Fortnightly, 1 May 2019

Fortnightly, 1 May 2019

May 2, 2019


1 May 2019
26 Nissan 5779
26 Shaban 1440




1.1  Jerusalem Allocates NIS 180 Million for Startups in Outlying Regions
1.2  Israel’s 21st Parliament Sworn-In, Inaugurating Netanyahu’s Fifth Term as Prime Minister


2.1  Trustpilot Partners With to Integrate Customer Reviews Into Videos
2.2  D-ID Wins Prestigious Netexplo Award for Innovative Identity-Protection AI
2.3  VDOO Raises $32 Million in Series B Financing for Embedded Devices and IoT Security
2.4  Audioburst Announces New Investments and Dentsu & Hyundai Strategic Partnerships
2.5  Willi-Food Signs MOUs to Buy 2 Companies
2.6  Oriient Secures $4 Million to Finally Bring in-Store Navigation to the Masses
2.7  Medicinal Genomics Partners with Eldan to Distribute Cannabis Testing Solutions in Israel
2.8  BIRD Energy Opportunities for U.S.-Israel Cooperation for Energy & Efficiency Technologies


3.1  Promofix Announces Partnership with BeIN Sports
3.2  KHCC First Oncology Hospital Awarded MAGNET Accreditation Outside of the US
3.3  AES to Sell its Interests in Jordanian Power Project
3.4  Mubadala Investment Company Launches $1 Billion Fund – Abu Dhabi Catalyst Partners
3.5  Dubai’s Dnata Expands US Catering Operations
3.6  Atlanta’s Verusen Selected for Dubai Future Accelerators Program in the UAE
3.7  Dubai’s Jump the Q Secures Pre-Seed Funding to Expand Their Grocery Delivery Services
3.8  BankDhofar First in Oman to Introduce NCR’s Financial Kiosk/a>
3.9  SAGIA Launches Venture Capital Platform
3.10  Foodics Looks to Revolutionize the Food & Beverage Tech Scene in Saudi Arabia
3.11  Hyatt Regency Algiers Airport Opens, Marking the First Hyatt Branded Hotel in Algeria
3.12  Canada’s Magna Expands Presence in Morocco with New Plant


4.1  Dubai Crown Prince Issues Resolution to Regulate Autonomous Vehicle Testing
4.2  Dubai Municipality Completes $350 Million Phase of Sewage Treatment Project
4.3  New Solar Power Projects Inaugurated Under UAE-Caribbean Fund
4.4  BMW First Brand to Officially Launch Electric Vehicles in Egypt


5.1  Average Lebanese Inflation Rose by 3.47% During the First Quarter of 2019
5.2  Lebanon’s Industrial Exports Increase by 3% to $2.55 Billion During 2018
5.3  Lebanon’s Fiscal Deficit Up to $5.8 Billion by November 2018
5.4  Jordan’s Inflation Rises By 0.7% in First Quarter of 2019
5.5  Jordan’s Exports Rise by 11.4% to JOD721 Million
5.6  Jordan’s Tourism Revenue Rises by 5.2% During the First Quarter of 2019
5.7  Foreign Investment in Jordan Drops by 52.6% in 2018
5.8  Jordan’s Shadow Economy Challenges Development

♦♦Arabian Gulf

5.9  GCC Economy Forecast to Grow by 2.3% in 2019
5.10  UAE & China Consider Closer Ties to Drive $70 Billion in Trade by 2020
5.11  Israel & Qatar Among 192 Countries Invited to Take Part in Expo 2020 Dubai
5.12  Saudi Arabia Starts Year with Budget Surplus for First Time Since 2014
5.13  Saudi Tourism Numbers Forecast to Exceed 23 Million Visitors by 2023

♦♦North Africa

5.14  IMF Fifth Review of Tunisia’s Reform Program Supported by EFF Arrangement
5.15  Diaspora Remittances Reach $7.4 Billion in Morocco in 2018


6.1  Turkey’s Foreign Trade Deficit Falls by 67.4% During First Quarter
6.2  Turkey’s Tourism Income Hits $4.63 Billion in First Quarter
6.3  Cyprus Records One of the Lowest Annual Inflation Rates in EU
6.4  Cyprus Bond Sale Raises Money to Pay Russian Debt
6.5  Cypriot Economic Sentiment Improves Due to Business Confidence



7.1  Yom HaShoah – Holocaust Martyrs’ & Heroes’ Remembrance Day 2019‎
7.2  Ramadan Begins on Eve of 5 May
7.3  Israel Commemorates Those Who Fell in Service to the Nation
7.4  Israel’s Independence Day – 71 Years After Sovereignty was Regained


7.5  Jordan Ranks 10th Regionally on World Happiness Report 2019
7.6  UAE Launches World’s First Ministry of Possibilities
7.7  Egypt Voters Approve Referendum Extending President’s Rule


8.1  Tyto Care & Best Buy Launch TytoHome – Medical Exams On-Demand from Home
8.2  Aidoc Raises $27 Million to Expand Its Life-Saving AI Solutions Across Medical Imaging
8.3  PlantArcBio New Collaboration in the Development of Breakthrough Crop Enhancers
8.4  Theator Raises $3 Million
8.5  Teva Launches a Generic Version of VESIcare Tablets in the United States
8.6  Rapid Medical Raises $20 Million to Support Stroke Treatment Products
8.7  Mondelēz Collaborates With Israel’s The Kitchen to Lead the Future of Snacking
8.8  The Technion’s New Center for 3D Tissue Printing
8.9  AstaPure-EyeQ – Natural Astaxanthin Inspired by Eagle Vision
8.10  Groundwork BioAg Disrupts Cannabis Cultivation with DYNAMYC Mycorrhizal Inoculants


9.1  DriveNets Delivers World’s First 400G White-box Based Distributed Router
9.2  Intel Launches Israel-Developed 9th Gen Laptop Chip
9.3  Checkmarx Named a Leader in Gartner Magic Quadrant for Application Security Testing
9.4  Sixgill Partners With Anomali to Enhance Results in Leading Threat Intelligence Platform
9.5  Folksam Selects Sapiens’ Digital Core Insurance Suite
9.6  ERM & Altair to Improve Models for Deploying Vehicle Telematics and Asset Tracking
9.7  ECI Adds Another Layer of Flexibility to Its Apollo Portfolio
9.8  Waterfall Security & Dragos Partner to Strengthen Industrial Control Systems Cybersecurity
9.9  IncrediBuild Launches IncrediBuild Cloud: Unlimited Development Acceleration Potential
9.10  Votiro Partners with Box to Prevent Content-Based Attacks and Zero-Day Exploits


10.1  Israel’s Composite State of the Economy Index for March 2019
10.2  Israel Defense Exports Decline During 2018
10.3  Israel’s Unemployment Rate Falls Below 4% in March


11.1  MIDDLE EAST: Fitch Ratings Reviews Ambitious Regional Drive for Renewables Generation
11.2  ISRAEL: Six Trends of the Israeli Tech Industry in 2019
11.3  GCC: Russia and the Gulf States – Pragmatic Energy Partners
11.4  OMAN: Oman Outlook Revised to Negative on Rising External Risks; ‘BB/B’ Ratings Affirmed
11.5  EGYPT: Moody’s Upgrades Egypt’s Ratings to B2, Stable Outlook
11.6  TURKEY: University Graduates Swell Turkey’s Army of Jobless
11.7  GREECE: ‘B+/B’ Ratings Affirmed; Outlook Positive


1.1  Jerusalem Allocates NIS 180 Million for Startups in Outlying Regions

The Israel Innovation Authority (previously known as the Office of the Chief Scientist of Israel’s Ministry of Economy) has launched a special support track for local entrepreneurship in the outlying areas amounting to NIS 180 million over five years.  The Innovation Authority is promoting the founding of incubators in Zone A development areas.  In contrast to the past, the aim of these incubators is to create a regional ecosystem that will connect research and development companies with regional assets: focuses of know-how, industry, other businesses, etc.

Behind the conceptual change in the incubators model lies one of the most prominent characteristics of the high-tech industry – the massive concentration of startups in central Israel.  Some 77% of the startups in Israel are in this region.  One of the main challenges in the high-tech industry has been the shortage of personnel, while the outlying areas have not benefited from this industry.  For example, employees with high salaries are obliged to choose between living in central Israel and living in the outlying areas and traveling long distances to and from work.

The Israel Innovation Authority is now looking for franchise holders to operate the incubators.  The franchise holders will be selected according to their ability to promote cooperative efforts with academic institutions, industrial concentrations, investors, partners, and potential customers.  The franchise period is for five years, with a three-year extension option.  The franchise holders will have to have NIS 10 million in capital behind them, compared with NIS 50 million in the ordinary incubators. Each incubator will receive NIS 1.5 million in financing for its regular activity.  Regular costs will of course be higher; the incubators’ investors will finance them.

The companies operating in the incubator will receive support of up to NIS 1 million per company, with a grant percentage of 85% for a year in order to prove that the idea is practical.  The companies will also benefit from the Innovation Authority’s other benefit tracks.  If a company succeeds in turning the technological idea into a business idea, it will have to present a development program to the Innovation Authority.   Approved programs will receive 60% of the total budget up to a NIS 6 million grant.  (Globes 18.04)

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1.2  Israel’s 21st Parliament Sworn-In, Inaugurating Netanyahu’s Fifth Term as Prime Minister

Israel’s 21st parliament (Knesset) held its opening session on 30 April, with the 120 lawmakers elected in the country’s 9 April national elections taking the oath of office.  Prime Minister Benjamin Netanyahu was sworn in following his plurality victory and will seek to form a governing coalition in the days ahead.  President Rivlin delivered a speech opening the new Knesset’s first plenary session, calling upon members to set aside political differences raised in the contentious election season that saw a lot of name-calling and criminal accusations of corruption as well as sexual harassment.  He called upon both the opposition and the ruling majority to unite in order to serve the Israeli public.  He further called for unity across Israel’s demographic sectors.

Prime Minister Netanyahu earned a fresh mandate and a record fifth term as prime minister in the recent ballot, putting him on track to surpass Israel’s founding father Ben Gurion as the country’s longest-serving leader.  While both Blue & White faction leader Gantz and Netanyahu’s Likud party earned 35 seats in the vote, the collective majority of right-wing parties left the incumbent better positioned for form a government.  He is expected to assemble what some call a right-wing coalition, bolstered by a strong ultra-Orthodox bloc and the inclusion of far-right elements.  (i24NEWS 30.04)

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2.1  Trustpilot Partners With to Integrate Customer Reviews Into Videos announced a partnership with Denmark’s Trustpilot, a leading global customer review platform, to help businesses integrate customer reviews into their marketing videos for added credibility, engagement, and performance.  Review-based videos are proven to be more powerful and effective as people look for trust and social recommendations regularly on social media.  With this partnership, anyone can use Promo to incorporate highly engaging review content into their marketing videos at the click of a button.

The integration, which will utilize Trustpilot’s API to import authentic customer feedback, enhances messaging and credibility, offering improved brand awareness, customer loyalty, and retention. users can now sync to their Trustpilot accounts to access their best recent reviews as well as their Trustpilot TrustScore to showcase in their video ads.  This short and simple action lets digital marketers achieve beautifully designed results.

Consumers post more than 2 million reviews on Trustpilot every month.  Beyond the star ratings, Trustpilot customers can access deep insights and analytics from the review content that business can leverage to improve products, services, and to connect with their audiences at scale. is already being used by over one million businesses of all sizes, from solopreneurs, and freelancers, to Fortune 500 and publicly traded companies in over 200 countries.

Tel Aviv’s is the #1 video creation platform for businesses and agencies. helps businesses of all sizes to leverage great visual content to promote anything they want online in smart, effective ways. offers access to over 15 million premium video clips and images, ready-made templates, pre-edited licensed music, and a user-friendly editor. is an official Facebook & Instagram Marketing Partner, and a YouTube Creative Partner.  (Trustpilot 17.04)

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2.2  D-ID Wins Prestigious Netexplo Award for Innovative Identity-Protection AI

D-ID announced that it is one of ten 2019 Netexplo award winners for developing an artificial intelligence technology that protects facial images from being automatically detected by face-recognition algorithms. D-ID was selected from over 2,000 technology initiatives.  D-ID presented at the Netexplo Innovation Forum on 17 April at UNESCO House, Paris, France.  Paris based Netexplo Observatory spots more than 2,000 innovations per year through an exclusive global network of 19 leading universities, facilitated in partnership with UNESCO.  It continuously tracks the hottest topics in tech and studies the impact of digital tech on society and business.

Tel Aviv’s D-ID was established by veterans of the Israel Defense Forces Intelligence Corps’ elite 8200 unit.  These out-of-the-box innovators rose to the challenge creating the first facial image de-identification solution, to protect privacy without influencing usability.  D-ID employs market-leading experts in deep learning, computer vision and image processing.  D-ID’s IP-protected solutions are being successfully implemented in leading fortune 500 companies and institutions worldwide.  (D-ID 17.04)

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2.3  VDOO Raises $32 Million in Series B Financing for Embedded Devices and IoT Security

VDOO Connected Trust raised $32 million in Series B funding led by venture capital firms WRVI Capital and GGV Capital, with participation from NTT DOCOMO, which joined the round based on earlier successful cooperation, MS&AD Ventures, an affiliate of a global cyber insurance firm, and strategic individual investor Mr. Avigdor Willenz, Founder of Galileo Technologies and Annapurna Lab.  83North, Dell Technology Capital and David Strohm, who led the company’s initial financing, also participated in the B round.

The funding will enable VDOO to increase market adoption of its IoT security platform while also expanding its technical capabilities, as the company sets its sight on becoming the industry’s first end-to-end security solution for embedded devices of any type.  This round brings the company’s total funding to $45M.

The funds will be used to accelerate product innovation in the form of a comprehensive set of automated analysis capabilities, including zero-day vulnerabilities detection, that enable device vendors to implement unprecedented security levels at scale, both for new and legacy devices.  In addition, the round will fuel the expansion of a rapidly growing partner and distribution network, which already includes NTT, Macnica, DNP and Fujisoft in Japan.  VDOO’s partners help IoT makers easily secure their devices, address their customers’ security expectations, and comply with emerging IoT regulatory actions and industry standards.

Tel Aviv’s VDOO helps embedded device vendors worldwide increase the security level of any of their products by automatically analyzing the security gaps of each device, using the cloud or a closed local environment.  The company’s advanced device attributes segmentation engine uses machine learning to build actionable security requirements in less than one hour, enabling vendors to take instant actions towards device hardening and active runtime protection – using a single platform.  (VDOO 24.04)

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2.4  Audioburst Announces New Investments and Dentsu & Hyundai Strategic Partnerships

Audioburst unveiled plans to build unique advertising and in-car voice-based experiences with brands Dentsu and Hyundai Motor Company.  These partnerships are accompanied by investments, in conjunction with existing investors, totaling $10 million.  In addition, Audioburst plans to launch in the Japanese market at the end of 2019, marking their first move outside of English-language content.

Hyundai plans to add Audioburst’s personalized audio search, playlists and Deep Analysis API to its Hyundai and Kia models’ infotainment systems providing drivers with an engaging, screen-free and original-voice experience.  This move will also put the company in a prime position to respond to user behavior, utilizing Audioburst’s ability to understand real-time consumer audio content consumption.

Dentsu, the 5th largest global advertising agency, will be working closely with Audioburst to build a new market for personalized audio as an effective advertising channel for brands in Japan.  An Audioburst solution will help provide their clients with actionable insights into listener fascinations and behavior.

Tel Aviv’s Audioburst is an AI-based Voice Search platform that connects audio content and users.  With the mission of organizing the world’s audio content, Audioburst is building the world’s largest growing library.  Every day, their AI platform listens to, understands, segments and indexes millions of minutes of audio information from top radio stations and podcasts.  Powered by advanced NLP technology and a proprietary AI platform that indexes audio segments into searchable bursts in real-time, Audioburst is introducing an entirely new way for consumers and businesses to interact with live or recorded audio content across platforms and devices.  (Audioburst 22.04)

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2.5  Willi-Food Signs MOUs to Buy 2 Companies

On 23 April, G. Willi-Food Investments announced it had signed two memoranda of understanding (MOUs) for acquiring control of two food companies: fruits and vegetables supplier Bikurei Hasadeh North and Miki Food Industries Fish and Salads (1992).

G. Willi-Food reported an MOU to acquire 51% of Bikurei Hasadeh, which imports, distributes and markets fresh fruits and vegetables. Last year, Bikurei Hasadeh also acquired food chain Super Bareket, which has 11 branches. According to the MOU signed by G. Willi-Food and Bikurei Hasadeh North, the latter will issue ordinary shares constituting 41% of Bikurei Hasadeh North’s issued capital after the offering for NIS 70 million.  Simultaneously with the issue, the Bikurei Hasadeh North founding shareholders will sell 10% of Bikurei Hasadeh’s ordinary shares from their holdings in the company, giving G. Willi-Food 51% of the share capital in Bikurei Hasadeh North if and when the issue and sale are completed.

G. Willi-Food also reported signing an MOU to acquire control of Miki Food Industries Fish and Salads. G. Willi-Food is negotiating to found a joint company with Miki Food Industries that will acquire all the activity and assets of Miki Food related to G. Willi-Food’s activity for NIS 10 million. If the deal goes through, G. Willi-Food will hold 70% of the new company’s shares and Miki Food Industries 30%. G. Willi-Food will also grant the new company a NIS 5 million owners’ loan.  The two deals are subject to various conditions, including the completion of due diligence within 90 days of the signing of the MOUs.  (Globes 23.04)

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2.6  Oriient Secures $4 Million to Finally Bring in-Store Navigation to the Masses

Oriient announced the closing of $4m in seed funding from F2 Capital and innogy Innovation Hub, the accelerator and venture capital arm of innogy SE, a leading German energy company.  The company also announced it is already working with the world’s largest retailers, as it scales to unlock the power of indoor navigation by delivering an experience similar to online search, to in-store shoppers.

Oriient provides enterprise level businesses including retailers, airports, malls and wholesalers, with the ability to allow their customers to navigate large areas and locate items with pin-point accuracy.  The service is the first solution of its kind requiring no installation nor hardware: instead of using beacons or WiFi, it is based on just Earth’s magnetic field and users’ smartphones.

Oriient, a Tel Aviv based technology company, is a pioneer of magnetic field-based indoor positioning.  Oriient’s service powers location-aware mobile apps in any indoor environment.  Focused on the retail and smart buildings verticals, Oriient helps people find products, places and other people in difficult to navigate indoor environments.  (Oriient 25.04)

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2.7  Medicinal Genomics Partners with Eldan to Distribute Cannabis Testing Solutions in Israel

Beverly, Massachusetts’ Medicinal Genomics Corp. (MGC), a pioneer in genomics and blockchain technology that improves the yield, safety and transparency of cannabis, signed a product distribution and sales agreement with Eldan of Petah Tikva, Israel, a leading medical devices and life sciences distributor and a member of the Neopharm Group.  The distribution agreement gives Eldan access to the full range of Medicinal Genomics’ proprietary cannabis testing platforms for the detection of cannabis genes, genotypes, microorganisms, pests and pathogens on or in cannabis, as well as MGC’s full complement of genomics solutions, including the recently announced cannabis pan-genome project.

The Israeli market has long been known for its role in pioneering cannabis research.  As signs that the country’s cannabis industry is moving towards normalization, recently Israel voted to decriminalize recreational use, passed approval of cannabis exports, and saw a cannabis technology conference in Tel Aviv draw over 1,000 participants from 45 countries.  A survey in 2017 showed that 27 percent of Israelis between the ages of 18 and 27 consumed cannabis in the prior year, one of the highest rates of consumption in any country.  Currently, about 35,000 Israelis hold medical cannabis licenses, but usage is expected to jump with the passing of this latest legislation.

