Fortnightly, 10 August 2016

Fortnightly, 10 August 2016

August 10, 2016


10 August 2016
6 Av 5776
7 Dhul Qadah 1437




1.1  Bank of Israel Warns on Household Consumer Debt
1.2  Bank of Israel Allows Banks to Increase Construction Credit
1.3  New Law Offers Incentives to Build Hotels in Israel
1.4  Israeli Government Promotes Mutual Funds for Tech Investment
1.5  As State Budget Talks Intensify, Ministries Brace For 2% Cut
1.6  Netanyahu Presses Kahlon to Ease Regulation


2.1  Engie Raises $3.5 Million
2.2  SafeBreach Raises $15 Million to Test Companies’ Cybersecurity
2.3  Prospera Raises $7 Million
2.4  SlateScience Raises $45 Million
2.5  Zeek Raises $9.5 Million
2.6  Netafim Aligned with UN’s Sustainable Development Goals
2.7  StackPath Acquires Fireblade for $20 Million
2.8  Riverbed to Acquire Leading End User Experience Monitoring Provider Aternity
2.9  Keter Plastic Signs Agreement for its Acquisition by BC Partners
2.10  Gujarat Delegation Meets Leading Israeli Companies in Tel Aviv and Jerusalem
2.11  Consortium to Acquire Playtika for $4.4 Billion With Caesars Interactive Entertainment
2.12  CyberX Raises $9 Million to Protect the Industrial Internet
2.13  Teridion Expands With New Office in Israel
2.14  Cloudyn Raises $4 Million from India’s Infosys
2.15  Kaltura Announces $50 Million Investment from Goldman Sachs
2.16  Innoviz Technologies Secures $9 Million in Series A Funding
2.17  SoLoMoTo Enters the US Market


3.1  Cold Stone Creamery Enters Lebanon Marketplace
3.2  ArabiaWeather Forms Standalone Meteorology Department
3.3  Dubai to Invest $275 Million in New Tech Innovation Initiative
3.4  Covalon Wins $7.6 Million Twelve Month Saudi Arabia Contract to Supply Wound Dressings
3.5  As FX Shortage Bites, Egypt’s CIB Limits Use of Bank Cards Abroad
3.6  Chinese Electric Car Company Invests MAD 1 Billion in Morocco


4.1  Solar Plane Completes Epic Round-the-World Trip


5.1  Lebanon’s Trade Deficit Reached $7.93 Billion by June 2016
5.2  Number of Lebanese Tourists Up by 7.7% by June 2016
5.3  Jordan Signs Letter Accepting Terms of $700 Million Deal with IMF
5.4  Jordan’s Exports Decline During First Five Months of 2016

♦♦Arabian Gulf

5.5  Findings Say 50,000 Schools Needed Across Arabian Gulf by 2020
5.6  Kuwait Plans to Raise Fuel Prices By 73% from September
5.7  Third Reactor Vessel Installed at UAE’s Nuclear Power Site
5.8  South Korea Signs $920 Million Deal for UAE Reactors
5.9  UAE’s Hotel Construction Pipeline Set to Peak in 2018
5.10  Occupier Demand for UAE Offices Falls for Third Straight Quarter
5.11  Dubai-Run Hospitals See 524,000 Patients in First Half of 2016
5.12  Sharjah’s Ratings Outlook Downgraded by S&P
5.13  Oman Posts $6.6 Billion Budget Deficit in First 5 Months of 2016
5.14  Oman Said Set to Slash Subsidy Bill by 64% in 2016
5.15  Saudi Arabia Increases Visa Fees & Traffic Fines

♦♦North Africa

5.16  Egypt Has Proposed 18-Month Reform Program to IMF
5.17  CAPMAS Says 88.1% of Egyptian Families Own Mobile Phones
5.18  Nearly 40% of Egyptians’ Education Spending Pays for Private Tutorials
5.19  27.8% of Egyptian Population Lives Below Poverty Line
5.20  Egypt Signs Exploration Deals with US & Cypriot Firms
5.21  Libya’s Petroleum Facilities Guard Reopens 4 Ports to Resume Oil Exports
5.22  China Delivers Third C28A Corvette to Algeria
5.23  Number of Internet Users in Morocco Increases by 34%
5.24  Morocco Receives First US Abrams Tanks for Royal Armed Forces


