’s vulnerability to weather shocks by investing in more-efficient technologies in the agricultural sector via the Green Morocco Plan, as well as diversifying the economy. In this context, we believe that nonagricultural output, which had been accelerating this year (3.4% growth in the first quarter of 2019), will continue to expand in line with past trends and reflect continuous growth in foreign direct investment (FDI), despite an expected dip this year.

The main sources of growth are the expanding automotive, aeronautic, and electronics sectors, where substantial output growth is expected to continue at least through 2022. For example, the recently inaugurated car manufacturing plant by PSA is expected to increase its output in 2021, boosting the economy’s exports. Indeed, Morocco has built comprehensive industrial clusters around its emerging auto industry. It has attracted a number of foreign car manufacturers, first from France and most recently from China.

As a result, the number of vehicles produced in Morocco has increased by more than 2.5x since 2014, overtaking in value exports related to phosphates and their derivatives a few years ago. Nevertheless, phosphates and their derivatives will still represent an important share of the country’s exports. We also consider that tourism has substantial further growth potential, despite solid growth in tourist receipts this year, of almost 6% year-on-year during the first seven months of the year. The construction sector has recovered this year and we expect it to contribute positively to overall economic growth.

Given Morocco’s significant dependence on energy imports, FDI in the energy sector is increasingly important. The country aims to produce 52% of its power from renewable energy by 2030, which appears realistic, given that an estimated 35% of its current electricity production comes from renewables (hydro, wind and solar). Projects such as this, which ease the economy’s dependence on external sources of energy, are positive because they support a further reduction in current account imbalances and also further insulate Morocco from energy price increases, which were particularly adverse in 2018.

The government has also promoted several gas field exploration projects. Although they are unlikely to come on-stream over the next two years, they could further reduce Morocco’s energy imports and benefit its trade balance. This vulnerability was most recently demonstrated in September 2019 when oil prices increased due to geopolitical factors. As a result of the significant negative economic and budgetary effects, the government is considering a price regulating mechanism that would prevent the full impact of oil price increases being felt by end-user customers. Instead, it would require the supply chain to absorb part of the pressure. If approved by the Moroccan competition authority, this mechanism could cushion the negative impact on the economy, in part by supporting households’ disposable income, and allow for improved predictability in terms of budgetary outcomes.

We forecast that real GDP growth will average about 4% in 2020-2022, backed by increasing growth in nonagricultural sectors and resilience in the agricultural sector. We also expect that the business environment and external demand will remain broadly supportive of the steady pick-up in nonagricultural output. To this end, the government has prepared an investment charter, small-business act, and tax system overhaul to introduce more stability and policy predictability for business. Moreover, to improve liquidity in the economy, the government has shortened its payment times to suppliers, and those of state-owned enterprises (SOEs), and has settled its payment arrears with the private sector. We believe that these measures will support the private sector’s development, especially given this year’s economic slowdown.

Tackling other structural weaknesses, such as payment indiscipline among private sector companies and administrative hurdles in the business environment, could support the country’s economic diversification and the resilience of its economic growth. We believe that the government’s strategy to further improve the business environment, including access to finance, is likely to enhance the country’s standing in the World Bank Doing Business ranking. It is currently 60th among 190 countries.

Unless Morocco suffers external economic shocks – for example, due to the heightened risk of global protectionism or a faster slowdown in European economies, which represent about 70% of its export markets – we believe that the expansion of its export capacity and its rise up the value-added ladder will contribute positively to economic growth over 2019-2022. We view the two-year IMF-approved liquidity line put into place in December 2018 (worth about $2.97 billion) as an important tool in the context of these risks, as well as a relevant policy anchor. It resulted in a number of policy measures being rolled out to improve the economy’s performance and strengthen its resilience.

We believe that Morocco has largely demonstrated political and social stability, especially following the Arab Spring. It achieved this through constitutional reforms, a rise in government spending aimed at economic development, and reduction of economic inequality in less developed regions, with broad support from King Mohammed VI. The king chairs the Council of Ministers, which deliberates on strategic laws and state policy orientations. His role in policymaking has held greater importance since 2017, when he intervened in curbing social tensions in the Rif and Jerada regions.

Although ethnic, tribal, religious and regional divisions are less pronounced in Morocco than in much of the Middle East and North Africa, there are rising demands from some parts of the Moroccan population for more-inclusive economic growth. In our view, this partially stems from high unemployment among youth and the income disparities between more- and less-developed areas. At the national level, the unemployment rate appears low and falling, but the differences among population segments are significant (higher in urban areas, and for youth and women). Moreover, we believe that higher participation by women in the labor market (estimated at 22.2% in 2018) could significantly increase the country’s economic growth potential.