Signing Eldan Electronics as its distributor in Israel is the latest in a series of technology licensing and distribution agreements executed by Medicinal Genomics.  (Medicinal Genomics 29.04)

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2.8  BIRD Energy Opportunities for U.S.-Israel Cooperation for Energy & Efficiency Technologies

BIRD Energy announced its next funding cycle for U.S.-Israel joint project proposals with a focus on Renewable Energy and Efficiency and Natural Gas Technologies.  To be considered, a project proposal must include R&D cooperation between two companies or cooperation between a company and a university/research institution (one from the U.S. and one from Israel).  The proposal should have significant commercial potential and the project outcome should lead to commercialization.

Examples of research and development topics within the scope of this call are: Solar and Wind Power, Advanced Vehicle Technologies and Alternative Fuels, Smart Grid, Storage, Water-Energy Nexus, Advanced Manufacturing or any other Renewable Energy/Energy Efficiency technology.  This year the topic of natural gas technologies was also added to the scope.  The conditional grant per project is up to 50% of the R&D costs associated with the joint project, and up to a maximum of $1 million per project.

The application process is web-based and requires prior discussion with the BIRD Foundation.  The deadline for Executive Summaries is 2 July 2019 and full proposals are due by 21 August 2019.  Decisions on projects selected for funding will be made in the end of October, 2019.

BIRD Energy was established following an agreement between the U.S. Department of Energy/EERE and the Israel Ministry of Energy to promote and support joint research and collaborations in the field of Alternative Energy and Energy Efficiency.  BIRD Energy is administered by the BIRD Foundation, which has been promoting cooperation between U.S. and Israeli companies in various technology sectors since 1977.  (The BIRD Foundation 29.04)

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3.1  Promofix Announces Partnership with BeIN Sports

Beirut’s Promofix announced a partnership with BeIN Sports, becoming its sole advertising sales representative in the MENA region.  The new strategic partnerships should put Promofix, a subsidiary and digital arm of Lebanese JGroup, on the map as a global player in the sports ad industry.  Since the signing of the agreement, Promofix will be the executive advertising sales agent for BeIN Sports, in all 24 MENA countries, both online and offline.  Behind the partnership lie plans of further collaboration between the two parties, which have plans on combining their global experience and networks on several fronts.

BeIN Sports, the region’s, and one of the world’s, biggest sports broadcaster.  The network owns exclusive rights to some of the plant’s biggest sporting events, including the UEFA Champions League, FIFA World Cup and La Liga.  As for Promofix, this is a great addition to their very diverse and impressive portfolio. The media group has represented several key players in the region, including Lebanese popular Al Jadeed TV, Shazam, Snapchat, Sizmek, Bucksense, Sharkiya and Summaria.  (Promofix 16.04)

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3.2  KHCC First Oncology Hospital Awarded MAGNET Accreditation Outside of the US

On 24 April, Amman’s King Hussein Cancer Centre (KHCC) was awarded with MAGNET (certificate of excellence) accreditation from the American Nurses Credentialing Centre (ANCC).  The KHCC said that the accreditation is considered the highest and most prestigious recognition for nursing excellence, and is evidence of the KHCC’s progress in achieving better patient care outcomes, safer environments and quality service for KHCC patients.  The final step of the MAGNET accreditation included a three-day field visit by a team of international experts who reviewed a report on the performance of KHCC nursing staff and services.

KHCC is the first oncology hospital outside of the US to become a member of the MAGNET Recognition Program.  Only 8% of hospitals in the US and 9 international healthcare institutions have received such recognition of excellence.  The program focused on the development of several objectives, of which the most important included raising the quality and level of healthcare, identifying points of excellence in nursing services provided to the patient and publishing the results of the finest research available in the field of nursing care.  (JT 24.04)

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3.3  AES to Sell its Interests in Jordanian Power Project

Arlington, Virginia’s AES Corporation has entered into agreements to sell its interests in six power plants in Jordan and the UK for total proceeds of $211 million.  In Jordan, AES agreed to sell two operational thermal power plants and one solar plant under construction for a total of 683 MW to Nebras Power Investment Management B.V. (a wholly-owned subsidiary of Nebras Power Q.P.S.C.) and Mitsui and Co.  These transactions are expected to close later this year.  The sale in Jordan is subject to approvals from project lenders.

In Jordan, AES agreed to sell its 36% interest in the 381 MW Amman East gas-fired power plant, the 250 MW IPP4 oil-fired power plant and the 52 MW AM Solar project, which is currently under construction.  (AES 23.04)

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3.4  Mubadala Investment Company Launches $1 Billion Fund – Abu Dhabi Catalyst Partners

UAE-owned Mubadala Investment Company said it has launched a new $1 billion fund, Abu Dhabi Catalyst Partners, to explore opportunities within the UAE and abroad.  The new fund will be based in Abu Dhabi Global Market (ADGM), the financial center of Abu Dhabi, and will make use of Mubadala’s networks to originate investment opportunities in the region.

Mubadala manages more than $225 billion in assets and has committed $15 billion to the $100 billion SoftBank Vision Fund. It has equity stakes in companies including General Electric and private equity firm Carlyle Group.  Set up in 2015, ADGM is Abu Dhabi’s financial free zone, home to banks, investment funds, asset managers and tech companies.  (Arab News 28.04)

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3.5  Dubai’s Dnata Expands US Catering Operations

Dubai’s Dnata has expanded its US catering operations with a new facility at George Bush Intercontinental Airport in Houston.  The new 4,700 m2 facility, which has with a capacity of more than 10,000 meals a day, will create more than 150 new jobs over the next 18 months.  The launch customer will be British Airways, which operates two daily flights from Houston.

Last year saw Dnata strengthen its position in the US market with the acquisition of New York-headquartered inflight and VIP caterer 121 Inflight Catering.  In addition to Houston, Dnata operates catering facilities at three US airports, in New York (JFK), Nashville (BNA) and Orlando (SFB), serving commercial, VIP and private aviation companies, fixed base operators and charter aircraft operators.

Dnata plans to expand further this year with four additional catering facilities at the airports of Boston (BOS), Los Angeles (LAX), Newark (EWR) and San Francisco (SFO), bringing the total number of airports to eight, and the number of employees to 700.  Globally, Dnata has grown its global catering network in recent years, with the acquisition of Qantas Airways’ catering division and opened new catering facilities in Canberra and Melbourne in Australia, and Dublin in Ireland.  Dnata said it also open a catering operation in Vancouver, Canada this year.  (AB 24.04)

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3.6  Atlanta’s Verusen Selected for Dubai Future Accelerators Program in the UAE

Atlanta, Georgia’s Verusen, an innovator in materials inventory and data management technology, has joined the Dubai Future Accelerators (DFA) program in Dubai, UAE.  The company was selected as one of seven startups out of 245 global applications and is working with Emirates Airlines, one of the world’s leading airlines, to help solve its inventory management challenge.

Verusen’s cloud platform uses artificial intelligence to harmonize and provide visibility into materials inventory data from ERP and other systems.  The technology will help lay the data foundation for materials inventory management and procurement across Emirates Airlines’ complex global supply chain.  Verusen and the six other companies began the nine-week DFA program on 2 March in Dubai and will address three primary challenge categories with Emirates, one of the government’s global companies.  The program is designed to continue to showcase and build Dubai as the central hub for technology.  (Verusen 16.04)

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3.7  Dubai’s Jump the Q Secures Pre-Seed Funding to Expand Their Grocery Delivery Services

Jump the Q, a Dubai based tech startup, has successfully secured a pre-seed funding round of an undisclosed amount from an Abu Dhabi based angel investor.  Jump the Q is a convenience platform (mobile app) that seeks to cater for home services including but not limited to grocery delivery.  This funding has come just in time to enable the company to refine the product and build the much-needed traction so as to prepare the company for the next phase of growth and expansion.  This investment is another indication of the opportunities that still lies in this sector hence investor confidence despite the presence of some big players in the sector.

Jump the Q mobile application is here to give hassle free shopping experience.  From “Online ordering”, “Scan and Go” to “self-checkout” they let you take total control of the whole process.  Buy everything you need with just a few clicks either through our mobile application or through our web store.  They want you to spend more time doing the things you love and that’s why they are here to never see you waste time by standing in a queue.  Jump the Q is available for free download on Google Play and App store.  (Jump the Q 28.04)

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3.8  BankDhofar First in Oman to Introduce NCR’s Financial Kiosk

Atlanta, Georgia’s NCR Corporation, a global enterprise technology company for the financial industry, announced that BankDhofar, one of the fastest growing banks in the Sultanate, is the first financial institution in Oman to deploy NCR’s Financial Kiosk.  NCR Financial Kiosk offers BankDhofar customers the ability to conduct 90% of teller-aided transactions conveniently and on their schedule, with a digital, self-service experience free from waiting in line in a bank branch.  NCR’s Financial Kiosk is powered by NCR’s SelfServ 81, NCR’s next-generation, mobile-ready ATM platform. In combination with NCR’s Activate software, the bank will now be able to integrate their self-service channel with the rest of their digital infrastructure.

BankDhofar is one of the prominent financial services institutions in the Sultanate.  As part of its transformation strategy ‘Together 2020’, the bank aims at reaffirming its position as a leading bank in the Sultanate of Oman and the best in the Gulf.  BankDhofar provides an extensive network of conventional branches and Maisarah Islamic Banking services branches with more than 121 highly functional ATMs and 55 CDMs serving the customers 24 X 7.  (NCR Corporation 24.04)

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3.9  SAGIA Launches Venture Capital Platform

On 24 April the Saudi Arabian General Investment Authority (SAGIA) launched VENTURE by Invest Saudi, a new initiative aimed at attracting global venture capital firms to the Kingdom.  The VENTURE by Invest Saudi platform will also provide streamlined licensing procedures for venture capital portfolio companies.  Offering an ‘instant license’ in under three hours, VENTURE by Invest Saudi will enable companies to more easily tap into the Saudi market.  So far, more than 20 venture capital firms have signed agreements under the VENTURE by Invest Saudi platform, representing the United States, the United Kingdom, China, and Singapore.

Saudi Arabia is witnessing strong growth in international investment coming into the Kingdom.  Last year, Saudi Arabia saw the value of inward FDI grow 127% year-on-year.  The World Bank recently ranked Saudi Arabia as the 4th largest reformer within the G20 and noted improvement across four key pillars in its latest Doing Business report.  Led by SAGIA, the National Licensing and Reform Program (NLRP) has played an important role in the improvements in the operating environment that have helped to attract increased levels of investment.  Through the Program, the number of licensing requirements in Saudi Arabia has reduced by more than half and the NLRP has already successfully eliminated or modified more than 60% of over 5,500 licenses selected for reform.  (SAGIA 24.04)

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3.10  Foodics Looks to Revolutionize the Food & Beverage Tech Scene in Saudi Arabia

Kuwait’s Faith Capital announced their recent participation in the bridge round of Foodics, a competitive provider of cloud-based POS solutions in the GCC, focused in the F&B market.  Faith Capital will play a pivotal role in the expansion and market share capture in the MENA region and beyond.

Since its inception in 2016, Saudi Arabia’s Foodics has revolutionized the food & beverage tech scene in Saudi Arabia and the United Arab Emirates; steadily growing both regionally and globally as well. It provides an iPad-based restaurant management platform that runs on the Cloud.  Foodics allows single restaurants and food chains to optimize transactions, inventory, employee scheduling, logistics, delivery, loyalty programs and integrate with hundreds of third-party apps.  It was originally set up in 2013 as a bespoke software development house for restaurants but then moved to a product-based SaaS startup in 2016.  Since then, the company on-boarded 4,000 clients and deployed 10,000 terminals all over the Middle East.  With cloud technology and multiple add-on iOS apps, thousands of restaurants, food trucks, cafes and fast-food chains across the Middle East are hiking their revenues and building their relationships with diners.  Foodics 15.04)

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3.11  Hyatt Regency Algiers Airport Opens, Marking the First Hyatt Branded Hotel in Algeria

Chicago’s Hyatt Hotels Corporation announced the opening of the first Hyatt hotel in Algeria, Hyatt Regency Algiers Airport.  Operated under a management agreement with Société d’Investissement Hoteliere EPE SPA, the hotel adds to Hyatt’s growing brand presence across Africa, joining Hyatt’s existing seven properties in Africa including Hyatt Place Taghazout Bay and Hyatt Regency Casablanca in Morocco, Park Hyatt Zanzibar and Hyatt Regency Dar es Salaam in Tanzania, Hyatt Regency Sharm El Sheikh in Egypt, Hyatt Regency Johannesburg in South Africa and the recently opened, Hyatt Regency Addis Ababa in Ethiopia.  Located at Houari Boumediene Airport in Algiers, Algeria, the 320-room hotel is in close proximity to the newest terminal, and is the only hotel linked to the terminal; offering a stress-free connection for travelers.  (Hyatt 24.04)

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3.12  Canada’s Magna Expands Presence in Morocco with New Plant

Canadian automotive supplier Magna is launching the construction work for a new mirrors facility in Morocco.  The move comes as the Canadian giant seeks to be a part of the North African country’s growing automobile sector.  With a budget of $11.3 million, the plant will create 275 job opportunities.  The new plant will be built in the free industrial zone in Kenitra, an hour drive from Rabat.  The plant is set to supply international automotive companies with interior and exterior mirror systems.  The facility will start production in the spring of 2020.

In 2018, Magna and Altran Technologies set up an engineering center in Casablanca to provide engineering services for cars.  Fourteen kilometers away from Europe and a doorway to Africa, Morocco has established itself as a leader in the automotive industry. Morocco’s strategic location has attracted several world leaders in the industry.  Along with the aeronautic industry, the automotive sector is significantly contributing in the success of Morocco’s new development strategy.  Between 2014 and 2018, the automotive industry held the highest record of job creation per economic sector in Morocco.  (MWN 24.04)

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4.1  Dubai Crown Prince Issues Resolution to Regulate Autonomous Vehicle Testing

Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum has issued a new resolution to regulate autonomous vehicle testing in Dubai.  The resolution, the first such initiative in the region, is part of the first phase of a legislative framework being created to ensure the highest efficiency, reliability and security of smart mobility.  The Crown Prince of Dubai, also chairman of the Executive Council, said the resolution aims to ensure the highest level of safety for autonomous vehicles and achieve the objectives of Dubai’s Autonomous Transportation Strategy.  As per the resolution, the Roads and Transport Authority (RTA) is tasked with reviewing the technical aspects and standards related to the safety of autonomous vehicles that will be included in vehicle manuals.  These should be compliant with RTA’s autonomous vehicle testing requirements.

RTA is also tasked with specifying the safety requirements that should be satisfied in vehicle tests.  It is also authorized to set all other conditions and requirements that should be met in the tests.  RTA will also be responsible for providing licenses to operators and overseeing their compliance with RTA’s regulations.  It is also tasked with developing the infrastructure required to conduct such vehicle tests in coordination with concerned authorities in Dubai.

The Dubai Autonomous Transportation Strategy aims to transform 25% of the total transportation in Dubai to autonomous mode by 2030 and is expected to bring AED22 billion in annual economic revenues in several sectors by reducing transportation costs, carbon emissions and accidents, and raising the productivity of individuals as well as saving hundreds of millions of hours wasted in conventional transportation.  The strategy also aims to cut transportation costs by 44%, resulting in savings of up to AED900 million a year.  It will also help save AED1.5 billion a year by reducing environmental pollution by 12%, as well as generate AED18 billion in annual economic returns by increasing the efficiency of the transportation sector in Dubai by 2030.  (AB 24.04)

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4.2  Dubai Municipality Completes $350 Million Phase of Sewage Treatment Project

The Dubai Municipality has completed the second phase of the expansion of Jebel Ali Sewage Treatment Plant at a cost of AED1.3 billion ($350 million).  The addition of extra capacity of 375,000 cubic meters of water takes the combined capacity of Warsan and Jebel Ali plants to about 1 million cubic meters with the possibility of future expansion of three more stages.  The director general of the Dubai Municipality said that the expansion of Jebel Ali plant is one of the important infrastructure projects for the coming years to keep pace with Dubai’s growth.

The expansion produces about 232 billion cubic meters of irrigation water that is enough to irrigate 6,250 hectares of cultivated land.  The project will absorb the excess flow from the areas of Expo 2020 and other areas and will cover the existing urban projects and future projects in the emirate.  The project handles 21,900 tons of solid wastes rich in nutrients that make them suitable fertilizers with high international standards and can be used as biofuels.  (AB 17.04)

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4.3  New Solar Power Projects Inaugurated Under UAE-Caribbean Fund

Three solar power projects in the Bahamas, Barbados, and Saint Vincent and the Grenadines have been inaugurated under the $50 million UAE-Caribbean Renewable Energy Fund (UAE-CREF).  The fund, the largest renewable energy initiative of its kind in the region, is a partnership between the UAE Ministry of Foreign Affairs and International Cooperation, the Abu Dhabi Fund for Development (ADFD) and Abu Dhabi Future Energy Company (Masdar).

In total, the three projects, which broke ground in November, will deliver 2.35MW of solar and 637kWh of battery storage capacity, while displacing more than 2.6 million tonnes of carbon dioxide annually.  Combined, they will also achieve diesel savings of more than 895,000 liters per year, worth about $1.1 million.

The Bahamas, Barbados, and Saint Vincent and the Grenadines face some of the highest power costs in the world, due to their reliance on diesel.  All three projects are designed to withstand up to 160 mile per hour winds and extreme weather in the wake of Hurricanes Irma and Maria.  The three projects all represent significant steps forward in realizing the three countries’ renewable energy ambitions.

The UAE-CREF was launched in 2017 and intends to deploy renewable energy projects in 16 Caribbean countries in three cycles to reduce energy costs, increase energy access, and enhance climate resilience.  UAE foreign aid for renewable energy projects now totals almost $1 billion since 2013, supporting more than 40 countries.  (AB 28.04)

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4.4  BMW First Brand to Officially Launch Electric Vehicles in Egypt

The Bavarian Auto Group (BAG), BMW and Mini’s exclusive dealership in Egypt, has become the first brand to launch electric vehicles (EVs) in Egypt.  BAG completed the preparations to introduce a new generation of cars to keep pace with international markets.  The most prominent preparations made by the group for customers are the completion of the service and maintenance centers to solve all possible problems which may face customers after the acquisition of EVs for the first time in Egypt.