6.1  Turkey’s Tourism Revenue Sees Steepest Q2 Plunge Since 1999
6.2  Greek Government Reports Nearly €1 Billion in Tax Evasion Fines, Asset Seizures



7.1  Tisha B’Av to Be Observed on 13/14 August
7.2  NBA’s Amar’e Stoudemire Joins Hapoel Jerusalem Basketball Club
7.3  Israeli University Offers Degree in Winemaking


8.1  LabStyle Innovations Now DarioHealth
8.2  Gamida’s First Sickle Cell Patient Transplanted in Study of CordIn as the Sole Graft Source
8.3  Quark Awarded Key Patent for QPI-1007 Ocular Neuroprotectant Treatment
8.4  Teva Completes Acquisition of Actavis Generics
8.5  Aeterna Zentaris and Rafa Laboratories Sign Exclusive Agreement for Zoptrex in Israel
8.6  Check-Cap Awarded $1.25 Million Grant for 2016 from Israel’s OCS
8.7  POP Medical Receives FDA Approval for Pelvic Device
8.8  Intec Pharma to Pursue Development of Accordion Pill for Cannabinoid Therapies
8.9  Teva Announces Acquisition of Anda
8.10  InSeal Medical Announces CE Mark for InClosure Large Bore Vascular Closure Device
8.11  FDA Approves EyeYon Corneal Edema Treatment


9.1  Stratoscale Symphony V2 Delivers the Public Cloud Experience in the Enterprise Data Center
9.2  Mellanox Receives Baidu’s Award for Technology Leadership
9.3  NUA – the Smart Carry-On Suitcase That Follows You Around
9.4  Medallia Deploys Mellanox Solution to Supercharge Real-Time Analytics
9.5  BillRun Implements Billing and CRM Systems at Monaco Telecom
9.6  Pontis Recognized as One of the 100 Most Promising Big Data Solution Providers
9.7  Matomy Launches mtmy – the First Mobile Performance Advertising Agency
9.8  GuardiCore Unveils Infection Monkey Open Source Cyber Security Testing Tool
9.9  TrekAce Unveils Navigator for Bikers & Hikers
9.10  Celliboost Launches Mobile System for Rugged Terrain
9.11  Optimal+ Announces Availability of Electronics Solution with Release 6.5
9.12  NICE Scenario Analyzer Enhances Customer Journey Analytics


10.1  Unemployment Down to 4.8% in Israel in Second Quarter


11.1  ISRAEL: S&P ‘A+/A-1’ Ratings Affirmed; Outlook Stable
11.2  ISRAEL: Private Equity Deals Fall By 24% in First Half of 2016
11.3  JORDAN: Why Many Jordanians Have Little Stomach for Upcoming Elections
11.4  UAE: Emirate of Abu Dhabi ‘AA/A-1+’ Ratings Affirmed; Outlook Stable
11.5  SAUDI ARABIA: The Potential of Saudi Economic Reforms
11.6  EGYPT: What Will $12 Billion IMF Loan Cost Egypt?
11.7  EGYPT: Can Sisi’s New Investment Council Save Egypt’s Economy?
11.8  EGYPT: Wealthiest 10% in Egypt Responsible for 25% of Spending
11.9  EGYPT: Political Instability, Poor Access to Finance Hold Back Private Sector
11.10  MOROCCO: Why Morocco Really Wants Back in the African Union
11.11  GREECE: Greece ‘B-/B’ Ratings Affirmed; Outlook Remains Stable
11.12  CYPRUS: Bond Issue Is a Key Post-Program Milestone


1.1  Bank of Israel Warns on Household Consumer Debt

The Bank of Israel found that 30% of Israeli households have an average consumer debt of NIS 94,000.  While its semi-annual Financial Stability Report focuses on the risks in the housing market, the Bank of Israel also devoted a large section of the report to the steep increase in household credit in recent years and the risk it entails.  According to the Bank of Israel, household credit (including mortgages), grew 6% over the past year, totaling NIS 481.7 billion as of the end of April.  Non-mortgage credit accounted for a third of that amount.