The government has expressed its willingness to accelerate the implementation of regional development programs and decentralization of the state with devolution of tasks to regions to reduce income disparities, including by tackling high unemployment. We believe that these demands will persist and constrain Morocco’s budgetary position, delaying a faster reduction in the budget deficit over our forecast horizon. Nevertheless, to the extent they are directed toward improving education and labor market outcomes, such policies could boost the country’s growth potential in the medium-to-long term.

Flexibility and performance profile: Budget deficit to slowly decline, supported by privatization proceeds

For 2019, we expect the government to post a budget deficit of about 3.3% of GDP, including the planned privatization proceeds. Following a significant wider current account deficit in 2018, we expect the deficit to gradually decline, on the back of new exporting capacities, subject to the trends in external demand. We anticipate that authorities will inch toward a more flexible exchange rate regime over the medium term.

The budget deficit widened to 3.7% of GDP in 2018 against the government’s target of 3%, mainly because of a sharp rise in oil prices (leading to increased cost of energy subsidies for liquefied petroleum gas), combined with lower-than-planned grants from the Gulf Cooperation Council (GCC). We don’t anticipate a repeated slippage in 2019 because the remaining amount of budgeted GCC grants is modest and our forecasts don’t suggest a similar rise in oil prices this year. In fact, the latter risk has been eliminated, as the government put in place a hedging strategy which shields its spending on subsidies for LPG against potential price increases during 2019. We therefore expect the headline budget deficit to be broadly stable in GDP terms in 2019.

This year, the government expects to address the shortfall in tax revenues mainly by savings in current spending. We don’t expect the public sector wage hike to affect its budgetary outcome, given that it had already been budgeted for and we expect additional savings from lower-than-budgeted government subsidies for LPG, due to the implementation of the above-mentioned hedging strategy. Moreover, the government’s strategy of promoting private sector activity includes the establishment of public-private-partnership-like schemes, including concessions to private sector investors. These should allow the government to reduce public investment outlays and build on its assets. Given the government’s commitment to privatize assets worth approximately 4% of GDP during 2019-2024, we expect the change in net general government debt to decline in 2019 compared with 2018.

The government has been addressing the rising social demands for better living standards, including education and health care, and tackling high unemployment rates in poorer parts of the country by strengthening social protection programs. This includes the National Human Development Initiative aimed at supporting vulnerable parts of the population, funded from public and private sector sources. Morocco provides socially sensitive subsidies on basic goods (flour, sugar, and LPG) and is implementing a single subsidy registry to provide better targeted and efficient support. On the revenue side, in the context of the decisions following the tax system conference held in May 2019, we view favorably the government’s plans to broaden the tax base to improve tax collection. This includes reducing numerous tax exemptions to benefit the investment activity and attempting to address sizable tax avoidance and evasion, while targeting the vulnerable social groups.

We forecast that the gross government debt-to-GDP ratio will stabilize at about 53% of GDP over the medium term. We expect net general government debt to average about 51% of GDP during 2019-2022. The average maturity of the central government debt outstanding stands at about 6.75 years, with the average interest rate estimated at below 3.9%.

Our budgetary forecast includes expected privatization proceeds for 2019-2022. We incorporated into our forecast privatization proceeds of about 0.4% of GDP in 2020 and 2021, and 0.2% of GDP in 2022. If the realized proceeds are higher than forecast, the decline in the general government debt-to-GDP ratio will be faster than our forecast suggests.

Our gross general government debt data consolidate the holdings of central government debt by other branches of state, such as public pension funds, while net general government debt excludes from gross debt the government’s liquid assets. Therefore, change in net government debt – our preferred variable for fiscal flow performance – reflects all the components affecting the government debt position, not just the central government balance.

The general government debt stock has risen significantly over the past eight years (from 32% of GDP at year-end 2010, before the Arab Spring) due to consistently large budget deficits. We believe this points to structural weaknesses in the Moroccan economy, relative to other sovereigns at this rating level. The government’s debt profile appears favorable: At year-end 2018, the average life of debt outstanding stood at six years and five months, and the average cost of debt was 3.9%.