Egyptian Minister of Trade and Industry Nassar stressed the keenness of his government to encourage the production and manufacture of EVs, which represent the future of the automotive industry in the world. He pointed out the importance of keeping up with the current global trends to shift towards environmentally friendly cars.  Nassar added that the government is currently preparing all new cities with infrastructure for charging EVs, especially after the issuance of a republican decision to allow the import of cars without customs duties, which contributes toward encouraging the Egyptian consumer to use this type of car to reduce energy consumption and maintain the environment free of hazardous emissions.  (DNE 23.04)

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5.1  Average Lebanese Inflation Rose by 3.47% During the First Quarter of 2019

According to the Central Administration of Statistics (CAS), Lebanon’s average inflation rate rose by 3.47% y-o-y, compared to an average inflation rate of 5.36% recorded by March 2018.  The average costs of Housing and utilities (including: water, electricity, gas and other fuels), which held a combined 28.4% of the Consumer Price Index (CPI), rose by 3.65% year-on-year (y-o-y) by March 2019.  In details, average Owner-occupied rental costs constituted 13.6% of this category and increased by 2.83% y-o-y.  As for the average prices of Water, electricity, gas, and other fuels (11.8% of the Housing & utilities component), they rose by an annual 4.61% over the same period.  Moreover, the average prices for Food and non-alcoholic beverages (constituting 20% of the CPI) and Education costs (6.6% of CPI) registered yearly upticks of 7.02% and 5.22% by Q1/19.  In turn, the average prices of Health (constituting 7.7% of the CPI), Clothing and Footwear (5.2% of the CPI) increased yearly by 0.7% and 10.17% in Q1/19.  However, the average price of Transportation (13.1% of the CPI) declined by an annual 1.77%.  This decline can be linked mainly to the decline in oil price by an annual 5.06%,given the average price of oil retreated from $67.23/barrel by March 2018 to $63.83 /barrel in the same period this year.  (CAS 23.04)

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5.2  Lebanon’s Industrial Exports Increase by 3% to $2.55 Billion During 2018

According to the Lebanese Ministry of Industry, the total value of industrial exports during 2018 rose by 2.99% year-on-year (y-o-y) from $ 2.47B in 2017 to stand at $2.55B in 2018.  Similarly, on a monthly basis, in December 2018 exports witnessed a 5.8% y-o-y decline in the value of total industrial exports to stand at $213.8M.  In December 2018, the main exported products were products of the chemical industries with a total value of $40.35M recording an increase of 33.8% from $30.14M in December 2017.

The main export market for this product was Turkey which accounted for 13.27% of the total, equivalent to $5.35M; followed by Italy and Iraq with $5.22M and $5M respectively.  Exports of machinery and electrical equipment came in second place, totaling $37M, down from $42.50M in December 2017.  Syria was the largest importer for this category, with an import value of $5.30M, followed by Iraq and Algeria with values of $5.19M and $2.87M respectively.  Prepared foodstuffs and tobacco held 3rd place this year, recording an annual decrease of 23.1% with a total value of $31.98M.  Exports of base metals and articles of base metal followed, despite the 39.6% drop in their export value to $21.55M.

In a regional breakdown, the primary importers of Lebanese industrial products in December 2018 were the Arab Countries, the European Countries and with Non-Arab African each holding a stake of 60.7%, 15.1%, and 11.2% of total exports respectively.  The United Arab Emirates topped the export market with $24M; Saudi Arabia came second with a total value of $21M followed by Syria with $18.8M.  (LMoI 23.04)

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5.3  Lebanon’s Fiscal Deficit Up to $5.8 Billion by November 2018

Lebanon’s fiscal deficit expanded from $3.38B by November 2017 to $5.81B by November 2018 according to the Ministry of Finance.  This was attributed to a 21.8% yearly increase in government expenditures to hit $15.2B, outpacing the 4.5% annual rise in fiscal revenues to stand at $9.9B.  During the same period, the total primary balance displayed a deficit of $490.7M, compared to a $1.4B surplus recorded by November 2017.  The breakdown of revenues reveals Tax revenues (79.7% of total public revenues) increased by a yearly 4.5% to $7.9B by November 2018.  In turn, VAT revenues (grasping 30.4% share of tax receipts) rose by 11.1% y-o-y to $2.4B.  The improvement in VAT revenues continues to be attributed to hiking the VAT rate to 11% from 10%, effective January 2018.

Meanwhile, Custom revenues (15.6% of tax receipts) retreated by 5.22% to $1.2B over the same period.  In turn, non-tax revenues (20.3% of total government revenues) rose by a yearly 10.1% to $2B by November 2018, owing to the yearly 29.1% rise registered in “telecom revenues” to stand at $921.3M over the same period.  On the expenditures front, total public spending recorded a yearly growth of 21.8% to hit $15.2B by November 2018.  Regarding transfers to Electricité du Liban (EDL), they surged from $1.1B in November 2017 to $1.6B in November. 2018 on the back of the continuous increase in average oil prices from $54/barrel until November 2017 to $73/barrel in November 2018.  Moreover, total debt service reached $5.3B by November 2018, up by a yearly 10.4%. In fact, interest payments on government debt went up by 10.8% to $5.1B, while the foreign debt principal repayment recorded an incremental uptick of 0.3% to reach $86.4M to November 2018.  (MoF 19.04)

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5.4  Jordan’s Inflation Rises By 0.7% in First Quarter of 2019

Jordan’s inflation rate rose by 0.7% during the first quarter of 2019, compared to the same period in 2018, according to the Department of Statistics (DoS).  The main commodity groups, which contributed to this increase, were Vegetables, dried and canned legumes (0.56%), cereals and its products by (0.39%), rents (0.32%), education (0.31%) in addition to fuel and lighting (0.09%).  The most main commodity groups the prices of which declined were meat and poultry (0.50%), transport (0.16%), dairy products and eggs (0.11%) and fruits and nuts by (0.07%).  (DoS 22.04)

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5.5  Jordan’s Exports Rise by 11.4% to JOD721 Million

Jordan’s national exports picked up by 11.4% in January and February of 2019 reaching JOD721 million, an increase mainly driven by exports of fertilizers, the Department of Statistics (DoS) announced.  The value of total exports in the first two months of 2019 stood at JOD857 million, an increase of 9.8% compared to the same period last year, while the value of re-exports reached JOD136 million, an increase of 2.5%.  In turn, the value of Jordan’s imports were at JOD2.24 billion, a drop of 1.8% in January and February of 2019.  (Petra 28.04)

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5.6  Jordan’s Tourism Revenue Rises by 5.2% During the First Quarter of 2019

Jordan’s tourism revenue climbed by 5.2% and reached $1.3 billion during the first quarter of 2019, in comparison to the same period of 2018.  The number of foreign tourists arriving in Jordan during the first quarter rose 33.3%, and the number of overnight and group-based tourists increased by 36% and 19.7% respectively.  In 2018, tourism revenue surpassed the $5 billion mark, signifying an 8% increase from 2017’s $4.6 billion.

The number of tourist groups was reported to have increased significantly throughout the first 11 months of 2018, with 86,320 tourists visiting the Kingdom in groups, compared with 61,620 tourists during the same period of 2017, which constituted an increase of 40.1%.  Also during the first 11 month period in 2018, overnight tourists from European countries represented the highest increase in numbers, with a 51.5% increase, compared with the same period of 2017.  Tourists from Asian and Pacific island countries accounted for 24.4%, those from North and South American countries for 22.9% and tourists from African countries accounted for 21.6%.  (Petra 17.04)

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5.7  Foreign Investment in Jordan Drops by 52.6% in 2018

The inflow of Foreign Direct Investment (FDI) into the Jordanian market fell by 52.6% in 2018 compared to 2017, the Central Bank of Jordan (CBJ) reported on 29 April.  According to CBJ, the net FDI to Jordan reached JOD 679.8 million ($958.5 million) in 2018 compared with JOD 1.436 billion ($2.024 billion) in 2017.  FDI, tourism, trade balance and expat remittances are major components in the kingdom’s balance of payments.

FDI into Jordan achieved its highest value in 2008, reaching JOD 2 billion ($2.8 billion), but later declined as a result of the global financial crisis.

During the first half of 2018, the Jordanian government proposed a package of measures to cover the budget deficit including increasing the income tax and energy prices.  The proposal was met with protests across the country which eventually led to the resignation of Prime Minister Al-Mulqi in June that year.  (CBJ 29.04)

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5.8  Jordan’s Shadow Economy Challenges Development

In 2014, the Jordan Economic and Social Council published a report on the scale and causes of tax evasion in Jordan.  In its report, the council cited various studies, estimating the scale of Jordan’s shadow economy at 18.3-21.7% of the Kingdom’s GDP.  However, the World Bank in 2011 estimated it at somewhere between 20 and 25% of Jordan’s GDP.  These estimates, ranging between JOD5 billion and JOD9 billion, include tax revenue lost to evasion, which the government estimated at JOD695 million in 2014, according to the government’s Inform (Khabber) website, citing the economic social council’s data as a reference.

Some 29% of Jordan’s evaded tax revenue is lost to income tax avoidance.  The rest is lost to general sales tax avoidance.  In Jordan, tax evasion was estimated at JOD1.5 billion in 2016, former general director of the Income and Sales Tax Department Bashar Saber stated in March 2017.  However, by August 2018, official estimates of tax evasion in Jordan dropped to JOD650 million, the figure cited by Deputy Prime Minister and Minister of State Rajai Muasher at a meeting with political figures and civil society organizations.  In August 2018, Muasher said that 38% of the Treasury’s income from sales taxation is lost to evasion, contrary to government estimates of 2014.  The new estimate, according to Director General of the Sales and Income Tax Department Hussam Abu Ali, is based on revamped measures introduced by the government under Prime Minister Omar Razzaz, following Hani Mulki’s resignation.  Since then, the government has been pledging new anti-evasion measures and efforts to capture at least some of the revenues lost to tax evasion.

Current studies place tax evasion at around JOD650 million.  This figure includes all tax evasion violations, not only income or sales tax.  The government website Khabber also says that tax arrears in 2014 were estimated at JOD370 million.  Combined, the government’s estimates of both arrears and tax evasion stand at around JOD1.02 billion.  Lost tax revenues are not entirely due to tax evasion, as nearly JOD834 million’s worth of tax exemptions are issued on an annual basis, according to the council’s 2014 report.  Overall, the report cites lost tax revenues in 2012 at JOD1.9 billion.

Earlier this month, Prime Minister Razzaz stated that the new tax laws have helped curb tax evasion.  As a result, tax revenues increased by 62% to JOD21 million during the first quarter of 2018, compared with JOD13 million during the same period last year, the premier said.  (JT 22.04)

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►►Arabian Gulf

5.9  GCC Economy Forecast to Grow by 2.3% in 2019

The GCC is expected to post economic growth of 2.3% in 2019, a marginal improvement on the previous year of 0.3%, according to a new report by the Institute of Chartered Accountants in England and Wales (ICAEW).  It said the GCC economy will be weighed down by renewed OPEC-plus oil production cuts and lower oil prices, with the main source of growth coming from the non-oil sector this year.

Despite a strong drive in recent years by GCC authorities to diversify their economies, oil continues to play a dominant role, constituting up to 46% of total GDP, adding that the renewal of the OPEC-plus oil production cuts will limit the oil sector’s contribution to overall growth in 2019.  The oil sector will also be dampened by lower oil prices, which is forecast at $64 per barrel in 2019, down by $7 from the average in 2018.  The non-oil sector in the GCC is expected to be the primary engine of growth in 2019, forecast to grow by 3.1%.  This will be supported by higher government spending, notably in the UAE and Saudi Arabia.

The report noted that economic activity in the UAE is set to accelerate to 2.2% in 2019, up from an estimated 1.7% in 2018, buoyed by a pick-up in non-oil activity, rising public spending, higher investment ahead of the Expo 2020 and continued regional economic recovery.  According to ICAEW, both the oil and non-oil sectors are expected to be supportive of growth this year.  The UAE’s non-oil sector is expected to accelerate from an estimated 1.3% in 2018 to 2.1% in 2019, supported by expansionary budgets and various pro-growth government initiatives, notably in Abu Dhabi and Dubai, which collectively account for an estimated 90% of the UAE’s GDP.

The economic outlook for Saudi Arabia is set to grow at a pace of around 2% in the coming year with record budget spending and various pro-growth government initiatives ensuring faster expansion of non-oil activity, even as oil sector growth slows.  Saudi Arabia continues to work towards Vision 2030 as its government remains focused on boosting the contribution of its non-oil economy.  A record budget spending and various pro-growth government initiatives will most certainly help boost the country’s economic diversification agenda as oil sector growth slows.  Hiring activity in Saudi Arabia remains subdued – over time this may complicate the Vision 2030 job growth goals.  (AB 17.04)

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5.10  UAE & China Consider Closer Ties to Drive $70 Billion in Trade by 2020

The UAE and China are seeking to expand their economic collaboration, as trade is set to total $70 billion in 2020.  The trade boost was announced during a meeting between Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and Chinese President Xi Jinping in Beijing.  The meeting was held on the sidelines of the Second Belt and Road Conference for International Cooperation held in the Chinese capital.

During Sheikh Mohammed’s visit to Beijing, major deals were signed and investments including the launch of 60 million square feet station at the new Silk Road in Dubai for Expo 2020.  Chinese firm Yiwu will invest $2.4 billion to use the station for storing and transporting Chinese goods from Jebel Ali to the world.  Sheikh Mohammed also announced plans for a $1 billion “vegetable basket”, funded by the China-Arab investment Fund which will import, process and pack agricultural products, marine and animal products and export them all over the world.  Sheikh Mohammed said that the UAE is working to further enhance its relationship and expand collaboration with China following the visit of Jinping to the UAE last year.

The two countries are working to boost collaboration in the business sector at a time when the number of Chinese tourists to the UAE is on the rise.  Over 850,000 Chinese tourists visited the UAE in 2018.  The two leaders also discussed means to boost collaboration between the private sectors of both countries, and ways that Chinese companies can benefit from the investment environment and strong infrastructure offered by the UAE.

Sectors that the two countries are exploring future cooperation in include innovation, technology and scientific research, advanced sciences, artificial intelligence, and small and medium-sized projects.  China is the UAE’s main trade partner with non-oil trade between the two countries exceeding $53.3 billion in 2017.  The UAE accounted for 30% of Chinese exports to Arab countries, and 22% of the Sino-Arab trade in 2017.  (Various 25.04)

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5.11  Israel & Qatar Among 192 Countries Invited to Take Part in Expo 2020 Dubai

Expo 2020 Dubai has invited all 192 countries “without exception” to take part in the event next year, including Qatar and Israel, making it the most inclusive and international Expo ever organized, an official spokesperson confirmed.  “We have invited all countries in the world without exception, in line with our commitment to making Expo 2020 Dubai a truly international event and platform for all of humanity,” an official Expo 2020 Dubai spokesperson said in a statement.

On 25 April, Israel confirmed it will take part in the event.  “I welcome Israel’s participation in the Dubai expo,” Israeli Prime Minister Benjamin Netanyahu said in a statement.  It has yet to be announced which Israeli companies will present their technologies in the Israeli pavilion in Dubai.

Despite the United Arab Emirates, along with Saudi Arabia, Egypt and Bahrain, severing diplomatic, trade and transport links with Qatar in June 2017, Expo 2020 Dubai organizers are in talks with the Doha government to participate in event.

Expo 2020 Dubai will run from 20 October 2020 to 20 April 2021 and it is estimated the event will attract 25 million visitors to the UAE.  The Dubai government is planning to spend around $40 billion on major projects related to the event.  (Various 25.04)

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5.12  Saudi Arabia Starts Year with Budget Surplus for First Time Since 2014

Saudi Arabia began 2019 with a surplus of 27.8 billion riyals ($7.4 billion) in the first quarter, helped by an increase in non-oil revenue as well as income from crude exports, Finance Minister Mohammed Al-Jadaan told an audience of Saudi and international bankers gathered in Riyadh.  Total spending increased by 8% while revenue jumped 48%.  Higher oil revenue and the introduction of value-added taxation as well as subsidy cuts have helped the kingdom repair public finances battered by lower crude prices.  The budget deficit narrowed to 5.9% of gross domestic product last year from 9.3% in 2017.

In addition, the Saudi economy grew 2.2% in 2018; with the non-oil sector accounting for 56.2% of total GDP.  First-quarter oil revenue climbed to about 149 billion riyals, compared with 114 billion riyals in the same period a year earlier.  Income from non-oil activities rose to 76.3 billion riyals, compared with 52.3 billion.  (AB 24.04)

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5.13  Saudi Tourism Numbers Forecast to Exceed 23 Million Visitors by 2023

Saudi Arabia’s travel and tourism sector is expected to contribute $70.9 billion in total to the country’s GDP in 2019 while international visitors are set to rise steadily to 2023, according to new research.  Colliers said international arrivals to Saudi Arabia are expected to increase 5.6% per year from 17.7 million in 2018 to 23.3 million in 2023.  It said religious tourism is expected to remain the foundation of the sector over the next decade, with a goal of attracting 30 million pilgrims to the kingdom by 2030, an increase of 11 million from the 19 million Hajj and Umrah pilgrims that visited the country in 2017.

Saudi Vision 2030 has set aside $64 billion to invest in culture, leisure and entertainment projects over the next decade, which will significantly add to the attractiveness of the country as a touristic destination.  The first phase of the Red Sea project, which is estimated to grow the kingdom’s GDP by $5.86 billion and will consist of an airport, marinas, up to 3,000 hotel rooms and various recreational activities, is also expected to complete during 2022.  Saudi Arabia’s Public Investment Fund has also announced the development of Amaala, a new ultra-luxury tourism megaproject which is earmarked for completion in 2028.

The upbeat tourism forecast is also being driven by domestic tourism with the number of local tourist trips inside Saudi Arabia exceeding 47 million in 2018.  The latest research from Colliers forecasts this figure to increase 8% per year to 70.5 million by 2023.  (AB 21.04)

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►►North Africa

5.14  IMF Fifth Review of Tunisia’s Reform Program Supported by EFF Arrangement

An International Monetary Fund (IMF) staff team discussed Tunisia’s economic reform program and the policy plans for the Fifth Review of the Extended Fund Facility (EFF) arrangement.  The IMF team and the Tunisian authorities reached a staff-level agreement, albeit completion of the review is subject to the approval by the IMF’s Executive Board.  Tunisia will benefit from a sixth disbursement of SDR 177 million (around $247 million) following the Executive Board’s review that is expected to take place by early June 2019.  This will bring total disbursements under the EFF to about $1.6 billion and will help unlock additional financing from Tunisia’s other external partners.

The authorities and IMF staff agreed on policy and reform measures to ensure that the budget deficit target of 3.9% of GDP (before grants) for 2019 can be met to contain the high debt and elevated financing needs.  In parallel, the authorities are working on strengthening the social safety net for lower-income families to help protect them from the potential impact of the reforms, supported by the new databank of vulnerable households.  Monetary and exchange rate policies will remain geared towards reducing inflation that threatens the standards of living of all Tunisians and on supporting an improvement in the large current account deficit through better price competitiveness.  (IMF 17.04)

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5.15  Diaspora Remittances Reach $7.4 Billion in Morocco in 2018

The 2019 Migration and Remittances report from the World Bank has expressed positive expectations on the inflow of remittances from the Moroccan diaspora.  In 2018, according to the report, Morocco received $7.4 billion from its diaspora, equal to 6.2% of the country’s Gross Domestic Product (GDP).  The report found that remittance inflows to North Africa and the Middle East overall experienced rapid growth in 2018.

Egypt ranked highest in remittances, having receiving $28.9 billion from its expatriates, followed by Morocco, Lebanon with $7.2 billion, and Jordan with $4.4 billion.  Tunisia and Algeria received only $2 billion and $1.9 billion, respectively.

Throughout the year, the Moroccan diaspora sends or brings home remittances which help the country’s economy.  The North African country receives thousands of returning expatriates for holidays throughout the year.  In 2018, 1,741,212 passengers, 464,977 vehicles, and 4,390 buses transited the Tangier Med port during the Marhaba 2018 operation that annually facilitates the summer influx of Moroccans living abroad (MREs).  In addition to Tangier Med Port, thousands of MREs also choose to fly home for holidays.  (MWN 24.04)

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6.1  Turkey’s Foreign Trade Deficit Falls by 67.4% During First Quarter

Turkey’s foreign trade deficit in the first quarter of this year fell 67.4% year-on-year, TUIK announced on 30 April.  The figure totaled some $6.8 billion from January to March, improving from a $20.7 billion deficit in the same period last year.  Turkish exports rose to $42.2 billion- up 2.7% on a yearly basis- while imports slipped to $49 billion, down 20.8%.  The exports-to-imports coverage ratio rose to 86.2% in the first three months of this year, up significantly from 66.5% in the same period last year.