The Bank of Israel notes that it has been conducting a survey of households since 2012 in cooperation with the Central Bureau of Statistics, and the Ministry of Finance.  The survey follows the conduct of 4,621 households; its results show that 30% of the households currently have an average of NIS 94,000 in consumer credit.

The survey results also indicate that the proportion of mortgages is greater in the higher income brackets, rising from 7% in the bottom income decile to 41% in the top income decile.  The proportion of total ordinary debt, on the other hand, rises with income only up to a certain point, rising from 18% in the bottom income decile to 34% in the sixth income decile, then falling in the higher income deciles.  The Bank of Israel concludes that credit that is not for housing purposes is considered more risky than credit for housing, because only part of it is backed by collateral (mainly loans for buying cars).  If increased competition leads to more non-housing credit and increased leverage among borrowers, it should be promoted cautiously in order to maintain households’ financial stability.  (Globes 28.07)

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1.2  Bank of Israel Allows Banks to Increase Construction Credit

Israel’s Supervisor of Banks, Hedva Ber, has distributed a draft circular to the banks changing the system for measuring the restrictions on credit by sector.  Credit risk against which the banks have contracted policies from overseas insurance companies will be classified mainly as financial services credit, instead of real estate credit.  This change will enable the banks to increase their supply of credit to the construction and real estate industry and continue financing important projects in the sector.

According to regulations issued by the Bank of Israel Banking Supervision Department, the proportion of credit granted by a bank to the individual households sector is limited to 20% (22% in certain circumstances) of the bank’s total credit.  This restriction was designed to prevent a crisis in a specific household sector from jeopardizing the bank’s stability, and thereby that of the economy as a whole.

The planned ad actual increase in construction in recent years, including large-scale buyer fixed price projects and infrastructure projects (such as military infrastructure in the Negev), have brought a number of banks near the permitted credit proportion threshold.  They are limited in their ability to increase their credit to the sector, causing real estate companies to report a credit crunch.

In view of this problem, and especially given the capital adequacy requirements that the banks must meet, in the past year, the banks have made a number of substantial deals for acquiring insurance policies covering their credit risk from bank guarantees given according to the Sales (Dwellings) (Assurance of Homebuyers Investments) Law.  The insurance policies were purchased from international insurance companies recognized by the Basel Committee for international standards for purposes of calculating capital adequacy, and have reduced the exposure of these banks to real estate credit risk.

Ber is considering a change in the classification of the amounts of the sale guarantees for which insurance was purchased, so that 70% of these amounts would be classified according to the main activity of the party providing the hedge, in other words as financial services, instead of real estate.  Recognition of credit hedges is consistent with the Banking Supervision Department’s existing instructions for calculating capital adequacy.  The decision against full recognition of the sale is because the Banking Supervision Department intends to take measures in the future concerning the calculation of exposure to the household sectors (such as including lines of credit, etc.), which are likely to raise the banks’ exposure to this sector.

The Banking Supervision Department estimates that the proposed regulatory change will lower the proportion of real estate credit by 1.5% (with some difference between the banks), and will enable the banks to increase their credit and finance infrastructure and residential construction projects by NIS 10 billion.  (Globes 26.07)

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1.3  New Law Offers Incentives to Build Hotels in Israel

The Knesset approved Minister of Tourism Yariv Levine’s proposal aimed at making tourism cheaper.  The law was approved on 1 August on its second and third readings.  The proposal included a plan aimed at increasing the number of hotel rooms in Israel by streamlining planning and building procedures, encouraging hoteliers through incentives that include an allocation of 20% of the space for residences (in certain areas in Israel), etc.  The proposal passed, despite a long list of opponents, mainly among environmental organizations, which expressed dismay concerning damage to the coastline.  Minister of Finance Kahlon also expressed opposition and a compromise was introduced in the section concerning the District Planning and Building Commissions, which will have to approve the 20% added to the hotel area for residential construction.