The Moroccan dirham is currently pegged to a currency basket comprising 60% euros and 40% U.S. dollars. The foreign exchange (FX) peg regime limits monetary policy flexibility, in our view. In January 2018, Moroccan authorities and the central bank, Bank Al Maghrib (BAM), decided to increase flexibility in the exchange rate regime by widening the band of fluctuation between the dirham and the basket of currencies to 2.5% in either direction from the previous plus or minus 0.3%. In our view, the measure was implemented smoothly, especially considering earlier attempts in mid-2017, when BAM’s FX reserves shrank by more than 15% in the two months before the reform. We attribute the decline in FX in part to pressure from domestic market participants following increasing demand for hedging instruments. As a result, a sizable portion of these reserves was transferred onto domestic banks’ balance sheets, leading to a substantial increase in foreign-currency assets, and the banking system as a whole did not lose its FX reserves. At the end of 2018, the reserve coverage was approximately five months of current account payments.

If widening the exchange-rate fluctuation bands continues to go well, we would view further widening as positive for our overall monetary assessment on Morocco. It would likely bolster the country’s external competitiveness and ability to withstand macroeconomic external shocks. However, we anticipate that authorities will first allow external financial developments to test the current fluctuation bands, and wait for other parameters like budget and current account balance to improve before moving toward further widening the bands.

Finally, although they are moving toward a more flexible exchange rate regime, we expect Moroccan authorities will maintain restrictions on capital accounts in the near term. These restrictions will be eased gradually, to avoid any potential large-scale capital outflows.

Although the banking sector appears to be moderately capitalized, it is unlikely to pose a significant risk to the wider economy, given its adequate regulatory Tier 1 capital ratio of almost 10.8%. Although nonperforming loans constitute a relatively high proportion of the total, at 7.7% at the end of August 2019, they appear adequately provisioned. Nevertheless, the banking sector remains vulnerable to credit concentration risks. The banks’ expansion into Sub-Saharan Africa has so far been highly profitable, but it opens new channels of risk transmission to the country’s banking system.

We expect Morocco’s current account deficit to narrow to about 4.9% of GDP in 2019, down from about 5.5% of GDP last year, when energy-related imports increased by almost 20%. In the absence of a significant decline in external demand – which could come from a rise in global protectionism or the ongoing economic slowdown in Europe – we expect the current account deficit to narrow during the forecast horizon, as rising export capacity materializes in higher value-added industries, like automotive.

Cars have become the country’s leading export product, accounting for about 24% of total goods exports and more than 5% of GDP in 2017. Auto exports rose almost 11% during 2018, with an even larger increase in aeronautics (13.9%). Furthermore, the export of phosphate and its derivatives bottomed out and will grow in line with external demand (17% growth last year). At the same time, tourism receipts grew by almost 6% in the first seven months of this year. Meanwhile, the development of domestic energy sources should curb growth in Morocco’s energy bill, although we do not incorporate this development into our forecast yet, since it is likely to emerge only at the end of our projection horizon. Morocco also benefits from strong remittances.

The external liabilities position will remain large over the next three years, and we forecast narrow net external debt as a proportion of current account receipts (CARs) to be 20%-30% in 2019-2022. We also forecast external financing requirements will remain covered by CARs and usable reserves over this period. (S&P 04.10)

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11.6 CYPRUS: Fitch Revises Cyprus’s Outlook to Positive; Affirms at ‘BBB-‘

On 11 October, Fitch Ratings revised the Outlook on Cyprus’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Positive from Stable and affirmed the IDR at ‘BBB-‘.

Key Rating Drivers

The revision of the Outlook on Cyprus’s IDRs reflects the following key rating drivers and their relative weights:

Medium: The prudent fiscal policy stance has continued since the last rating review in April 2019 and will likely result in a general government surplus above 3% and a primary surplus close to 6% of GDP in 2019. The underlying budget surplus, excluding one-off items, has steadily increased over the past three years from 0.3% of GDP in 2016 to 1.8% in 2017 and reached 3.4% in 2018. Cyprus has the largest budget surplus among Eurozone members in 2019 and the surplus is also significant compared with the ‘BBB’ median of a 2.3% deficit. Fitch expects the budget surplus to remain close to 2% of GDP in 2020-2021, well above the requirements of the EU fiscal rule. The pending court decision on the reversal of public sector wage cuts represents a moderate fiscal risk, an estimated annual cost of around 0.8% of GDP until 2022.

The post-crisis recovery of the economy has been strong, reflected by the five-year average GDP growth reaching the ‘BBB’ median of 3.6% in 2019. The economy is forecast to slow gradually as the spare capacity is gradually absorbed and the external environment has become less supportive. Nevertheless growth will be favorable compared with Eurozone dynamics. Fitch forecasts 2.9% GDP growth in 2019 and 2.7% in 2020 and 2021.