In the meantime, Turkey’s energy import bill increased by nearly 10.6% to over $3.7 billion in March compared to the same month of 2018.  The data shows that Turkey’s overall import bill, including energy and other items, reached $17.62 billion in March, with energy accounting for 21%.  The country’s crude oil imports showed almost an 87% increase over the same period compared to March 2018.  Turkey imported approximately 2.5 million tons of crude oil in March, up from 1.33 million tons for the same period of 2018.  (TUIK 30.04)

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6.2  Turkey’s Tourism Income Hits $4.63 Billion in First Quarter

Turkey’s tourism income totaled $4.63 billion in the first quarter of this year.  From January to March, quarterly tourism revenue surged 4.6% year-on-year, up from $4.42 billion in the same period last year, the Turkish Statistical Institute (TUIK) reported.

Official figures said individual expenditures constituted nearly $4.1 billion of the total tourism income, while some $543 million of the revenues came from package tour expenditures.  Turkey welcomed over 6.6 million visitors in the three-month period, an 8.5% rise on a yearly basis – 82.2% foreign and 17.8% Turkish citizens living abroad.  TUIK said visitors’ average expenditures were $697 per capita, as foreigners spent $678 per capita and Turkish citizens spent $765 per capita.  (TUIK 30.04)

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6.3  Cyprus Records One of the Lowest Annual Inflation Rates in EU

Hovering at 1.1%, Cyprus registered one of the lowest annual inflation rates in Europe during March, according to Eurostat.  Inflation in Cyprus in March 2019 increased to 1.1% from 0.8% in February and it was -0.4% in March 2018.  Inflation in Greece increased to 1.0% form 0.8% the month before and 0.2 a year earlier.  Euro area annual inflation rate was 1.4% in March, down from 1.5% in February. A year earlier, the rate was 1.4%. European Union annual inflation was 1.6% in March 2019, stable compared to February.

The lowest annual rates were registered in Portugal (0.8%) Greece (1.0%) and Cyprus, Ireland, Finland, Croatia and Italy (all at 1.1%).  The highest annual rates were recorded in Romania (4.2%), Hungary (3.8%) and the Netherlands (2.9%).  Compared with February 2019, annual inflation fell in six Member States, remained stable in two and rose in 19.  In March, the highest contribution to the annual euro area inflation rate came from energy (+0.52%age points), followed by services (+0.51 pp), food, alcohol & tobacco (+0.34 pp) and non-energy industrial goods (+0.04 pp).  (Eurostat 17.04)

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6.4  Cyprus Bond Sale Raises Money to Pay Russian Debt

Cyprus’ first 30-year bond sale was inundated with orders on 24 April, as Nicosia tapped the markets to raise money to pay-off a 2011 Russian loan worth €2.5 billion.  Cyprus began marketing five-year and its first ever 30-year bonds, and already demand has exceeded €9 billion, split evenly between the two maturities.  Nicosia seeks early repayment of the €2.5 billion loan it obtained in 2011 from Moscow to avert financial crisis as it became locked out of markets.  The loan’s outstanding amount is €1.57 billion.

The demand for 30-year debt from a country that needed a bailout from the European Union and International Monetary Fund just five years ago is remarkable and says as much about the state of the European economy and bond market as Cyprus’ prospects.  Several other euro zone countries have sold super long-dated debt in recent years and the average maturity of government bonds in the bloc is now at the highest level on record at nearly 7.4 years.  (FM 24.04)

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6.5  Cypriot Economic Sentiment Improves Due to Business Confidence

Economic sentiment in Cyprus improved in April 2019 as the University of Cyprus Economic Sentiment Indicator increased by 2.4 points compared to March.  According to the survey, “the Services Confidence Indicator increased as a result of firms making more positive assessments of past business situation and past demand as well as upward revisions in demand expectations”.

The Retail Trade Confidence Indicator did not change from the marginally positive level registered in March, as firms’ views on all three components of the Indicator (past sales, volume of stocks, expected sales) remained broadly unchanged.

The survey recorded a marginal decrease in the Construction Confidence Indicator driven by downward revisions in employment plans.  Moreover, the Industry Confidence Indicator increased due to improvements in company assessments of the current level of order books and upward revisions in production expectations.  The Consumer Confidence Indicator increased only marginally, as more favorable assessments about household-specific aspects (financial situation, intentions for major purchases) were almost offset by more pessimistic views on the future general economic conditions in Cyprus.  (FT 24.04)

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7.1  Yom HaShoah – Holocaust Martyrs’ & Heroes’ Remembrance Day 2019‎

Israel will mark Holocaust Martyrs’ & Heroes’ Remembrance Day (Yom HaZikaron HaShoah ve-‎laGvura in Hebrew) beginning on Wednesday evening, 1 May and Thursday, 2 May.  Holocaust ‎Remembrance Day (Yom HaShoah) is a national day of commemorating the six million Jews ‎murdered in the Holocaust.  It is a solemn day, usually beginning at sunset on Hebrew date of ‎‎26 Nisan and ending the following evening.  The internationally recognized date comes from the ‎Hebrew calendar and corresponds to the 27th day of Nisan on that calendar.  It marks the ‎anniversary of the 1943 Warsaw ghetto uprising.  Some years the observance can be moved by a day later to prevent the desecration of the Sabbath in preparation for the memorial services.‎

Places of entertainment are closed and memorial ceremonies are held throughout the country.  ‎The central ceremonies, in the evening and the following morning, are held at Yad Vashem and ‎are broadcast nationally on television.  Marking the start of the day, in the presence of the ‎President and the Prime Minister, dignitaries, survivors, children of survivors and their families, ‎gather together with the general public to take part in the memorial ceremony at Yad Vashem in ‎which six torches, representing the six million murdered Jews, are lit.  The following morning at ‎‎10:00, the ceremony at Yad Vashem begins with the sounding of a siren for two minutes ‎throughout the entire country.  For the duration of the sounding, work is halted, people walking ‎in the streets stop, cars pull off to the side of the road and everybody stands at silent attention ‎in reverence to the victims of the Holocaust.  Afterward, there is a central ceremony at Yad ‎Vashem, while other sites of remembrance in Israel, such as the Ghetto Fighters’ Kibbutz and ‎Kibbutz Yad Mordechai, also host memorial ceremonies, as do schools, military bases, ‎municipalities and places of work.  Throughout the day, both the television and radio broadcast ‎programs about the Holocaust.

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7.2  Ramadan Begins on Eve of 5 May

Ramadan 2019 is expected to start on Sunday night, 5 May and will continue for 30 days until the evening of 4 June (although this is subject to change because the dates are determined by the sighting of a new moon.).  Ramadan is the ninth month of the lunar Islamic calendar, which lasts 29 or 30 days according to the visual sightings of the crescent moon according to numerous biographical accounts compiled in Hadiths.  It is the Muslim month of fasting, in which Muslims refrain from dawn until sunset from eating, drinking and sexual relations.  The sawab (rewards) of fasting are many, but in this month, they are believed to be multiplied.  Muslims fast in this month for the sake of demonstrating submission to God and to offer more prayers and Quran recitations.

Ramadan is a time of spiritual reflection and worship.  Muslims are expected to put more effort into following the teachings of Islam and to avoid obscene and irreligious sights and sounds.  Purity of both thoughts and actions is important.  The act of fasting is said to redirect the heart away from worldly activities, its purpose being to cleanse the inner soul and free it from harm.  It also teaches Muslims to practice self-discipline, self-control, sacrifice and empathy for those who are less fortunate; thus encouraging actions of generosity and charity (zakat).

 It becomes compulsory for Muslims to start fasting when they reach puberty, so long as they are healthy, sane and have no disabilities or illnesses.  The elderly, the chronically ill and the mentally ill are exempt from fasting, although the first two groups must endeavor to feed the poor in place of their missed fasting.  Also exempt are pregnant women if they believe it would be harmful to them or the unborn baby, women during the period of their menstruation, and women nursing their newborns.  A difference of opinion exists among Islamic scholars as to whether this last group must make up the days they miss at a later date, or feed poor people as a recompense for days missed.  While fasting is not considered compulsory in childhood, many children endeavor to complete as many fasts as possible as practice for later life.  Lastly, those traveling (musaafir) are exempt, but must make up the days they miss.  Twelver Shi’a believes that those who travel more than 14 miles (23 km.) in a day are exempt.

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7.3  Israel Commemorates Those Who Fell in Service to the Nation

Israel’s Memorial Day for Fallen Soldiers and Victims of Terrorism which will begin at sundown on 7 May, honors the soldiers who have fallen in the line of duty since 1860 (when modern-day Jews first lived outside of Jerusalem’s Old City walls).  The Memorial Day begins with a minute-long siren sounded at 20:00h, followed immediately by official events.  On the following day, a two-minute siren will be sounded at 11:00 as part of Memorial Day ceremonies across the country.  For the duration of the sounding of both sirens, work is halted, people walking in the streets stop, cars pull off to the side of the road and everybody stands at silent attention in reverence to the fallen soldiers and victims of terrorism.

A small flag a black ribbon will be laid on the grave of every soldier who died in the line of duty as an expression of respect and sympathy.  More than a million people are expected to visit military cemeteries across the country.  Though a regular work day, activity is usually curtailed and many leave their offices early pending the Independence Day celebrations that follow.

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7.4  Israel’s Independence Day – 71 Years After Sovereignty was Regained

Celebrations for the 71st anniversary of Israel’s regaining its independence will begin on Wednesday evening, 8 May throughout the country, continuing throughout Thursday, 9 May.  The official observance starts when the state flag is raised to full mast at a national ceremony on Mount Herzl in Jerusalem.  Israel Independence Day is celebrated annually on 5 Iyar, which corresponded to 14 May 1948, the date the British mandate ended over the Land of Israel.  A religious and national holiday, Yom HaAtzmaut – Independence Day is a celebration of the renewal of the Jewish state in the Land of Israel, the birthplace of the Jewish people.  In this land, the Jewish people developed its distinctive religion and way of life.  In the Land of Israel, the Jews preserved an unbroken physical presence, for centuries as a sovereign state, at other times under foreign domination.  Throughout their long history, the yearning to return to the Land has been the focus of Jewish life.  With the rebirth of the State of Israel, in 1948, Jewish independence, lost 1,878 years earlier, was restored.

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7.5  Jordan Ranks 10th Regionally on World Happiness Report 2019

The World Happiness Report 2019, published by the Gallup International Association (GIA), ranked 156 countries by happiness levels, based on factors such as life expectancy, social support, and corruption.  The report has ranked Jordan 10th among Arab countries, while it ranked the Kingdom 90th internationally.

According to the same report, Jordan came after the United Arab Emirates (UAE), which ranked first in the Arab world, followed by Qatar, Saudi Arabia, Bahrain, Kuwait, Libya, Algeria, Morocco, and Lebanon.  The report also published a list of the top ten happiest and most miserable countries in the world, where Finland has maintained its first rank among all happiest countries in the world, while the UAE, which ranked 20th internationally, maintained its first rank regionally.  The ranking of the other Arab countries was as follows:

-Qatar (32)

-Saudi Arabia (33)

-Bahrain (43)

-Kuwait (45)

-Libya (70)

-Algeria (84)

-Morocco (85)

-Lebanon (88)

-Jordan (90)

-Somalia (98)

-Tunisia (111)

-Iraq (117)

-Egypt (122)

-Sudan (137)

-Syria (150)

-Yemen (152) (Roya 29.04)

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7.6  UAE Launches World’s First Ministry of Possibilities

On 23 April, the United Arab Emirates unveiled a new branch of government, a Ministry of Possibilities, three years after launching a department in charge of happiness.  Sheikh Mohammed bin Rashid Al-Maktoum, the UAE’s premier and ruler of Dubai, said the “unconventional” ministry would function “without a minister” but with input from the whole cabinet.  This virtual ministry will address pressing national portfolios and build future government systems.  It would also cut waiting times for government services, according to the Dubai government’s media office.

The Ministry of Possibilities will oversee the Department of Behavioural Rewards in the first phase.  The department will bring together a team from different ministries and public entities to develop an approach for incentivizing positive behavior through a point-based “rewards” system.  Individuals will be able to collect points that can be used in payments for government services.  The department will also develop a list of positive behaviors with a measurement system that will calculate points and rewards.  (WAM 23.04)

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7.7  Egypt Voters Approve Referendum Extending President’s Rule

On 23 April, voters in Egypt approved constitutional amendments allowing President Abdel-Fattah el-Sissi to remain in power until 2030, a move that critics fear will cement his authoritarian rule eight years after a pro-democracy uprising.

El-Sissi led the military overthrow of an elected but divisive Islamist president amid mass protests against his rule in 2013 and has since presided over an unprecedented crackdown on dissent.  Thousands of people, including many pro-democracy activists, have been arrested by authorities.  Freedoms won in 2011, when mass protests ended President Hosni Mubarak’s nearly three-decade rule, have been rolled back.

Egypt’s National Election Authority said the amendments to the 2014 constitution were approved with 88.83% voting in favor, with a turnout of 44.33%.  The nationwide referendum took place over three days, from Saturday through Monday to maximize turnout.  Egypt has some 61 million eligible voters.

Pro-government media, business people and lawmakers had pushed for a “Yes” vote and a high turnout, with many offering free rides and food handouts to voters, while authorities threatened to fine anyone boycotting the three-day referendum.  Two international advocacy groups – Human Rights Watch and the International Commission of Jurists – had urged the Egyptian government to withdraw the amendments, saying they placed the country on a path to more autocratic rule.

Generally, the amendments extend a president’s term in office from four to six years and allow for a maximum of two terms.  But they also include a special article specific to el-Sissi that extends his current second four-year term to six years and allows him to run for another six-year term in 2024 – potentially extending his rule until 2030.  During the referendum, business people and lawmakers loyal to el-Sissi offered incentives to voters.  They provided buses to transport people free of charge to a polling center. Also some voters were being handed bags of food staples – like oil, rice and sugar – after they cast their ballots.  Trucks with loudspeakers drove around central Cairo through the three-day referendum, playing patriotic songs and urging people to vote.  (Various 24.04)

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8.1  Tyto Care & Best Buy Launch TytoHome – Medical Exams On-Demand from Home

Tyto Care is partnering with Best Buy to make it easier and more convenient for customers to receive health care.  Tyto Care’s TytoHome is now available exclusively on for all customers and in select Minnesota Best Buy stores, with in-store availability coming soon in North Dakota, South Dakota, California and Ohio.

TytoHome, available for $299.99, is a handheld examination device with attachments that can examine the heart, lungs, skin, ears, throat and abdomen, as well as measure body temperature, to enable remote diagnosis of acute care situations like ear infections, sore throats, fever, cold and flu, allergies, stomach aches, upper respiratory infections, coughs, rashes and more.  TytoHome enables users to perform comprehensive medical exams and send the captured exam information to a primary care provider for diagnosis.  Users can connect with a provider 24 hours a day, seven days a week, 365 days a year, no matter their location.

Tyto Care works with experienced, quality telehealth platforms across the country including LiveHealth Online, powered by American Well, the leading telehealth provider in the U.S.  LiveHealth Online is the current telehealth provider for users who purchase TytoHome at and reside outside of Minnesota, Iowa, North Dakota or South Dakota.  Also, through LiveHealth Online, select employers can offer the service to their employees and provide them with coupons to purchase TytoHome at Best Buy.

Netanya’s Tyto Care is transforming primary care by putting health in the hands of consumers.  The company seamlessly connects people to clinicians to provide the best virtual home examination and diagnosis solutions.  Tyto Care’s solutions are designed to enable a comprehensive medical exam from any location and include a hand-held, all-in-one tool; a complete telehealth platform for sharing exam data, conducting live video exams, and scheduling visits; a cloud-based data repository with analytics; and built-in guidance technology and machine learning algorithms to ensure accuracy and ease of use for patients using the device at home.  The platform also allows for simple integration with electronic health records systems, third party exam tools and other telehealth platforms.  (Best Buy 17.04)

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8.2  Aidoc Raises $27 Million to Expand Its Life-Saving AI Solutions Across Medical Imaging

Aidoc announced a $27 million investment, bringing its total funding to $40 million.  The Series B round, led by Square Peg Capital, will be used to grow Aidoc’s technology and go-to-market team to support the high market demand for its products.  The funding comes as Aidoc announced that it has analyzed its millionth patients CT scan in real-time – the largest number of images analyzed by an AI tool and a landmark in the radiology AI ecosystem.  In addition, Aidoc will be releasing its oncology line of products as well as the extension of its current suite for time-sensitive conditions to X-ray.

Aidoc’s FDA-cleared and CE-marked solutions support and enhance the impact of radiologist diagnostic power, helping them expedite patient treatment and improve quality of care.  Radiologists benefit from deep learning technology that is “Always-on”, running behind the scenes and freeing them to focus on the diagnosis.  Aidoc’s solution flags the most critical, urgent cases where a faster diagnosis and treatment can be a matter of life and death.  Aidoc’s results are clinically proven and independently monitored.

An early leader in AI healthcare, Tel Aviv’s Aidoc was one of Time Magazine’s 50 Genius Companies of 2018 and its founders were recognized in Forbes’ “30 under 30” list.  The company’s solutions reduce turnaround time and increase quality and efficiency by flagging acute anomalies in real-time.  Aidoc’s healthcare-grade deep learning algorithms benefit from large quantities of data, making their solutions the most comprehensive in the field, and enabling them to provide diagnostic aid to the broadest set of pathologies.  (Aidoc 17.04)

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8.3  PlantArcBio New Collaboration in the Development of Breakthrough Crop Enhancers

Givat Chen’s PlantArcBio and ICL Innovation, a subsidiary of ICL, have signed a collaboration agreement for the development of innovative crop productivity enhancers for agriculture.  The agreement was signed following a proof of concept that was performed by the companies in 2018.  As part of the collaboration between the companies, PlantArcBio will use its discovery capabilities to identify biological targets and by using innovative techniques, will bring about improved crop productivity in various crops for global agriculture.  Targets that will be successfully identified as possessing a positive impact on crop productivity will be integrated in the ICL development pipeline for continued development and formulation.  Both parties estimate that the commercialization of their collaborative products will be possible within five years.  (PlantArcBio 15.04)

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8.4  Theator Raises $3 Million

Theator helps surgeons enhance capabilities and reduce medical errors by leveraging machine learning and computer-vision to identify, optimize and scale dissemination of best practices.  While most companies at the intersection of healthcare and AI are working on static images such as x-rays and CTs for diagnostics, Theator is working to leverage video – a critical missing piece in the sector.

Theator has also launched its first product – a platform called Minutes, which provides edited versions of surgical procedures covering surgical steps and outcome-critical components.  Hours-long procedures can be reviewed in minutes, helping surgeons prepare and review procedures.  AI-powered algorithmic analytics can also inform surgeons on their performance.  Videos will be stored in a repository where surgeons access palatable, actionable footage as they prepare for procedures and retrieve crucial information post-operatively to debrief and improve patient care.