The law will make it possible and financially worthwhile to immediately construct thousands of hotel rooms.  The law preserves environmental values and the beaches, including retaining the responsibility of the Coastal Environment Protection Committee for preventing damage to the coast.  Under the new law, in certain areas (not the coastal environment), hotels will be defined as national infrastructure, and will be approved quickly and simply by the Committee for National Infrastructure.  This will make planning and building procedures more efficient and shorter, with a possibility of receiving a permit for a chain of hotels throughout Israel from one committee through an abbreviated procedure (up until now, building a chain required dealing separately with local committees in each local authority).  Through this clause, Levine is trying to encourage overseas developers, who according to the Ministry of Tourism have already expressed interest in simultaneously building a chain of hotels in Israel.  Previously, the average time required to build a new hotel in Israel has been a decade.  In many cases, the approval and construction procedures continued far longer than a decade.  (Globes 02.08)

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1.4  Israeli Government Promotes Mutual Funds for Tech Investment

Minister of Finance Moshe Kahlon and Israel Securities Authority chairman Shmuel Hauser are promoting mutual funds for investing in public and private high-tech companies.  The inspiration for this move is that the Israeli public reaps little benefit from high-tech success, because most of the shareholders are not Israeli residents.

Kahlon approved the regulations for founding high-tech mutual funds.  A high-tech mutual fund is a special-purpose instrument for investing in Israeli high-tech companies engaging in R&D, including those not listed on any stock exchange.  The measure will bring money into a sector almost completely financed by money from the US.  In this way, the Israeli public can participate in the high-tech sector.  In 2015, Israeli exits totaled $9 billion, and the Israeli public reaped almost no benefit from this success, because most of the shareholders are not Israeli residents.  (Globes 27.07)

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1.5  As State Budget Talks Intensify, Ministries Brace For 2% Cut

Government spending will be cut by 2% across the board in the next state budget, Finance Minister Kahlon announced on 08 August.  The planned cuts are expected to save the state 2 billion shekels ($520 million) a year.  The Social-Economic Cabinet was expected to begin debating the biennial budget on 09 August.

Under the plan, NIS 336 million ($88 million) will be cut from the defense budget, NIS 312 million ($82 million) from the Transportation Ministry budget, NIS 177 million ($46 million) from education spending, and NIS 167 million ($44 million) from the Health Ministry budget.

Outlining the 2017-2018 budget, the Finance Ministry set state deficit projections at 2.9% of gross domestic product for 2017, and a similar percentage for 2018.  The Finance Ministry expects the deficit to decrease to 1.5% of GDP by 2023.  While the original deficit goal was 2.7%, raising it to 2.9% will increase government resources by NIS 5 billion ($1.3 billion) in 2017 and NIS 8 billion ($2 billion) in 2018.  The budget is also expected to include income and corporate tax reforms, with both expected to drop by 1% in each of the two years, for a total of 2%. This is expected to cost the state some NIS 3 billion ($785 million).

Prime Minister Benjamin Netanyahu approved Kahlon’s budget framework last week, and the Social-Economic Cabinet is expected to hold a series of votes on its articles ahead of its presentation for a Knesset vote.  (IH 09.08)

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1.6  Netanyahu Presses Kahlon to Ease Regulation

Prime Minister Netanyahu is reportedly pressuring Minister of Finance Kahlon to introduce compulsory labor relations arbitration arrangements as part of the upcoming Economic Arrangements bill, as well as to take more active measures to ease the regulatory burden.  According to sources close to Netanyahu, he is disappointed with the format of the budget presented to him and believes that it does not achieve the goals he wishes to promote.  As of now, Kahlon has not responded to Netanyahu’s appeal on this issue.  In the past, however, he vetoed Netanyahu’s initiative to include a commitment to a compulsory arbitration bill.