Due to the firm downward trajectory of gross general government debt (GGGD), benefiting from persistent budget surpluses and solid economic growth, there is increasing capacity to absorb potential costs of further banking sector interventions.

Cyprus’s ‘BBB-‘ IDRs also reflect the following key rating drivers: The structural strength of the Cyprus economy is illustrated by per capita GDP and governance indicators in line with the ‘A’ and higher than the ‘BBB’ median.

The GGGD is very high, forecast at 95% of GDP at the end of 2019 compared with the ‘BBB’ median of 36% of GDP. Nevertheless it is declining again after the one-off increase (€3.19 billion, equal to 15.5% of GDP) in 2018 due to transactions related to the sale of Cyprus Cooperative Bank (CCB) to Hellenic Bank. According to our debt dynamics simulation, GGGD/GDP could decline to 60% of GDP by 2028. This scenario is based on the assumption of 2% medium term growth and primary surpluses, combined with a subdued increase in the marginal effective interest rates.

The banking sector remains a major weakness relative to ‘BBB’ peers, primarily due to weak asset quality and high NPE ratios that are still weighing on capital, in particular capital at risk from unreserved problem assets, and profitability. The Banking System Indicator (BSI), the weighted average Viability Rating of institutions in the highly concentrated banking sector, remains among the weakest of ‘BBB’ peers at ‘b’.

The ratio of NPEs to total loans was broadly stable in H1/19, at around 30%, following sharp declines in 2018, and remains among the highest in the EU. Addressing the remaining substantial legacy issues in the banking sector has become more uncertain since the last rating review. In August 2019, parliament adopted amendments to the existing foreclosure law that would reverse some of the previous reform measures aimed at facilitating foreclosures and could make the work-out of NPEs more difficult. The final ruling has been deferred to the Supreme Court, which has not yet come to a conclusion.

The government’s flagship Estia program to help defaulting mortgage borrowers through loan restructurings and state subsidies to incentivize loan repayment had a slow start in September 2019, with limited initial interest from eligible borrowers despite the generous conditions.

Private sector debt and non-performing exposures remain high at 217% (excluding special purpose entities; SPEs) and 42% of GDP in Q1/19, respectively, and constrain credit growth.

The current account deficit has widened during the cyclical recovery as strengthening domestic demand, especially in the construction sector and household consumption, have led to strong import growth. Fitch forecasts a 7.3% of GDP deficit in 2019, compared with the current ‘BBB’ median of 1.9% deficit. When excluding SPEs, both financial and non-financial companies that materially distort external statistics, the current account deficit decreases substantially, according to the Central Bank of Cyprus. Cyprus’s net external debt (NXD) was close to 0 in 2018 when adjusted for SPEs, compared with a non-adjusted NXD debtor position of 106% at-end 2018 and a current ‘BBB’ median of 7%.

Cyprus’s financing flexibility has improved substantially since the country exited the macroeconomic adjustment program in March 2016. The government has built a track record of capital markets access with increasingly favorable yields, the average issuing bond yield was 2.3% in H1/19, including 15- and 30-year bonds. Furthermore, Cyprus now fully benefits from the ECB’s asset purchase program: the ECB’s holdings have reached €1.6 billion in September 2019 from €678 million at the end of December 2018.

Rating Sensitivities

Developments that may, individually or collectively, lead to an upgrade include:

Materially reduced contingent liabilities to the sovereign stemming from the banking sector, for example from declining NPEs;

Marked reduction in the GGGD/GDP ratio; and

Reduced vulnerability to external shocks, for example stemming from narrowing in the current account deficit.

The Outlook is Positive. Consequently Fitch does not currently anticipate developments with a high likelihood of leading to a downgrade. However, developments that may individually or collectively lead to negative rating action include:

Stalling of the decline in the government debt-to-GDP ratio, for example due to deterioration of budget balances, weak growth or materialization of contingent liabilities;

Heightened risks in the banking sector, for example from deterioration in asset quality, with adverse impact on the real economy and/or the fiscal position.

Key Assumptions

Gross government debt-reducing operations such as future privatizations or asset sales by the state-owned asset management company are not considered in Fitch’s baseline scenario. The projections also do not include the impact of potential future gas reserves off the southern shores of Cyprus, the benefits from which are several years in the future.

Fitch does not expect substantial progress with reunification talks between the Greek and Turkish Cypriots over the next quarters. The reunification would bring economic benefits to both sides in the long term but would entail short-term costs and uncertainties. (Fitch 11.10)

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