Tel Aviv’s Theator is building a SaaS platform to provide surgeons with AI-powered decision support tools.  Theator is helping surgeons improve performance by leveraging machine learning and computer-vision to identify, optimize and scale dissemination of best practices.  The company’s long-term vision is to enhance surgeon performance in real time and build the future cognitive base to enable autonomous surgical robotic platforms.  Launching in April 2019, Theator’s first product, Minutes, is a highlight reel and analytics tool providing intelligently edited versions of surgical procedures.  These are presented to surgeons in a palatable and actionable form in order to help prepare and debrief, quickly and efficiently, using AI-powered algorithmic insights.  (Theator 17.04)

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8.5  Teva Launches a Generic Version of VESIcare Tablets in the United States

Teva Pharmaceutical Industries announced the launch of a generic version of VESIcare 1 (solifenacin succinate) Tablets, 5 mg and 10 mg, in the U.S.  Solifenacin Succinate Tablets are a muscarinic antagonist indicated for the treatment of overactive bladder with symptoms of urge urinary incontinence, urgency, and urinary frequency.  Overactive bladder (OAB) is most often characterized by a strong sudden urge to urinate that is difficult to control.

With nearly 500 generic medicines available, Teva has the largest portfolio of FDA-approved generic products on the market and holds the leading position in first-to-file opportunities, with over 100 pending first-to-files in the U.S.  Currently, one in eight generic prescriptions dispensed in the U.S. is filled with a Teva generic product.

Israel’s Teva Pharmaceutical Industries has been developing and producing medicines to improve people’s lives for more than a century.  They are a global leader in generic and specialty medicines with a portfolio consisting of over 35,000 products in nearly every therapeutic area.  Around 200 million people around the world take a Teva medicine every day and are served by one of the largest and most complex supply chains in the pharmaceutical industry.  (Teva 22.04)

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8.6  Rapid Medical Raises $20 Million to Support Stroke Treatment Products

Rapid Medical completed an oversubscribed Series C financing of $20 million.  The proceeds will be used for the completion of the TIGER U.S. IDE study and to support accelerating commercial growth of the company’s minimally invasive stroke treatment and prevention products worldwide.  The round was led by JAM Capital Partners and MicroPort with participation from Agate JT, RocSon Medtech Fund and existing investors.

The proceeds will be used to develop a commercial presence in the U.S. ahead of regulatory approvals, expanding the Company’s sales and marketing efforts in Europe, as well as the development of additional innovative products.  In addition, the funding will be used to support the completion of TIGER IDE study in the U.S., which has been successfully enrolling patients since May 2018.  As well, Rapid Medical and MicroPort have entered into a partnership granting MicroPort the marketing rights for Rapid Medical’s TIGERTRIEVER and COMANECI products in China.

Yokneam’s Rapid Medical is developing game-changing devices for endovascular treatments.  Rapid Medical is the maker of TIGERTRIEVER, the first-ever controllable, fully visible stentriever that is designed to treat ischemic stroke patients and COMANECI, the first-ever controllable aneurysm neck-bridging device.  TIGERTRIEVER and COMANECI are CE marked for use in Europe.  (Rapid Medical 23.04)

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8.7  Mondelēz Collaborates With Israel’s The Kitchen to Lead the Future of Snacking

Deerfield, Illinois’ Mondelēz International has reached a collaboration agreement with The Kitchen, Israel’s only FoodTech-focused incubator and one of the first FoodTech incubators in the world.  This collaboration is led by Mondelēz International’s R&D and SnackFutures teams, the company’s innovation and venture hub aimed at unlocking snacking growth opportunities around the world.

Through the collaboration, Mondelēz International will have unparalleled access and visibility to one of the world’s leading FoodTech ecosystems.  At the same time, Mondelēz International will offer technological and commercial expertise to entrepreneurs from The Kitchen and provide an opportunity to work in the company’s global Technical Centers, including access to pilot plants and internal experts across a variety of areas such as R&D, Food Safety, Marketing Insights and Operations.

Counting 12 portfolio companies so far, The Kitchen addresses global food challenges by nurturing and investing in cutting-edge technology startups.  The goal is to nourish promising FoodTech ventures that can disrupt the global food system – making it more productive, more affordable, more sustainable, and healthier.

Founded in 2015 as a part of the incubators program of Israel Innovation Authority, and owned by Strauss Group, Ashdod’s The Kitchen is Israel’s only FoodTech focused incubator.  The Kitchen addresses global food challenges by harnessing Israel’s renowned innovation eco-system.  Some examples of their areas of interest are: supply chain technologies, efficient food processing, sensors for food safety and quality, prolonged shelf-life and reduction of food spoilage, smart packaging, ingredients and products with new health benefits, improved nutritional profiles, reduction of environmental foot prints.  (Mondelēz International 25.04)

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8.8  The Technion’s New Center for 3D Tissue Printing

An innovative center for the printing of cells, tissues, and organs has been established in the Faculty of Biomedical Engineering at the Technion–Israel Institute of Technology in Haifa.  The field of tissue engineering has undergone dizzying progress in recent decades – and the Technion has filled a significant role in this revolution.  Technion researchers are developing complex and precise artificial tissues that significantly improve their integration in the target organ.  This involves, among other things, the creation of tissue containing a developed system of blood vessels that quickly connect to the patient’s blood vessels.

The 3-D Bio-Printing Center for Cell and Biomaterials Printing will provide a significant boost to the field of tissue engineering.  The center operates an innovative printer that prints three-dimensional scaffolds and the cells that grow into tissue.  The printer translates the information obtained from the patient’s CT scans into three-dimensional tissue suited to the injury area. The system has additional tools to design scaffolds or cells to make 3D tissues.  The printer is relevant to all areas of regenerative medicine and makes possible the printing of various tissues and the integration of controlled- release systems.  It has several different printing heads, enabling the simultaneous creation of printed tissue from different materials. It is equipped with precise motors of variable speed and accuracy of 0.001 mm, as well as a built-in camera that improves the exactitude of the printing needle.

The system is suitable for a wide range of raw materials, such as hydrogels, thermoplastic materials and ointments, with precise temperature and radiation control (ranging from 0 to 70 degrees Celsius and 30 to 250 degrees Celsius and ultraviolet radiation).  The printing can be carried out directly into the culture dish.  (Technion 31.03)

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8.9  AstaPure-EyeQ – Natural Astaxanthin Inspired by Eagle Vision

Inspired by the superb vision and natural mechanism of the eagle’s eye, Algatechnologies (Algatech) announces AstaPure-EyeQ, a clinically supported, microencapsulated, cold water-soluble 2% natural astaxanthin powder.

In nature, astaxanthin complexed with other carotenoids is found in the eyes of birds, such as eagles, that depend on their superb vision for survival.  The astaxanthin protect its eye from oxidative stress and radiation.  AstaPure-EyeQ, a proprietary microencapsulation form of natural astaxanthin, was developed in conjunction with the fast growing Italian startup Sphera Encapsulation.  The astaxanthin is encapsulated with a unique formula of completely biodegradable and natural materials, enabling higher bioavailability in the eyes and brain.

AstaPureEyeQ is a highly pure extract derived from Haematococcus pluvialis microalgae.  This species of microalgae is known to be the richest source of natural astaxanthin.  As a microencapsulated, cold water-soluble, 2% natural astaxanthin powder, it can be readily incorporated into supplements such as softgels, sachets, gummies and chewables, and otherfunctional foods and beverages.

Located in the Arava desert, Kibbutz Ketura’s href=””>Algatech cultivates microalgae in a patented, eco-friendly, closed system that guarantees the production of safe, pure ingredients and minimizes environmental footprint.  (Algatechnologies 30.04)

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8.10  Groundwork BioAg Disrupts Cannabis Cultivation with DYNAMYC Mycorrhizal Inoculants

Groundwork BioAg announced the launch of DYNAMYC premium mycorrhizal inoculants, uniquely formulated for cannabis cultivation.  DYNAMYC products contain up to two species of endomycorrhizal fungi that are proven to improve plant nutrient uptake, to boost growth rates and to increase plant yields.  DYNAMYC products are higher in concentration and in efficacy than most mycorrhizal inoculants currently available for cannabis.  DYNAMYC products are Clean Green Certified, suitable for use in sustainable and regenerative farming practices.

Commercial trial results at medical cannabis growers in Israel and in the United States have shown 10-45% yield increases, a feat which has garnered a good deal of attention from opinion leaders.  Selected growers who have already experienced the products in beta tests have reported similar positive results, across numerous cannabis cultivars and growing environments.

Mazor’s Groundwork BioAg produces cost-effective mycorrhizal inoculants for commercial agriculture.  Natural mycorrhizal fungi improve soil nutrient uptake in 90% of all plant species.  When applied to agriculture, mycorrhizal inoculants increase crop yields, especially under stress conditions.  Growers can also reduce fertilizer application rates, notably phosphorus.  (Groundwork BioAg 24.04)

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9.1  DriveNets Delivers World’s First 400G White-box Based Distributed Router

DriveNets announced an industry first: Its Network Cloud software-based disaggregated router has added 400G-port routing support and is now being tested and certified by a tier-1 Telco customer.  The only solution of its kind, it demonstrates the agility and scalability of the Network Cloud model where cloud-native routing software can quickly support new functions in the underlying white-box hardware.  The achievement validates the vision behind Network Cloud – to simplify and scale service providers’ rollout of 5G and other new services, and meet customers’ growing demands faster than competitors.

In February, the company emerged from stealth with $110 million in Series A funding, establishing itself as a trusted alternative for tier-1 service providers seeking to replace traditional monolithic routing solutions.  DriveNets’ latest routing software release supports a packet-forwarding white-box based on Broadcom’s Jericho2 chipset which has high-speed, high-density port interfaces of 100G and 400G.  Network Cloud is the only router on the market designed to scale 100/400G ports up to performance of 768Tb, which could form the highest capacity router on the market.  This development demonstrates DriveNets’ commitment to implementing the most advanced technology to best serve their customers’ needs.

Network Cloud’s solution offers a new technological and economic model to reinvigorate network economics.  Inspired by the hyperscalers, Network Cloud runs the routing data plane on cost-efficient white-boxes and the control plane on standard servers, disconnecting network cost from capacity growth.  It allows service providers to handle exponential growth in demand and to roll-out new services while growing their profits.  Network Cloud can run any network function as a microservice on the same distributed hardware infrastructure, built with only two generic hardware building blocks, greatly reducing operational costs and logistical challenges.  Its cloud-native capabilities such as Zero Touch Provisioning, full life cycle management and automation, as well as superior diagnostics with unmatched transparency further reduce operational complexity.

Ra’anana’s DriveNets helps Communications Service Providers (CSPs) take advantage of the greatest demand surge in telco history.  Disaggregating monolithic routers along with redefining CSPs’ cost structure and business models, we transform the way networks are built, managed and grown to meet this demand. Network Cloud helps CSPs re-sync costs with revenue, capture fast-moving opportunities and migrate smoothly to web-scale networking.  (DriveNets 17.04)

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9.2  Intel Launches Israel-Developed 9th Gen Laptop Chip

On 23 April, Intel launched the most powerful generation of Intel Core mobile processors ever for laptops and notebooks.  The new 9th Gen Intel® Core mobile H-series processors, designed for gamers and creators who want to push their experience to the next level, was developed at Intel’s Haifa development center in Israel.  The 9th Gen Intel Core mobile processors deliver desktop-caliber performance in a mobile form factor and feature fastest, most reliable wireless with Intel Wi-Fi 6 AX200 (Gig+); the most versatile wired connectivity with Thunderbolt 3; and support for Intel Optane memory technology.  (Various 23.04)

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9.3  Checkmarx Named a Leader in Gartner Magic Quadrant for Application Security Testing

Checkmarx was named a Leader in Gartner’s 2019 analyst report, Magic Quadrant for Application Security Testing for the second consecutive year.  According to the report, “DevSecOps, modern web application design and high-profile breaches are expanding the scope of the AST market.  Security and risk management leaders will need to meet tighter deadlines and test more complex applications by accelerating efforts to integrate and automate AST in the software life cycle.”  Checkmarx delivers the industry’s most comprehensive, unified software security solution that tightly integrates SAST, SCA, IAST and developer training to address the entire software exposure lifecycle.  The company experienced record growth in 2018 – increasing revenue by more than 60% year-over-year — and now serves more than 40% of the Fortune 100.

Ramat Gan’s Checkmarx is the Software Exposure Platform for the enterprise.  Over 1,400 organizations around the globe rely on Checkmarx to measure and manage software risk at the speed of DevOps.  Checkmarx serves five of the world’s top 10 software vendors, four of the top American banks, and many government organizations and Fortune 500 enterprises, including SAP, Samsung and  (Checkmarx 23.04)

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9.4  Sixgill Partners With Anomali to Enhance Results in Leading Threat Intelligence Platform

Sixgill announced its partnership with Anomali.  By integrating Sixgill into the Anomali Preferred Partner Store (APP store), cyber intelligence analysts can trial and purchase six Sixgill threat intelligence feeds to gain better insights on vulnerabilities.  Sixgill feeds will be added to the Anomali APP Store and will cover several sectors including”: finance, ICS SCADA, telecom, healthcare, gambling and law enforcement.  The feeds will provide access to Sixgill’s broad coverage and collection of assets that may find their way onto Deep, Dark and surface web sources, including IP addresses, domain names, executive names and more. Organizations will also be able to sign up for Sixgill’s automated, actionable alerts.

Powered by machine learning, Anomali arms security teams with highly optimized thread intelligence so that they can detect threats and respond effectively.  The Anomali APP Store enables users to find the right intelligence needed for their organization, industry, geography, threat type and more.

Netanya’s Sixgill’s cyber threat intelligence solution focuses on organizations’ intelligence needs, helping them mitigate risks more effectively and more efficiently.  Using an agile collection methodology, Sixgill provides broad coverage of exclusive-access Deep and Dark Web sources, as well as relevant surface web sources.  By harnessing the exponential power of artificial intelligence and machine learning, Sixgill automates the cyber intelligence production cycle.  A market leader in Deep and Dark Web cyber threat intelligence, Sixgill helps Fortune 500 companies, financial institutions, governments, and law enforcement agencies address a wide range of cybersecurity challenges.

Tel Aviv’s Anomali delivers critical threat intelligence capabilities, allowing organizations to detect, investigate and respond to serious external threats. The company’s unmatched customer base spans all major verticals and includes partnerships with many ISACs and threat exchanges. Anomali integrates with internal infrastructure to identify new attacks, or search forensically over the past year to discover existing breaches, and enables security teams to quickly understand and contain threats. Anomali also offers STAXX, a free tool to collect and share threat intelligence, and provides a free, out of the box intelligence feed, Anomali Limo.   (Sixgill 23.04)

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9.5  Folksam Selects Sapiens’ Digital Core Insurance Suite

Sapiens International Corporation announced that Folksamgruppen (Folksam Group), a mutual insurance company with over four million customers, has selected Sapiens IDITSuite for Property & Casualty as its new digital core solution.  The Folksam Group is one of the largest insurance companies in Sweden and currently insures half of all family homes and people, as well as every fifth car, in the country.  The new suite is expected to deliver an improved customer experience, including a more responsive service, better claims experience for Folksam customers and an enhanced broker experience – ensuring that the Folksam Group can respond faster to its brokers.

Sapiens IDITSuite is a component-based software solution suite that enables insurance carriers to meet critical and long-term business goals, with extensive multi-company, multi-branding, multi-currency and multi-lingual capabilities.  The suite is built on open technology and is backed by Sapiens’ 35+ years of unmatched delivery expertise and global presence. Its field-proven, modular components support all core operations of personal, commercial and specialty lines of business.

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 29.04)

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9.6  ERM & Altair to Improve Models for Deploying Vehicle Telematics and Asset Tracking

Altair Semiconductor is partnering with ERM Advanced Telematics to develop a new range of low-powered and installation-free automotive IoT solutions.  ERM’s new set of IoT and asset management solutions leverages Altair’s optimized cellular IoT chipsets to provide installation-free solutions for IoT, asset management, stolen vehicle recovery (SVR) and vehicle financial services.  These will include event-based platforms for automatic vehicle location and asset management applications using various sensors.  The ultra-low power consumption of Altair’s chipsets allows the device to be connected without having to be powered by the vehicle’s battery, significantly reducing installation costs.

Altair’s optimized cellular IoT chipsets are the industry’s most advanced, providing the market’s lowest power consumption and enabling the longest battery life for IoT.  Commercially available, they feature a hardware-based security framework and a rich set of host, peripheral and sensor interfaces, ideal for integration in a range of industrial and consumer IoT applications.

Hod HaSharon’s Altair Semiconductor is a leading provider of LTE chipsets for IoT.  The company’s flagship ALT1250 is the smallest and most highly integrated LTE Cat-M and NB-IoT chipset, featuring ultra-low power consumption, hardware-based security and a carrier-grade integrated SIM.

Rishon LeZion’s ERM Advanced Telematics is an international technology company focused on automotive, Asset Management and IoT solutions, whose technologies and products are installed in millions of vehicles worldwide.  The company offers both hardware and software solutions, designed, developed and manufactured in its Israeli facilities.  (ERM 30.04)

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9.7  ECI Adds Another Layer of Flexibility to Its Apollo Portfolio

ECI has added yet another layer of flexibility to its Apollo optical transport portfolio with the addition of a high performance, contentionless 8x24CDCF ROADM based on wavelength switching technologies.  This far surpasses the capabilities of contentionless ROADMs available today, which are based on multicast switches (MCS) and can’t offer the density, high-caliber performance and cost-efficiency needed for today’s networks.

In line with ECI’s ‘as you like it approach’ to optical networking, the company continues to add flexibility and programmability to its Apollo optical portfolio.  Not only does this ensure that customers can tailor the solution to their specific requirements, it is also a means for network operators to achieve optimal returns on CapEx investments, maximize bandwidth capacity and enjoy a pay-as-you-grow approach.  ECI already offers programmable throughput with flex-grid and programmable line rate capabilities.  This new contentionless ROADM brings programmable wavelength routing to the next level for a more flexible, end-to-end set up.

With the ability to deliver low loss, the 8x24CDCF ROADM enables add/drop port scaling to support capacity growth while eliminating the need for additional amplification to overcome optical losses in multicast switches.  As a result, the 8x24CDCF ROADM offers more density, reliability and power efficiency at a lower cost.

Petah Tikva’s ECI is a global provider of ELASTIC network solutions to CSPs, critical industries and data center operators.  With the advent of 5G, IoT, and smart everything, traffic demands are increasing dramatically, and network operators must make smart choices as they evolve their infrastructure.  ECI’s Elastic Services Platform leverages our programmable packet and optical networking solutions, along with our service-driven software suite and virtualization capabilities, to provide a robust yet flexible solution for any application.  (ECI Telecom 24.04)

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9.8  Waterfall Security & Dragos Partner to Strengthen Industrial Control Systems Cybersecurity

Waterfall Security Solutions announced a global partnership with Washington, DC’s Dragos, provider of the industrial industry’s most trusted asset identification, threat detection and response platform and services, to protect critical industrial control systems (ICS) from the most advanced cyber threats.  The joint solution seamlessly integrates the Dragos Industrial Cybersecurity Platform with Waterfall Unidirectional Security Gateways to enable ICS operators to continuously monitor networks and process operations, while adding a layer of physical protection to prevent penetration of cyberattacks to industrial control networks.

The Dragos Industrial Cybersecurity Platform provides asset identification, threat detection, and response capabilities to: passively identify ICS network assets, pinpoint malicious activity, and provide step-by-step guidance to investigate incidents and respond.  Both security monitoring and strong Operational Technology (OT) perimeter protection are vital to continuous, correct, and efficient industrial operations.  The Waterfall Security and Dragos partnership enables safe visibility into operations networks for enterprise security operations teams.