Compulsory arbitration arrangements are a red line for workers’ committees and Histadrut (General Federation of Labor in Israel) because they force the committees to go to arbitration as a precondition for exercising the right to strike.  Netanyahu was already unsuccessful three years ago in promoting compulsory arbitration proposal and tried to bring the issue up again in the coalition negotiations for forming the present government.  (Globes 26.07)

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2.1  Engie Raises $3.5 Million

Engie has raised $3.5 million in an Series A financing round.  The best-known angel investor in the company, who was actually the first to invest in it, is Waze cofounder and former president Uri Levine.  Since the app was launched, more than 200 garages around Israel have joined it, and it has almost 100,000 users in the country.  The funds raised will help Engie expand overseas

The system is connected to the vehicle though a Bluetooth component that communicates with the vehicle’s computer.  As soon as the connection is made, Engie monitors the state of the car, identifies malfunctions, diagnoses them and gives the driver price offers from nearby garages.  In addition, it keeps track of the vehicle’s state, warns of imminent service needs, informs the driver if the battery is running down, provides information about fuel consumption, etc.  The Bluetooth component can be connected to almost any vehicle manufactured in 2002 or later.  The connection can be made independently.

Tel Aviv’s Engie is a car repair marketplace disrupting the automotive repair & maintenance industry as it offers a full solution to the driver – from malfunction diagnostics to real time quotes from mechanics, all through a smartphone app.  Drivers can also get information and quotes for their upcoming maintenance service, track daily parameters such as battery charge, oil level and more.  With Engie the driver can make an educated decision when choosing a mechanic and come with knowledge and power to the repair shop.  (TechCrunch 26.07)

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2.2  SafeBreach Raises $15 Million to Test Companies’ Cybersecurity

SafeBreach has closed a $15 million series A round from existing investors Sequoia Capital and Shlomo Kramer, with participation from new entrants Deutsche Telekom Capital Partners, Hewlett Packard Pathfinder, and Maverick Ventures.  Founded in 2014, SafeBreach serves as a virtual hacker of sorts, generating “war games” to analyze the impact of attacks on a company’s systems and the efficacy of its defenses.  This essentially lets any organization see how it would cope when faced with a real-life attack.  The company’s new backers, including Deutsche Telekom and Hewlett Packard, are also testament to how the broader tech industries are increasingly investing in cybersecurity smarts.  SafeBreach has raised around $4 million before this latest round and its latest cash injection will be used to expand its R&D and sales and marketing efforts.

Tel Aviv’s SafeBreach generates war games simulations within the organization’s information systems, analyzes the effect of the attacks and the effectiveness of the defense products at any given moment, and enables the organization to realize what risks it faces, and to close loopholes against an attacker trying to cause real damage.  (SafeBreach 26.07)

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2.3  Prospera Raises $7 Million

Prospera has raised $7 million in a Series A financing round led by Bessemer Venture Partners.  The company enables farmers to maximize yields by using artificial intelligence and among other things they can analyze databanks related to yields including the price of seeds, irrigation costs, produce market prices, etc.  Tel Aviv’s Prospera has developed computer vision technologies that continuously monitor and analyze plant health, development and stress.  The company develops both hardware and software solutions that collect and analyze multi-sensor data with state-of the-art machine learning algorithms.  Prospera’s technology captures climate and visual data from the field and provides actionable insights to growers via mobile and web.  (TechCrunch 26.07)

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2.4  SlateScience Raises $45 Million

SlateScience, which has developed the Matific educational math and science games for mobile and web platforms, has raised $45 million led by Australian entrepreneur Leon Kamenev.  The company raised $12 million last year.  Matific creates a fun, interactive learning experience, personally customized for each child using a unique technology that combines machine learning, data mining and automatic content generation.  The company offers school and home products.  The school product allows teachers to associate assignments that are customized to the school curriculum and each child’s individual needs.  In the past year, Matific’s school product, which is available in 20 languages, was successfully integrated in hundreds of schools all over the world.

SlateScience’s Matific R&D and global operations center is located in Israel, with sales offices in the US, Australia, Canada, South America, UK, and South Africa.  The R&D center includes specialized game design teams that provide both mentorship and hands on experience for computer science students and graduates, and is currently recruiting mathematicians, computer science engineers and team leaders.