Rosh HaAyin’s Waterfall Security Solutions is the global leader in industrial cybersecurity technology. Waterfall products, based on its innovative unidirectional security gateway technology, represent an evolutionary alternative to firewalls.  The company’s growing list of customers includes national infrastructures, power plants, nuclear plants, off and on shore oil and gas facilities, refineries, manufacturing plants, utility companies, and many more.  (Dragos 23.04)

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9.9  IncrediBuild Launches IncrediBuild Cloud: Unlimited Development Acceleration Potential

IncrediBuild announced the release of IncrediBuild Cloud, an expansion of IncrediBuild’s unique distributed processing acceleration technology.  IncrediBuild dramatically shortens development cycles by accelerating processes such as compilations, tests, shading, rendering, simulations, code analysis, packaging and more.  This is achieved through running these processes simultaneously across multiple machines within the local network, thereby effectively transforming every machine into a powerful virtual multi-core “super-computer” which utilizes the CPU power of machines already owned by the user.

With IncrediBuild Cloud, users can seamlessly scale up and down beyond their local machine resources on-demand, when they most need it, and according to their budget.  In peak times, IncrediBuild Cloud harnesses the power of thousands of automatically provisioned cloud compute instances, and de-provision these resources once the workload’s execution is done.  Using IncrediBuild Cloud, users can accelerate any multi-process task by up to 30 times.

Givatayim’s IncrediBuild Software is the leading solution provider of software acceleration technology.  IncrediBuild dramatically reduces build and testing times among other development processes. IncrediBuild’s non-intrusive distributed computing tech empowers users to easily save hundreds of hours, just minutes after installing the software.  (IncrediBuild 23.04)

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9.10  Votiro Partners with Box to Prevent Content-Based Attacks and Zero-Day Exploits

Votiro Cybersec Global Limited announced its partnership with Box, a leading cloud content management platform committed to bringing secure, centralized and cloud-native content services to organizations worldwide.  Votiro File Disarmer for Box will add an additional layer of protection for security sensitive organizations to ensure that shared files do not contain malware, ultimately preventing content-based attacks such as ransomware, or targeted phishing.

Votiro File Disarmer for Box enables productivity, making certain that when users share and access files on mobile devices, or carry out sophisticated business processes like data governance and retention, every file uploaded to the Box repository has gone through the Votiro sanitization process, making it safe to open and use.

Tel Aviv’s Votiro is an award-winning cybersecurity company with a mission of securing organizations throughout their digital transformation journey. Its proprietary next-generation CDR technology allows users to safely open email attachments, download and transfer files, share content, and use removable media, while keeping performance and functionality intact.  (Votiro 30.04)

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10.1  Israel’s Composite State of the Economy Index for March 2019

The Bank of Israel’s Composite State of the Economy Index for March increased by 0.29%, similar to its pace of increase in 2018 and for the year to date.  The Index was positively impacted by growth in most of its components, particularly increases in goods exports and consumer goods imports in March, and by an increase in the Industrial Production index in February.  The Composite Index’s rate of growth was moderated by a decline in imports of manufacturing inputs in March and a decline in the retail sales revenue index in February.  There was essentially no revision in index data for previous months.  (BoI 30.04)

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10.2  Israel Defense Exports Decline During 2018

Israel’s defense exports totaled $7.5 billion in 2018, $1.7 billion less than the $9.2 billion in defense exports in 2017, according to figures published by the Ministry of Defense.  According to figures from the Ministry of Defense International Defense Cooperation Directorate (SIBAT), one quarter of the defense products exported last year were missile systems and defense systems against missiles.  Unmanned aerial vehicles (UAVs) accounted for 15% of defense exports, radar and electronic warfare systems 14%, upgrades and avionics 14%, and weapons stations 12%.  Other exports were in optronic systems, satellite and space systems, and cyber products.

Some 46% of Israeli defense exports were to the Asian Pacific region, 26% to Europe, 20% to North America, 6% to Latin America and 2% to Africa.  Figures declined in defense exports in 2018, compared with the all-time record set in 2017, since the $2.5 billion sale of Barak 8 defense missiles to India led by Israel Aerospace Industries (IAI) in 2017 had pushed up the export figures for that year.  The 2018 defense export figures were still very high in comparison with the years before 2017, and were slightly higher than the $7.5 billion defense exports in 2012, a peak year.

The export figures for 2018 were affected by cancelation of a $500 million deal for the sale of 12 F-16s to Croatia.  The F-16s in the deal were out-of-date models that the Israeli air force has been removing from service in recent years.  Israel planned to have them upgraded by IAI and Elbit Systems before selling them to Croatia.  The US opposed the deal, because the planes were manufactured in the US, and Israel did not request permission to sell them to Croatia.  (MoD 17.04)

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10.3  Israel’s Unemployment Rate Falls Below 4% in March

The latest survey by the Central Bureau of Statistics shows that unemployment fell from 4.1% in February to 3.9% in March.  Unemployment in March returned to the record low set a year ago, after the number of unemployed rose slightly during 2018.  The new figure indicates economic expansion ahead of the upcoming interest rate decision by the Bank of Israel, which is scheduled for publication on 20 May.

Unemployment totaled 4.1% in the first quarter, down from 4.2% in the preceding quarter.  Employment totaled 3,965,000 in the first quarter.  The proportion of employees with full-time jobs dropped to 78.5%: 87.1% among men and 69.1% among women.  The average number of hours worked per employee rose from 35.8 in the fourth quarter of 2018 to 36.6 in the first quarter of this year.  (CS 30.04)

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11.1  MIDDLE EAST:  Fitch Ratings Reviews Ambitious Regional Drive for Renewables Generation

On 29 April, Fitch Ratings announced that several governments in the Middle East have set ambitious targets for the development of renewable energy, which will give rise to large capital requirements in the region.  The sovereign rating may be a critical factor in our assessment of credit strength of renewable projects due to the government-related entity (GRE) status of many off-takers or entire projects.

Between 2006 and 2016, per-capita energy consumption flat-lined in the EU, while it grew at approximately 3.7% across the Middle East.  Consumption in a number of countries in the region, while not growing, has been very high for a long time.  Underlying causes are the climate, the extensive use of air conditioning and water desalination plants, and a tradition of subsidies for energy use.  Furthermore, there has been a focus on energy-intensive industries in some countries, such as some of the world’s largest aluminum smelters in Bahrain and the UAE.  Renewables represent a small share of the region’s generation mix, with hydropower having the most meaningful presence of about 2%, and a fraction of a percent for other renewables.

We expect that the increase in per-capita energy consumption and strong population growth will support a large increase in renewables generation in the Middle East.  This reflects governments’ desire both to add new capacity and diversify away from a historical dependence on hydrocarbons.

When the government has control over the project itself, we would assess the entire transaction under our GRE criteria and it could benefit from an uplift, depending on our assessment of the strength of the sovereign linkage and the government incentives to support the project.  The rating of the sovereign may therefore be a critical factor in the assessment of the credit strength of these projects.

The initiatives to broaden the energy mix are likely to be realized largely through the use of solar PV and wind power, which benefit from abundant renewable resources in the region.  Solar power generation in particular could be supported by very high regional irradiance, which can be more than twice as high as in central Germany, a country that has built out 40GW of solar PV, mostly since 2000.  Another advantage of solar PV generation in the Middle East is its correlation with periods of high air-conditioning demand and the abundant availability of non-arable land for solar PV parks.

Challenges for both wind and solar PV generation are likely to include the harsh operating environment, such as sand storms and the ability and suitability of the grid infrastructure to cope with the additional intermittent capacity.  Furthermore, the contractor capacity in the market to deliver the build-out at the desired pace, scale and cost could be a constraint.  Despite there having been ambitious targets for a number of years, progress has varied across the region, and this trend might continue.

Recent tenders in Saudi Arabia set records for the lowest solar PV and onshore wind levelized cost of energy as at end-2018, at 2.32 c/kWh for the 300MW Sakaka solar PV plant (October 2017) and at 2.13 c/kWh for the 400MW Dumat Al Jandal onshore wind farm (July 2018), according to the country’s National Renewable Energy Program.  In our view, this is largely due to a combination of favorable natural resources and the timing of entry into this market when the technology is more mature and significantly cheaper than before.  These factors may prove to be the catalysts that accelerate the region’s roll out of renewable capacity.  (Fitch 29.04)

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11.2  ISRAEL:  Six Trends of the Israeli Tech Industry in 2019

Venture capitalist Amit Karp posted in Calcalist on 25 April that from mega acquisitions and funding rounds to new exit opportunities, 2019 has so far been an incredible year for Israeli startups and entrepreneurs.

Only four months ago, when the stock market tanked, it seemed like Israel was heading for a very tough year.  However, so far, it has been a phenomenal year for Israeli startups—one of the best starts to a year ever.  Below are some of the top trends witnessed so far this year:

Mega Acquisitions

Intel’s acquisition of Mobileye two years ago for $15.3 billion set a new bar for how high Israeli companies can aim.  This year, by buying connectivity chipmaker Mellanox Technologies for $6.9 billion, Nvidia reaffirmed that Israel still holds the potential to grow multi-billion dollar companies.

These mega-acquisitions paired together with an emerging crop of newer publicly traded Israeli companies finally debunks the myth that Israel is only good for early stage startups.  Website building company, worth $6.1 billion, and information security company CyberArk Software, worth $4.3 billion, to name a few, are not just leaders in the Israeli tech scene, but across the globe.

New Set of buyers

We are seeing a new set of non-traditional buyers eyeing Israeli technology and looking to benefit from the local ecosystem in the same way that most of the tech giants have done in the past.  Forget Microsoft, Google and Intel – I believe the acquisition of web personalization startup Dynamic Yield by McDonald’s for $300 million last month may be a first in a trend of non-traditional acquirers.  Just a few weeks ago, Walmart CEO Doug McMillon visited Israel searching for interesting startups.

The emergence of new buyers in Israel opens the door to potential collaborations and acquisitions for Israeli companies.

Cyber is Heating Up

The Israeli cybersecurity industry has long been recognized as a major source of innovation.  However, until recently, many Israeli cybersecurity startups have focused on building a solid product, and then, quickly sold the company to one of the larger cyber incumbents.

This trend has changed over the past few years with many Israeli cybersecurity startups aiming to become category leaders.  It was ratified this year as we saw Israeli cyber companies raising larger amounts.  Just this month, virtual container security startup Aqua Security Software announced a $62 million round, and IoT security company Armis announced a $65 million round.  We have also already witnessed impressive cybersecurity exits this year with Palo Alto Networks’ acquisition of information security firm Demisto for $560 million and Symantec Corp.’s acquisition of security company Luminate Security for an estimated sum of over $200 million.

IPOs are Back

After a long drought in Israeli startups going public, Cybersecurity company Tufin Software Technologies listed on the New York Stock Exchange earlier this month and is currently trading at a market capitalization of about $714 million.  Tufin is only the first of many Israeli startups poised to go public, assuming macro conditions remain stable.  Companies such as online gig marketplace Fiverr Int., cloud backup company Zerto and online payment company Payoneer are all rumored to be eyeing an IPO.

Slew of Acquisitions Across Sectors

Since the beginning of 2019, we have seen a large number of Israeli startups getting acquired across a wide range of sectors.  Among the companies acquired since January are cloud infrastructure companies Alooma and CloudEndure (acquired by Google and Amazon, respectively); the aforementioned cybersecurity startups Demisto and Luminate; IT service software company Samanage (acquired by New York-listed IT management company SolarWinds Worldwide for $350 million) and Dynamic Yield, also mentioned above; video creation startup Magisto (acquired by video streaming company Vimeo) and semiconductor company Corephotonics (acquired by Samsung).

Mega Funding Rounds

This upsurge in activity goes hand in hand with a large increase in funding for Israeli startups.  Just over a week ago, online insurance company Lemonade announced a $300 million funding round which brings its total funding to $480 million.  Such enormous rounds were unimaginable for Israeli startups just a few years ago.  While not all these companies will succeed, this virtuous cycle should lead to more mega exits and larger public companies coming out of Israel, which will improve the pool of talent and further increase funding.

Though the market will have to cool down at some point, it still appears that Israel is rapidly turning into a scale-up nation.

Amit Karp is a partner at the Israeli office of venture capital firm Bessemer Venture Partners, headquartered in Menlo-Park, California.  This article was originally published on Medium.  (Calcalist 25.04)

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11.3  GCC:  Russia and the Gulf States – Pragmatic Energy Partners

On 25 April, Li-Chen Sim posted in the Arab Gulf States Institute that these countries have ceased to perceive Russia purely as an adversary; today Moscow is regarded as a reliable international partner but also a competitor.

The future of the two-year old OPEC and non-OPEC agreement, or OPEC+, on cuts in oil production seems to be on shaky grounds.  Without the deal oil prices could have dropped to below the $27 per barrel (/bbl) recorded in 2016 and, because of the agreement, Russia’s budget gained an extra $120 billion.  Nonetheless, the future of the alliance is uncertain.  In October 2018, comments by Saudi Crown Prince Mohammed bin Salman that Russia would “disappear” as an oil supplier within 20 years drew sharp responses from Moscow.  This was followed by a projection from Russia’s Central Bank in January that the federal budget for 2019-21 would be based on an oil price of $55/bbl.  Consequently, given that oil prices in 2019 and 2020 are expected to be well above $60/bbl, Igor Sechin, the powerful head of Russia’s largest oil company, Rosneft, suggested an upward revision of oil production levels in future OPEC+ meetings to regain market share lost to U.S. oil exporters.  A similar position was adopted in early April by Kirill Dmitriev, head of Russia’s sovereign wealth fund and an erstwhile supporter of output cuts, when he conceded that supply cuts may not be required by the next OPEC+ meeting in June.

Taken together, the series of events appear to imply that Saudi Arabia believes Russia’s importance in global oil markets is only temporary.  For its part, Russia is increasingly frustrated with OPEC+-mandated production limits.  Such sentiments are underlined in a recent analysis demonstrating that Saudi Arabia has shouldered a disproportionate proportion of production cuts in 2019 while Russia has only met half of its obligations.  At stake is not just the outcome of the OPEC+ meeting in June but broader issues related to the current relevance and future sustainability of Russian-Gulf energy relations.

Contemporary Russian – Gulf energy relations are significant because both parties have a common interest in monetizing the value of their oil and gas resources in a world that increasingly privileges low-carbon energy.  Keeping consumers the world over well-supplied with affordable fossil fuels extends the hydrocarbon age and its centrality to modern lifestyles.  This in turn sustains prosperity and social peace in Russia and the Gulf states and underwrites economic diversification in preparation for a post-hydrocarbon era.

While seeking out third-party interlocutors, Russia and the Gulf states have also concluded bilateral energy deals.  The purchase in 2018 by Abu Dhabi’s sovereign wealth fund of a 44% stake in Russia’s Gazpromneft – Vostok as well as the multibillion dollar sale of 19% of Rosneft to Qatar freed up cash that Russia can use to develop new oil fields, in efforts to offset the long-term decline in its oil production.  For Abu Dhabi, the fact that some of the fields owned by Gazpromneft – Vostok feed into the east Siberian pipeline that delivers oil to China makes this a sound, long-term investment opportunity outside of the traditional Western and Middle East markets.  In the case of Saudi Arabia, it has expressed interest in acquiring Russian-built nuclear reactors to replace domestic consumption of oil-fueled electricity.  This will allow the kingdom to retain its pre-eminent position as an oil exporter within OPEC – where Iraq is already the second largest oil producer – and in global markets.  The Saudis are also considering a stake in Russia’s liquefied natural gas plant Arctic LNG-2 in Yamal, which will serve energy-hungry Asia.  This reflects a shrewd bet that gas-fired power plants will continue to be the preferred baseload source of power because they are able to quickly balance out variable output from solar and wind energy, thereby stabilizing electric grids.

In light of this active cooperation over energy, the Saudi- and Emirati-backed proposal to formally institutionalize OPEC+ is something of a red herring.  OPEC+ is likely to remain, in the words of Russian Energy Minister Alexander Novak, as “some mechanism of cooperation: to convene, to discuss, adopt some memorandums, joint resolutions” rather than a formal organization.  This reflects the approach known as “sovereign globalization,” whereby Russia welcomes selective aspects of economic globalization to increase national wealth while limiting political vulnerability to such global interdependence.  In 2007, President Vladimir Putin declared that Russia has always been privileged “to carry out an independent foreign policy,” and “we are not going to change this tradition today.”  This statement is likely relevant in considering the proposed oil alliance.

Nevertheless, there are challenges to the sustainability of energy cooperation between Russia and the Gulf states.  In the first place, they are partners but also rivals engaged in a common bid to lock-in demand for oil and gas from their largest customers.  As of 2016, Russia replaced Saudi Arabia as China’s top oil supplier thanks to oil-for-loans arrangements and the construction of an oil pipeline to China; over 40% of Rosneft’s oil sales in 2017 were to China.  To regain market share, the kingdom is trying to acquire stakes in China’s privately owned refineries that have been enthusiastic buyers of Russian crude to secure demand for Saudi oil instead.  A similar competition is playing out over stakes in oil refineries in India.

Furthermore, Russia is wary that its lucrative trade in pipeline gas to Europe may be undermined by the latter’s imports of Qatar’s liquefied natural gas; sentiments such as “if Europe succeeds in getting only one-half of Qatari LNG exports, its full gas independence from Russia will be achieved” are a case in point.  However, LNG is considerably more expensive than pipeline gas.  LNG also cannot fully substitute for pipeline gas since Europe currently has enough import and re-gasification capacity to cover only 40% of its gas demand, and construction to increase capacity will be costly.

Second, energy cooperation is limited to hydrocarbons and, to a lesser extent, nuclear energy, with little synergy in renewables.  Russian companies have been slow to embrace renewable energy unlike counterparts in Asia and Europe that have formed joint ventures with Gulf entities to develop solar and wind projects in the Middle East, North Africa and Europe.  Given that long-term oil demand is expected to grow 0.5% per annum compared to 7.1% for renewable energy, Russia and the Gulf states are losing out on a lot of opportunities for nonhydrocarbon energy cooperation.

Third, energy cooperation has yet to translate into concrete, major and consistent dividends in economic, political or strategic relations.  The Gulf Arab states accounted for 0.5% of Russia’s overall trade in 2018; this is up from 0.1% in 2012, but it is still much less than Russia’s trade to Egypt or Turkey was in 2018 (1.1% and 3.8%, respectively), partly due to the complementarity of their energy-based economies.  Russia has repeatedly signaled it will not be enticed away from Iran or Syria, much to Saudi Arabia’s chagrin.  The flurry of deals concluded during King Salman bin Abdulaziz’s historic visit to Russia in October 2017 remain on paper for the most part.  Comparing Saudi Arabia and Qatar, one observer noted that “the Saudis keep feeding Moscow promises of huge investments in the Russian economy but never deliver on these promises … by 2017, the volume of Saudi investments in Russia reached $600 million against Qatar’s $2.5 billion.”  The exception here is the strategic partnership between Russia and the United Arab Emirates, which is underpinned by robust growth in non-oil trade, direct investments, the presence of 25,000 Russian nationals in the UAE, joint ventures in developing combat aircraft and alignment of perspectives over Syria, Libya and terrorism.

Energy cooperation between Russia and the Gulf states is important for energy market stability, global growth and the finances and non-oil development of hydrocarbon exporters.  OPEC+ has certainly been more durable and successful than previous attempts at coordinating oil production levels.  While energy cooperation will probably remain pragmatic and driven by commercial realities more than strategic calculations, the Gulf states have at least ceased to perceive Russia purely as an adversary, which was the case during the last century; it is regarded today as a reliable international partner but also a competitor.