Slate Science develops science, technology, engineering, and mathematics educational applications for tablets.  The company offers Matific, a portfolio of educational applications to empower mathematical education from kindergarten through grade six.  Its Matific Series includes Matific for Kids that builds an understanding of the math skills required for the children’s age group; Matific for Schools, a professional version that allows teachers to customize the materials for specific study programs and class needs, as well as provides teacher dashboards, assessment tools, class diagnostics, and screen sharing; and Matific K1 for kindergarten and first grade levels.  The company also offers SlateMath, a portfolio of engaging mathematics learning activities that are available on tablets and mobile devices.  (NoCamels 28.07)

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2.5  Zeek Raises $9.5 Million

On 26 July, Zeek announced that it has closed a $9.5 million Series B financing round led by Scale-Up Venture Capital.  Other prominent investors in the round include Blumberg Capital, Qualcomm Ventures, FJ LABS (Fabrice Grinda), Waze founder Uri Levine, Emery Capital, Ton Ventures, Radiant Venture Capital, iAngels and Target Global.  The capital investment will support Zeek’s growth in the UK and expansion overseas, and will attract new talent to advance the company’s vision.

Tel Aviv’s Zeek is a mobile app and website that allows users to buy gift cards and vouchers from their favorite brands at a discount and sell unwanted gift vouchers for cash, providing a solution to the estimated $100 billion of unused gift cards globally.  Zeek has since expanded to the U.K., which is now a key market for the startup and part of the reason for today’s announced fund-raise. The new capital will be used to consolidate its position in the U.K. and for further international expansion. This will include a hiring drive as Zeek plans to increase headcount in order to accelerate that growth.  (TechCrunch 27.07)

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2.6  Netafim Aligned with UN’s Sustainable Development Goals

Netafim released its 2015 Sustainability Report, which demonstrates how its 2020 Sustainability Strategy is aligned with the Sustainable Development Goals (SDGs) recently adopted by the UN.  Written in accordance with the Global Reporting Initiative (GRI) G4 standard, the world’s most advanced sustainability reporting framework, the report highlights numerous Netafim activities that underscore its commitment to several of the 17 SDGs, which were approved in September 2015.

The report highlights a number of recent case studies from across the globe.  In one example of action for prosperity, the Company prepared the 2015 launch of a large-scale rice irrigation pilot with India’s Tamil Nadu government involving 600 farmers that has increased yields by 20% and decreased water usage by 60%.  In another example, Netafim is a majority partner in the Netafim Agricultural Financing Agency (NAFA), which has provided $33 million in loans over three years enabling 23,000 Indian smallholders to install drip systems across 22,000 hectares.  Netafim’s focus on education for prosperity was evident in a Kenyan project that is part of the USAID-funded Feed the Future Partnering for Innovation program.  Netafim has trained 5,000 smallholders in using the company’s Family Drip System (FDS) kit, while working with banks to help secure financing and with buyers to help the growers sell their produce.

Tel Aviv’s Netafim is the global leader in smart irrigation solutions for a sustainable future.  With 28 subsidiaries, 17 manufacturing plants and 4,300 employees worldwide, Netafim delivers innovative solutions to growers of all sizes, from smallholders to large-scale agricultural producers, in over 110 countries.  Founded in 1965, Netafim pioneered the drip revolution, creating a paradigm shift toward low-flow agricultural irrigation. Today, Netafim provides diverse solutions – from state-of-the-art drippers to advanced automated systems – for agriculture, greenhouses, landscaping and mining, accompanied by expert agronomic, technical and operational support.  (Netafim 27.07)

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2.7  StackPath Acquires Fireblade for $20 Million

StackPath has acquired Israeli website security company Fireblade.  No financial details about the deal were disclosed but sources estimate that the acquisition was for about $20 million.  Very little is known about StackPath, a Dallas, Texas based SaaS web security company, which came out of stealth yesterday with a reported investment of $180 million.  On launching, the company announced four acquisitions including Fireblade.