Li-Chen Sim is an assistant professor at Zayed University (UAE) and an expert on contemporary Russian politics, in particular the impact of oil and nuclear energy on Russia’s foreign policy.  (AGSIW 25.04)

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11.4  OMAN:  Oman Outlook Revised to Negative on Rising External Risks; ‘BB/B’ Ratings Affirmed

On April 19, 2019, S&P Global Ratings revised the outlook on Oman to negative from stable.  At the same time, we affirmed the ‘BB/B’ long- and short-term foreign and local currency sovereign credit ratings on Oman.


The negative outlook reflects our expectation that we could lower our ratings on Oman over the next 12 months if we view the government as unable to moderate external debt accumulation related to still-sizable fiscal deficits, which we expect will continue to increase through 2022.  We could also consider a downgrade if the government’s funding costs increase beyond our expectations, or if funding pressures rise, with sizable external debt maturities currently scheduled for 2021 and 2022.

We could revise the outlook to stable if Oman is able to sustainably reduce its accumulation of external debt, for example through fiscal adjustment measures or via privatization of significant state-owned enterprises (SOEs) and assets.  We could also revise the outlook to stable the ratings if economic growth prospects are significantly stronger than we currently anticipate.


The sharp fall in oil prices over 2014-2016 and only modest recovery since then has caused a significant deterioration in Oman’s GDP per capita and its fiscal and external metrics, similar to some other large oil exporters.  The accumulation of government external debt has been a key factor behind negative rating actions on Oman.  The government has made some strides toward diversification away from hydrocarbon receipts, but the pace and scope of planned fiscal measures could continue to be insufficient to stem deterioration in the government’s balance sheet and curb rising external debt.

Our ratings on Oman are supported by the sovereign’s modest government debt levels and relatively strong fiscal buffers, with liquid government assets estimated at about 50% of GDP.  The ratings also reflect our view that timely support from neighboring countries in the Gulf Cooperation Council (GCC) would be forthcoming, if needed; for example, in the event of a significant deterioration in the external reserves that, in our view, support the Omani rial’s peg to the U.S. dollar.

Our view of Oman’s creditworthiness is constrained, however, by the concentrated nature of the economy – -Oman derives about 35% of GDP, 60% of exports, and 70% of fiscal receipts from hydrocarbon products.  Given this high reliance on the hydrocarbon sector, we view Oman’s economy as undiversified.  We also view monetary policy flexibility as low, given the currency peg, although we note that it has provided a stable nominal anchor for the economy for several decades.  The ratings are also constrained by our assessment that the sultanate’s political institutions are at a nascent stage of development compared with those of non-regional peers in the same rating category.

Institutional and economic profile: Significant new gas production, along with non-oil sector prospects will support growth momentum

-We expect rising oil and gas production and investment will drive real GDP growth of 3.1% on average over 2019-2022.

-The country’s institutions are relatively underdeveloped, in our view, with highly centralized decision-making and untested succession processes.

-We expect Oman’s foreign policy will remain neutral, and we expect limited spillover to Oman from regional geopolitical conflicts.

During 2018, increased gas production from the Khazzan field, recovery in the manufacturing sector and higher crude oil production in the second half of the year supported real GDP growth of 3.4%, following a contraction of 0.9% in the previous year.  In nominal terms, the hydrocarbon sector expanded by almost 37% year on year in 2018, largely on the back of higher oil prices.  With a significant ramp-up in production, the gas sector’s contribution has increased to about 20% of total petroleum activity, from 13% in 2015.  The non-hydrocarbon sector also saw strong broad-based performance in sectors including manufacturing, particularly of base metals, trade, and financial services.  However, a double-digit contraction in construction, partly due to completed megaprojects such as the new Muscat airport and several road projects, moderated overall non-oil sector growth to 0.9% last year.

We forecast real GDP growth averaging about 3% over 2019-2022.  Although Oman is not a member of OPEC, in the past it has voluntarily participated in agreements by OPEC countries to limit oil production.  We therefore expect crude oil production will remain stable this year at 2018 levels of 978,000 barrels per day (bpd), and thereafter gradually increase to close to 1.1 million bpd by 2022.  We also assume that gas production will steadily expand in the medium term, in line with new production coming on stream with the Khazzan II and Mabrouk fields, among others.  Higher gas production will in turn support the expansion of petrochemicals, power generation and enhanced oil recovery projects.  Non-hydrocarbon growth prospects could be supported by Oman’s diversification strategy, with considerable investment in tourism, logistics, manufacturing and renewable energy.

While Oman has relatively high GDP per capita levels, estimated at $16,400 in 2019, real GDP per capita growth remains well below peers’ at similar income levels.  Including our growth forecasts through 2022, 10-year weighted-average real GDP per capita is expected to increase by about 0.4%.  Population growth has historically been high due to immigration.  However, we note that this has recently moderated due to the shrinking construction sector and the government’s restrictions on expatriate labor in line with Omanization efforts.

Sultan Qaboos bin Said Al Said exercises absolute power and holds the offices of prime minister, chief of staff of the armed forces, minister of defense, finance and foreign affairs, and chairperson of the board of governors of the Central Bank of Oman (CBO).  The Council of Oman implements general state policies, and is split into the upper chamber (the state council) and the lower chamber (the consultative council).  All members of the state council are appointed directly by the sultan, while the consultative council is democratically elected.  In 2011, the sultan granted legislative and monitoring powers to the consultative council.  The 78-year–old sultan has been in power since 1970.  While the constitution specifies a process for choosing a designated successor, Oman’s succession process is untested.

Geopolitical tensions in the region are likely to persist due to ongoing tensions between several GCC countries and Iran, and the boycott of Qatar by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt since June 2017.  Oman has traditionally taken a largely neutral position in regional conflicts and continues to play the role of mediator.  We note that regional tensions have increased trade activity in countries that have remained neutral in these disputes.

Flexibility and performance profile: Large fiscal and external deficits continue to erode Oman’s external creditor and government asset positions

-We expect fiscal deficits will remain at about 8.7% of GDP on average over the next four years, without additional fiscal adjustments relative to our base case.

-Oman’s large fiscal deficits require rising levels of external financing.

-We expect Oman will maintain its currency peg in the medium term, supported by external buffers.

We assume Brent oil prices will average $60 per barrel (/bbl) in 2019 and 2020, before falling to $55/bbl in 2021 and thereafter.

Supported by an increase in oil prices of 30% in 2018, we estimate that the fiscal deficit narrowed to a still-high 8.9% of GDP, from an average of more than 17% of GDP over the last three years.  However, overall non-hydrocarbon revenue underperformed relative to budget targets despite higher corporate tax receipts, given hikes in income tax rates.  At the same time, the government relaxed somewhat its stance on austerity.  Current spending increased by more than 10% last year, partly due to increases in interest costs and electricity subsidies, following government spending cuts in 2016 and 2017.  According to the authorities, this increase also reflects better recording of previous years’ off-budget items.  As a result, the deficit was higher than our initial estimate of 7.4% of GDP.

Given the predominance of hydrocarbon revenues, our forecasts for Oman’s fiscal deficits are significantly affected by the trends in our oil price and production assumptions.  We expect fiscal gains in 2019 from the implementation of excise taxes on cigarettes and energy drinks, and higher municipal service fees, along with a freeze on public sector hiring and stable capital expenditure.  We anticipate that the implementation of the value-added tax (VAT), which has been postponed from its initial date of 2018, will begin in 2020.  Further delays in implementation, along with a scenario of lower oil prices, pose downside risks to our assumption of narrower fiscal deficits relative to 2015-2017.

The government has announced its intention to slow the pace of borrowing in 2019.  A significant portion of the deficit financing (more than 4% of GDP) this year is expected to come from one-off items, including proceeds from the sale of Oman Oil Co.’s stake of 10% in the Khazzan field to Petronas of Malaysia, sale of a gas pipeline from the government to SOE Oman Gas Company, and cash surplus from 2018.  We understand that the government will continue to finance its deficits from 2020 predominantly via the issuance of foreign currency debt, with the remainder financed by asset drawdown, domestic debt and asset monetization.

We forecast that Oman’s annual average increase in net general government debt – which is our preferred fiscal metric, because in most cases it is more comprehensive than the reported fiscal deficit – will remain high, averaging 6.7% of GDP over 2020-2022.  The government plans to privatize several SOEs in the coming years, starting with two companies in 2019 – Oman Electricity Transmission Co. (BB/Stable) and Muscat Electricity Distribution Co.  Additional foreign direct investment and revenue proceeds from these transactions would support the country’s external position and government balance sheet.

Gross general government debt increased to an estimated 49% of GDP in 2018 from less than 5% in 2014, and we expect it will rise to about 64% by 2022.  At the same time, the share of foreign currency denominated debt predominantly held by nonresidents increased to 80% of total debt in 2018, from 26% in 2015.  In 2018, the government issued Eurobonds of $6.5 billion in January and sukuk of $1.5 billion in October.  In our view, the debt structure is vulnerable to a sharp decline in foreign investor confidence in Oman, particularly as large Eurobond maturities loom in 2021 ($4.3 billion) and 2022 ($6.4 billion), which could add significant pressure to foreign exchange reserves.  We note that authorities have transferred funds to the Petroleum Reserve Fund (PRF) for future debt repayment.  The PRF held assets of about $1.2 billion at end-2018, which form part of the central bank’s gross foreign reserves.

Oman’s access to external funding is also becoming more costly, partly due to monetary tightening in the U.S. In the absence of material fiscal adjustment measures to stabilize the debt stock, we anticipate in our base case that interest costs as a percentage of revenue will continue to rise, but remain under 10% over the next four years.

High fiscal pressures since the drop in oil prices have eroded Oman’s once-strong asset position, and we estimate that Oman will become a net debtor in 2019.  We forecast general government liquid assets averaging about 48% of GDP over 2019-2022.  In our calculation of assets, we include government deposits at the commercial banks and CBO, domestic and external liquid portion of the State General Reserve Fund (SGRF) and Oman Investment Fund, our estimate of the liquid portion of pension funds’ assets, and government deposits abroad.  We project an increase in net general government debt to about 20% in 2022 from -5% in 2018.

We estimate that the current account deficit decreased by 90% from the previous year, to 5.4% of GDP in 2018, primarily due to higher commodity prices but also due to the expansion of gas exports and non-oil exports.  Over 2019-2022, we forecast that deficits averaging about 10% of GDP will lead to gross external financing needs of about 143% of current account receipts and usable reserves on average, higher than our previous projections.  Although we expect a steady increase in gas production, we note that the majority will be required to meet the strong domestic demand rather than for exports.  We expect, however, that the deterioration in the current account deficits will be curbed to some extent by growth in tourism and non-hydrocarbon exports including base metals, chemical products, and minerals.

Large external deficits turned Oman’s net external creditor position (at the country level) to a net debtor in 2017.  As a result of the large external financing needs, we expect that the country’s external debt will exceed liquid external assets by an average of about 50% of current account receipts over the next four years.

In our view, monetary policy flexibility is limited because the rial is pegged to the U.S. dollar.  That said, the peg has provided a stable nominal anchor for the economy, particularly because contracts for oil, Oman’s main export, are typically priced in dollars.  We expect the peg will be maintained over the medium term.  The transmission of monetary policy is constrained by Oman’s underdeveloped capital market, although we view the recent commitment to build a local currency bond market as a positive development, supporting the growth of local debt and sukuk issuance over the next four years.  The rise in interest rates in advanced markets also puts pressure on interest rates locally as the CBO refinancing rate maintains a consistent spread over LIBOR.  Inflation has averaged under 1% over the five years to 2018.  However, the implementation of tax measures, including excise taxes and VAT, could result in some modest inflationary pressure over the coming years.  (S&P 19.04)

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11.5  EGYPT:  Moody’s Upgrades Egypt’s Ratings to B2, Stable Outlook

On 17 April, Moody’s Investors Service upgraded the long-term foreign and local currency issuer ratings of the Government of Egypt to B2 from B3.  The outlook was changed to stable from positive.  The decision to upgrade the rating primarily reflects:

i) Moody’s expectation that ongoing fiscal and economic reforms will support a gradual but steady improvement in Egypt’s fiscal metrics and raise real GDP growth.

ii) Moody’s increasing confidence that factors such as Egypt’s large domestic funding base support its resilience to refinancing shocks notwithstanding the government’s very high borrowing needs and interest costs.

The stable outlook balances the downside risks posed by very weak debt affordability and large financing needs alongside the longer-term challenges to a shift to a more inclusive, private sector-led growth model, against the possibility that strong reform commitment could deliver higher growth and lower borrowing needs and shore up resilience to changing financing conditions to a greater extent than currently assumed.

At the same time, Moody’s has upgraded Egypt’s foreign currency senior unsecured ratings to B2 from B3, and its foreign currency senior unsecured MTN program rating to (P)B2 from (P)B3.  Moody’s has also changed Egypt’s foreign-currency bond ceiling to B1 from B2, the foreign-currency deposit ceiling to B3 from Caa1, and the local-currency bond and deposit ceilings to Ba1 from Ba2.  The short-term country ceilings for foreign-currency bonds and deposits remain unchanged at Not Prime (NP).

Ratings Rationale


Moody’s expects a steady improvement in Egypt’s fiscal metrics, albeit from very weak levels. In particular, maintained primary budget surpluses combined with strong nominal GDP growth will contribute to reducing the general government debt/GDP ratio to below 80% by fiscal 2021 (the fiscal year ending in June 2021) from 92.6% in fiscal 2018.

Moody’s assumes that the fuel subsidy reform will be completed in fiscal 2019, via another round of energy price hikes in order to establish full cost recovery and the extension of the quarterly automatic price adjustment mechanism to other fuel products following the application on the Octane 95 type starting in March 2019.  Together with the fiscal reforms implemented in the last few years that have led to better targeting of income support, higher investment, and a reduced wage bill, this will allow the government to maintain the primary budget balance in surplus in the next few years.  Restraint on and targeting of government spending in the last few years now provide some space for higher investment and social spending, while maintaining fiscal prudence.

Budget execution data for fiscal 2019 indicate that the government is on track to achieve its 8.4% of GDP general government deficit target from a peak of 12.9% in 2013, and a primary surplus that Moody’s estimates at 0.8% after a history of primary deficits that peaked at 5.6% of GDP in 2013.  Moody’s expects a further improvement in the general government financial balance to 7.5% and 6.8% of GDP over the next two years and a primary surplus converging to 2% of GDP over the medium term.

Despite this improvement, Egypt’s fiscal metrics will remain very weak compared to the sovereigns rated by Moody’s.  In particular, the interest bill will continue to absorb nearly 45% of revenue.  However, absent a severe and lasting shock to the cost of debt, the trend decline in the debt burden is increasingly likely to be maintained.

The further decline in the debt burden will result in large part from strong nominal GDP growth, with robust real growth and gradually declining inflation.  Moody’s projects real GDP growth of 5.5% in fiscal 2019, converging to 6% in the next few years, supported by economic reforms and renewed credit extension to the private sector.

Higher growth will help reduce the unemployment rate further, which, at 8.9% in December 2018, was back at its 2010 levels and close to the lowest readings since 2003.  A steady decline in unemployment is essential to shore up acceptance of a relatively tight fiscal and monetary policy stance in the next few years.

Moody’s expects further progress on structural business environment reforms, mitigating key long-standing constraints to private sector development, to further improve Egypt’s competitiveness.  These reforms focus on strengthening of the competition framework, fostering a more transparent and competitive bidding process in public procurement, establishing improved governance standards at state-owned enterprises including via higher private sector participation and upgrading the industrial land allocation process to minimize misallocations and perceptions of corruption.

Consistent with the experience of many governments attempting similar reforms, Moody’s has taken into account the likely hurdles to an effective implementation of these wide-ranging reforms, in particular when that runs against long-standing vested interests.

Resilience to External Refinancing Shocks Despite Large Gross Borrowing Requirements

The steady improvement in Egypt’s fiscal metrics will, over time, reduce the sovereign’s vulnerability to financing shocks. In the meantime, increasing evidence that such vulnerability is already lower than the fiscal metrics alone would suggest also supports a higher rating at B2.  Together with other emerging markets, Egypt experienced large capital outflows in the second half of 2018. While these confirmed the sovereign’s exposure to shifts in investors’ portfolio allocation, the experience also supports the view that the country’s large financial sector mitigates the credit implications of financing shocks.

Between April and December 2018, capital outflows amounted to over $10 billion (about 4% of GDP), reflected in a fall in non-resident T-bill holdings to about 15% of the total from 30% during that period.  With gross financing needs of 30-40% of GDP, the government’s overall cost of debt is highly sensitive to reduced demand from foreign investors.  In the event, while domestic borrowing costs increased substantially, the large domestic banking sector, supported by the domestic non-bank financial sector, helped avoid a larger and more prolonged increase in the cost of debt.  Financial stability was maintained, with the exchange rate and foreign exchange reserves remaining broadly stable.  Since the beginning of the year, capital inflows have resumed, government bond yields and spreads have narrowed.

Looking ahead, the completion of energy subsidy reforms should allow headline inflation to decline toward single digits, allowing the Central Bank of Egypt gradually to reduce borrowing costs while continuing to anchor inflation expectations.  In turn, this will support the government’s efforts to extend the average maturity of domestic debt beyond the current 2-3 years, reducing rollover needs and mitigating the debt trajectory’s high sensitivity to interest rate shocks.

Rationale for the Stable Outlook:  The stable outlook signals that upward and downward rating pressures are balanced.

On the downside, debt affordability will remain very weak and financing needs very large, around 30-40% of GDP, in the next few years, leaving Egypt’s credit profile vulnerable to a sharp and sustained tightening in financing conditions.

Moreover, over the longer term, the removal of structural impediments to a shift to a more inclusive, private sector-led growth model will be a gradual process that remains exposed to long-standing vested interests or to the risk of reform reversal captured by a moderate political event risk assessment.

On the upside, the track record of the last few years denotes strong reform commitment that could deliver higher sustained growth than Moody’s currently expects.  A structural reduction in the current account deficit in light of renewed natural gas exports may also reduce the economy’s borrowing needs and shore up resilience to changing financing conditions to a greater extent than currently assumed.

What Could Change the Rating Up/Down

Over the medium term, a marked improvement in debt affordability and reduction in gross financing needs, resulting from a lengthening track record of credible and effective fiscal, economic and debt management, would likely lead Moody’s to upgrade the rating.  Evidence of a sustained improvement in the labor market and in non-hydrocarbon exports would also support an upgrade by signaling higher competitiveness that would facilitate a more rapid improvement in fiscal metrics and boost Egypt’s resilience to shocks.

Conversely, an erosion in policy effectiveness and credibility, resulting in either sustained lower growth levels or in higher inflation that raises the cost of government debt and erodes competitiveness, would put negative pressure on the rating.  Relatedly, evidence that the government was unable to mitigate a negative financing shock in a way that prevented a sharp worsening of debt affordability could also lead to a downgrade of the rating, particularly if accompanied by sustained heavy pressure on foreign exchange reserves.  (Moody’s 17.04)

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11.6  TURKEY:  University Graduates Swell Turkey’s Army of Jobless

On 17 April, Mustafa Sonmez posted in Al-Monitor that more than a fourth of Turkey’s 4.7 million unemployed are graduates of higher education — an alarming trend that reflects not only the country’s economic downturn, but its faltering university system.

Mounting unemployment has emerged as the most poignant aspect of Turkey’s economic crisis, which the International Monetary Fund expects to result in a 2.5% contraction this year.  The number of jobless reached nearly 4.7 million in January, rising by more than 1.2 million over a year, according to figures released on 15 April by the Turkish Statistical Institute (TUIK).  This puts the unemployment rate at 14.7%, an increase of 4% from the same period last year.  Non-agricultural unemployment rose by 4.1% to hit 16.8%.  The jobless rate among young people aged 15-24 is even more alarming, climbing 6.8% to nearly 27%.

Remarkably, a breakdown by education shows that more than a fourth of the 4.7 million jobless hold higher education degrees.

Higher education graduates make up about a fourth of Turkey’s labor force of 32 million, which comes across as a positive outlook.  Yet 12-13% of the educated labor force is unemployed and the uptick in the rate is a source of serious concern.  The main reason behind the trend has to do with the quality of higher education in Turkey.  The schooling rate in the 18-22 age group has reached nearly 46%, meaning that almost half of the young people in the said age group have had the opportunity to continue studying after high school.  The problem is that holding a degree in Turkey does not necessarily mean being a qualified professional in demand.

The number of universities in the country has reached 206, including 129 state universities and 77 private ones, according to figures by the Higher Education Board, which coordinates and supervises universities.  All of the country’s 81 provincial capitals have at least one university, and many towns are home to a faculty or some other tertiary school.  Yet, out of the nearly 7 million students currently enrolled in those universities, only some 4 million attend regular programs that require their physical presence at school, while the remaining 3 million study mostly on the basis of distance education, involving TV and online courses.

This educational infrastructure has major shortcomings in terms of qualified academic staff and equipment, such as modern labs and libraries.  It lacks any planning system that takes into account what kind of labor the country’s economy demands, resulting in a harsh reality where 12-13% of university graduates are unable to find jobs.

While a fourth of Turkey’s jobless hold higher education degrees, another fourth are graduates of high schools and equivalent vocational schools.  The remaining half are people with less education or uneducated, mostly laborers.

Taken at face value, access to higher education has increased in recent years, especially for those in the 18-22 age group.  The admissions capacity of universities has grown, meaning that the number of graduates who join the labor force has increased annually.  In 2018, the labor force with a higher education numbered 7.7 million, increasing by 2 million from 5.7 million in 2014.  But many in this fast-growing labor force have remained unemployed.  In January, their number stood at about 1.1 million, up from some 700,000 five years ago. With the added impact of the economic crisis, the figure is likely to reach 1.3 million next year.

Which professional groups are worst hit by unemployment?  The answer can be found in data the TUIK releases on a yearly basis.  Accordingly, the average number of higher education graduates who remained unemployed in 2018 stood at 951,000; 300,000 of them — approximately a third — were business and management graduates, apparently mostly from two-year distance-learning programs.  Among business and management graduates alone, the unemployment rate was 13.2%, slightly above the overall rate.

Some 115,000 diploma holders in the field of education comprised the second largest group of educated jobless, accounting for 12% of the total.

Engineers ranked third.  According to the TUIK data, some 91,000 out of 876,000 engineering graduates remained unemployed last year.  The unemployment rate in this group was 10.3%, 1% higher than 2017.

The turmoil in the construction sector, one of the worst hit by the economic crisis, is taking a toll on architects as well. In the architecture and construction category, the labor force with higher education numbered some 286,000 in 2018, up from about 280,000 in 2017, the TUIK data shows.  Out of the 6,000 newcomers, 5,000 were able to find jobs, while 1,000 remained unemployed.  Accordingly, the number of jobless architects rose to some 39,000 from 38,000 in 2017, meaning that the unemployment rate among architects reached 13.7% last year, up from 13.5% in 2017.  This was 1.3% above the 12.4% overall unemployment rate among the labor force with higher education in 2018.

According to TUIK data, “journalism and information” is another realm with a high unemployment rate.  The labor force holding degree in this field numbered about 40,000, and 10,000 of them — or 20% — were unemployed.  The jobless rate was even higher — more than 21% — among those educated in arts, and stood at about 15-16% in the categories of social sciences and humanities.

In sum, finding a job has become a growing anxiety for young people in Turkey as they seek to boost their hopes by pursuing university degrees after high school.  The growing demand for higher education has encouraged investments in private universities.  While the number of degree holders is on the rise, job opportunities remain limited.  The outcome of this discrepancy is a swelling army of educated jobless.

Mustafa Sonmez is a Turkish economist and writer. He has worked as an economic commentator and editor for more than 30 years and authored some 30 books on the Turkish economy, media and the Kurdish question.  (AL-Monitor 17.04)

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11.7  GREECE:  ‘B+/B’ Ratings Affirmed; Outlook Positive

On 26 April 2019, S&P Global Ratings affirmed its ‘B+/B’ foreign and local currency long- and short-term sovereign credit ratings on Greece.  The outlook remains positive.


The positive outlook signifies that we could raise our ratings on Greece within the next 12 months if the economic recovery strengthens.

This could result from additional certainty as regards the direction of the economic policy implemented by the government via further economic reforms boosting Greece’s economic growth potential and alleviating outstanding socioeconomic challenges.  Another potential trigger for an upgrade would be a marked reduction in nonperforming exposures (NPE) in Greece’s impaired banking system, as well as the elimination of all remaining capital controls.  Mitigation of fiscal risks related to pending court decisions regarding the past public wage bill and pension system measures could also trigger an upgrade.

We could revise the outlook to stable if, contrary to our expectations, there are reversals of previously implemented reforms, or if growth outcomes are significantly weaker than we expect, restricting Greece’s ability to continue fiscal consolidation, debt reduction, and financial sector restructuring.


Our ratings on Greece reflect the improving economic outlook, accompanied by strong budgetary performance and a very favorable government debt structure.  These are balanced against the country’s high external and public debt burdens, a difficult situation in the banking system, characterized by a large stock of NPE, a challenged monetary transmission mechanism, and remaining capital controls.

In terms of maturity and average interest costs, Greece has one of the most advantageous debt profiles of all our rated sovereigns.  Our rating pertains to the commercial portion of Greece’s central government debt, which is less than 20% of total Greek debt, or less than 40% of GDP.  The final disbursement from the European Stability Mechanism (ESM) program provided Greece with a sizable cash buffer, which we estimate will meet central government debt-servicing into 2023.  We project that Greece’s general government gross debt-to-GDP ratio will decline from 2019, aided by a recovery in nominal GDP growth, while the government’s net debt-to-GDP trajectory will depend on the budgetary implications of potentially adverse court decisions on past pension reforms, as well as on the success of the strategy to support the reduction of NPE in the banking sector.

Institutional and Economic Profile: Greece’s Economic Growth Prospects are Improving

-Greece graduated from its ESM program in August 2018, having secured further debt relief and a sizable cash buffer.

-We project that the economy will grow by 2.8% on average over 2019-2022 as domestic demand strengthens and solid export performance continues, although the latter will likely be limited by the ongoing slowdown in the rest of the Eurozone, Greece’s main trading partner.

-The pace of further economic reforms may slow during 2019, an election year.

Following real GDP growth of 1.9% in 2018, we expect the economy will expand by about 2.3% in 2019, before the pace gradually strengthens over 2020-2022.  Employment growth continues to be solid: We forecast growth above 2% annually through 2022, although the recent increase in the minimum wage could lead to a slowdown in hiring.  Moreover, the economy would benefit from a higher share of permanent jobs, given that in 2018, and so far in 2019, slightly more than one-half of new employees were hired on temporary contracts.

Over the next three years, we expect Greece’s economic growth will surpass the Eurozone average, including in real GDP per capita terms, reflecting a steady recovery following a deep and protracted economic and financial crisis.  We also expect economic performance to remain balanced, with domestic demand and exports continuing as the key drivers of growth. In this context, we expect slowly rising private consumption on the back of improved employment prospects, as well as the recent government decision to increase the monthly minimum wage by almost 11% to €650.  Moreover, if the recovery becomes well entrenched, we believe that consumption would likely see a boost from the pent-up demand by households, held back during the past protracted recessionary period.  A key constraint on the economic outlook remains authorities’ decision to subordinate public investment spending (including on education) to current expenditure, particularly on social transfers, although the government is committed to improving the absorption capacity and thus addressing the under-execution of public investment, which together with an accelerated use of EU funds should support economic growth over our forecast horizon.

The outlook for private investment is also improving, given the gradual increase in net foreign direct investment (FDI).  However, in our opinion, the key to a faster economic recovery is a substantial reduction in the banking sector’s NPE, which would significantly enhance credit activity in the private sector and as a consequence crystalize the benefits of the substantial structural reforms Greece has undergone since 2010.  We believe that the positive impact of the reforms, for example in product and services markets, are unlikely to be displayed in the recessionary or low economic growth mode that Greece has known over the last decade.  Without access to working capital, the broader small and midsize enterprise sector–the economy’s largest employer–remains in varying degrees of distress.  Private sector default is widespread, including on tax debt. Moreover, the economy’s ability to attract foreign investment to finance growth remains weak.

Absent the materialization of external risks, such as from mounting global protectionism and a faster-than-forecast slowdown in Eurozone economic growth, Greece’s export sector is well positioned to benefit from its reinforced competitiveness.  In this context, Greece’s labor cost competitiveness has improved to its level before 2000 and, together with the reorientation of domestic businesses from domestic to external demand, has resulted in almost a doubling of the share of exports of goods and services (excluding shipping services) in GDP terms, from 19% in 2009.  Greece’s market shares in global trade have increased correspondingly and we expect further gains over the forecast period through 2022.

Since 2015, policy uncertainty has receded, and in August 2018, the Syriza-led government exited the country’s third consecutive lending program, having overseen large fiscal and external adjustments.  Nevertheless, we believe that a faster economic recovery could result from further improvements in business environment, including an acceleration of the privatization process and government arrears clearance, as well as the above-mentioned improvements in the banking sector with respect to its capacity to fund the economy.

Although Greece’s labor cost competitiveness has been restored, we believe that its competitiveness in other areas remains weak.  Greece still compares poorly with its peers, due to its many impediments to competition in its product and professional services markets, alongside relatively weak property rights, complex bankruptcy procedures, an inefficient judiciary and the low predictability of the enforcement of contracts.  As a consequence, while net FDI inflows have recently improved, they may not be sufficient to fund a more powerful economic recovery.  At the same time, a recent reversal of labor reform, which could reintroduce collective wage negotiations at the national level, might weaken the ongoing recovery in the job market by reducing companies’ flexibility to navigate a tough economic situation.  Over the long term, however, in the absence of reforms to the business environment, we think that GDP growth is unlikely to exceed 3% on a sustained basis, constrained by administrative burdens and anticompetitive behavior across the economy – particularly concentrated in the services sector.  Complacency and fatigue in addressing structural problems may not adversely affect macroeconomic outcomes or sovereign debt-servicing ability in the medium term, but would likely cap Greece’s growth prospects in the long term.

Following the successful termination of the ESM program, Greece is subject to quarterly reviews by the European Commission under the “enhanced surveillance framework.”  Ongoing debt relief and the return of so-called ANFA/SMP profits on Greek bonds held by the European Central Bank (ECB) and the Eurozone’s national central banks (ESCB) will be subject to ongoing compliance with the program’s objectives.  Use of the cash buffer for purposes other than debt-servicing will have to be agreed with the European institutions. We therefore believe that the Greek authorities will have strong incentives to avoid backtracking markedly on most previously legislated reforms.  In this context, despite a delay, the authorities have complied with the commitments made regarding a series of post-program actions which led to a decision by the Eurogroup on disbursement of profits on ESCB holdings of Greek government bonds earlier this month.

The next general election is to be held by October 2019 at the latest, although early elections, e.g., after the May local and European elections and before the parliamentary summer break, cannot be excluded.  The government’s stability was weakened earlier this year, following the departure of a junior coalition partner, due to an agreement regarding Greece’s long-standing conflict about the name issue with its northern neighbor, recognized as North Macedonia as of 12 February 2019.  We believe that the agreement is positive for economic relations and growth prospects of both countries. Given that 2019 will also see local and European elections, it is very likely that the polarization of the political landscape will escalate in the coming months.  In our view, this represents a risk that areas such as privatization, increasing the efficiency of the judicial system, and further improvements in the business environment will face delays.

Moreover, a more resolute approach toward the reduction of NPE in the banking sector may see little further progress before the electoral challenges play out.  However, we expect Greece’s economic and budgetary policies will comply with commitments it made at the time of the termination of the ESM program.

Importantly, we view positively the constitutional amendments regarding the disentangling of the presidential elections away from the government mandate.  While the details of the presidential election according to the new arrangement remain to be specified, the risk of government instability due to a potentially unsuccessful appointment of the president of the republic by the parliament appears to be eliminated.  The previous arrangement has led in the past to a vote of confidence in the government and potentially, to new general elections, instilling instability in the length of the government’s mandate and policy predictability.  As a result, the next government will be able to face a more stable mandate, without being distracted by the presidential elections and related political maneuvering undermining the predictability of economic and budgetary policies.

Flexibility and Performance Profile: Strong Budgetary Performance to Continue, While Banks are on the Mend

-We project general government debt will decline during 2019-2022.

-The creation of cash buffers via the final ESM program disbursement limits risks to debt repayment through 2023.

-If implemented, proposals for an accelerated reduction in NPE in the banking sector could unlock credit activity and contribute to faster restoration of investment.

Following a large budgetary adjustment since the start of the economic and financial crisis, Greece has established a track record of exceeding budgetary targets via rigid expenditure controls and improved revenue performance.  In 2018, the primary balance reached 4.4% of GDP, significantly outperforming the target agreed with the creditors of 3.5% of GDP, and above the government’s own target of 4.0% of GDP.  The over performance against the government’s own target occurred despite a delayed payment to the government for the concession of Athens International Airport that occurred earlier this year.

As a result of the better-than-planned budgetary performance, contingent deficit-reducing measures, such as pension spending cuts, did not need to be implemented.  The 2018 performance was characterized by higher government revenue, in particular from higher indirect taxes, which appears to have nevertheless been lower than the government’s own plans.  In addition, primary expenditure was lower than budgeted (government expenditure without interest payments), reflecting compliance with the spending restraints in place, including in health care and the public sector wage bill.  While headline consolidation progress has been dramatic, it is notable that key components of spending on human capital, particularly on education and health, have been cut sharply to below European averages since the beginning of the crisis in 2009.

The 2019 budget includes a series of measures aimed at improving hiring incentives, including focusing on reducing the temporary character of the current employment structure.  For example, in the education sector, 4,500 teachers and specialized staff will be hired on a permanent basis for positions currently occupied by temporary teachers, without an impact on the overall headcount in the public sector.  The budget also includes a reduction of social security contributions for independent professionals, the self-employed, and farmers, as well as a subsidy to social security contributions for the young.  Finally, the government aims to reduce the tax burden on the economy by reducing tax rates on corporate income, dividends, and basic property, as well as the existing stock of arrears at approximately €2.1 billion at the end of 2018.

The execution of the 2019 budget could be negatively affected by pending court rulings on past government decisions on public sector wages, as well as on the 2012, 2015 and 2016 pension system reforms.  In our view, this would make compliance with the 2019 primary balance target somewhat more difficult. Moreover, given the upcoming elections, political maneuvering of the government, for example a higher increase in public sector workforce than planned, could lead to lower compliance with its expenditure ceiling.

If these risks do not materialize, we project that in 2019-2022 Greece will report general government primary surpluses above the 3.5% of GDP target agreed with official creditors, which should see gross general government debt decrease to just below 150% of GDP in 2022 from slightly above 181% in 2018.  Even in nominal terms, we forecast gross general government debt will decline from 2019, in line with the central government amortization schedule and our expectation of headline fiscal surpluses.  Net of cash buffers, we project that net general government debt will decline below 140% of GDP in 2022.  Nevertheless, the government net debt-to-GDP trajectory over the coming years will depend on the budgetary implications of potential adverse court decisions on past public wage bill and pension system reforms, as well as of the government’s strategy to support the reduction in the NPE of the banking sector.

Despite the size of Greece’s debt, the average cost of servicing this debt, at 1.6% at the end of 2018, is significantly lower than the average cost of refinancing for the majority of sovereigns rated in the ‘B’ category.  We anticipate that, even with increasing commercial debt issuance, the proportion of commercial debt will remain less than 20% of total general government debt through year-end 2021.  We therefore expect a gradual reduction in interest costs relative to government revenues.  Potential partial prepayment of the outstanding obligations to the International Monetary Fund (currently totaling €9.4 billion), as recently suggested by the authorities, would reduce the interest burden further without easing the post-program surveillance.  We estimate the average remaining term of Greece’s debt at 18.2 years as of year-end 2018, although this is set to increase further with the implementation of the debt-relief measures granted in June 2018.

In 2018, Greek banks made further progress in reducing their NPE stocks, which at the end of December stood at €81.8 billion (excluding off-balance-sheet items) from the €107.2 billion peak in March 2016, a reduction by almost 25%.  Initiatives to tackle the high stock of NPE are underway, including write-offs and implementation of out-of-court restructuring, the development of a secondary market and electronic auctions.  The recently adopted household insolvency law, agreed with the EU institutions, is likely to reduce the phenomenon of strategic defaults and accelerate the settlements with the borrowers, which will under certain conditions benefit from a state subsidy toward mortgage repayment installments.

Based on experience in other peers, like Spain, Ireland, Slovenia and Cyprus, we believe that a faster decline in NPE may not be possible without a more resolute approach and involvement of additional government support.  The current considerations by the authorities involve a proposal for an asset protection scheme, with the government extending sovereign guarantees to the senior tranches, and a scheme based on deferred tax credits, which would involve a transfer of a part of NPE to an asset management company, supported by a funding contribution by the government.  In the context of our sovereign rating analysis, we would likely view positively the implementation of the above proposals, which appear complementary, since they would materially improve the likelihood of meeting the banks’ own NPE reduction targets to 20% or below.  As a consequence, and given the experience of the sovereigns cited above, we believe that such measures would likely lead to faster economic recovery.  Namely, despite steady increases in new credit in the corporate sector (1.6% year on year in February 2019), the overall credit activity (overall -0.4% year on year in February 2019) is still negative and does not contribute to a meaningful restoration of investment activity in the economy.

At the same time, the banking system’s liquidity has improved.  Banks continue to reduce their reliance on official ECB financing and have in the first quarter of this year completely eliminated their reliance on more costly emergency liquidity assistance.  An uptick in deposits has helped, as have repurchase transactions with international banks and sales of NPE.  While deposits into the banking system have been growing–household and corporate deposits grew by about 6% in 2018 – confidence has not returned to the extent that would enable a full dismantling of capital controls, although these have been eased in line with the Bank of Greece plan, most recently in October 2018.  Over the past year, Greece’s systemically important banks have issued covered bonds.  Like the sovereign, this was their first market foray since 2014.  With Greece having graduated from the ESM program, its banks lost the waiver that allowed them to access regular ECB financing using Greek government bonds as collateral.  However, despite the loss of the waiver, the banks’ funding was not disrupted.

Greece has had a significant adjustment in its external deficit.  The current account deficit fell from nearly 14.5% of GDP in 2008 to the record low of 0.8% of GDP in 2015, mainly via significant import compression, before widening somewhat as the economy started to recover.  In 2018, the solid export performance, including the substantial growth in the services surplus, was more than offset by a higher oil deficit and import growth.  We project the current account deficit will decline slightly in 2019, but expansion of imports on the heels of consumption and expected solid investment recovery, as well as a slowdown in global economic trade, could lead to a wider current account deficit.  (S&P 26.04)

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