Tel Aviv’s Fireblade provides a sophisticated next generation website security and performance services, available to any website easily through the cloud.  The service bundles all aspects of website security and traffic management, including DDoS protection, web application security, health and performance monitoring and website acceleration.  Fireblade has innovated a behavioral approach to website security, shifting from traditional, costly and obsolete web application firewalls to a modern dynamic approach that relies on users’ behaviors and reputations, rather than signatures.

Fireblade’s technology is a unique 2-tier SaaS.  A cloud-based Central Security Cloud that analyzes huge volumes of traffic for behavioral profiling, inconsistency detection and reputation recognition, and edge nodes enforcing security policies and delivering the actual service, distributed in the cloud.  Fireblade offers its services directly and through partners and resellers, such as hosting providers, clouds and MSPs.  (Globes 26.07)

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2.8  Riverbed to Acquire Leading End User Experience Monitoring Provider Aternity

Riverbed Technology announced the signing of a definitive agreement to acquire Aternity.  The acquisition of the privately-held company will expand Riverbed’s SteelCentral performance monitoring solutions with a best-in-class end user experience offering, and provide Riverbed customers and partners with the industry’s best and most comprehensive end-to-end visibility solution– spanning network, application and end user experience performance management.  The acquisition of Aternity is expected to close in August 2016.  Financial terms of the deal were not disclosed.

Aternity’s proven technology helps enterprises see the entire user experience for any application running on any device, providing a user-centric, application performance experience vantage point that many of the market’s narrow-scope network or application performance monitoring tools lack.  By effectively transforming every device – physical, virtual and mobile – into a self-monitoring platform that is user experience aware, enterprises are empowered with user-centric, proactive IT management capabilities that dramatically reduce business disruptions and increase workforce productivity.

Hod HaSharon’s Aternity monitors any application on any physical, virtual, or mobile device, providing a user-centric vantage point that closes the visibility gap existing with network- and server-centric application performance management tools.  By effectively transforming every device — physical, virtual, and mobile — into a self-monitoring platform that is user experience aware, enterprises are empowered with user-centric, proactive IT management capabilities that dramatically reduce business disruptions and increase workforce productivity.  (Riverbed 28.07)

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2.9  Keter Plastic Signs Agreement for its Acquisition by BC Partners

Keter Plastic signed an agreement for the purchase of 80% of the company by investment fund BC Partners.  BC Partners is a leading international private fund that manages over €12 billion in assets.  Founded in 1986, the fund has played an active role in the buyout market in Europe for nearly three decades.  The Sagol family will continue to own 20% of the company.  Closure of the deal, which requires the usual approval, is slated for the fourth quarter of this year.  No financial details were disclosed but the acquisition is believed to be at a company value of $1.3 billion.  Keter Plastic’s 2015 sales totaled €800 million and the company’s annual growth has exceeded 10% in recent years.  Some 50% of the group’s revenue comes from new products launched in the past three years.

Keter Plastic develops, manufactures, and distributes throughout the world a broad range of plastic consumer products. It is regarded as an innovative global leader in the production of plastic products for the home and garden using the do-it-yourself method.  Keter Plastics’ consultants for the deal were Rothschild Bank, White & Case, and Ernst & Young. BC Partners was advised by UBS, JP Morgan, Linklaters and Ernst & Young.  (Globes 28.07)

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2.10  Gujarat Delegation Meets Leading Israeli Companies in Tel Aviv and Jerusalem

The Indian state of Gujarat in India organized a one day Vibrant Gujarat Road Show in Tel Aviv as part of its delegation visit to Israel.  The road show was aimed to strengthen economic and social ties between the two countries and to promote Vibrant Gujarat Global Summit 2017.  With the theme of “Gujarat – Connecting India to World,” the road show featured various activities involving leading Israeli companies, Industry Associations and government officials, strengthening the cause of development and promote cooperation between Israel and the State of Gujarat, India.  The delegates also discussed investor-friendly policies, perfect economic ecosystem and single window clearance procedures that Gujarat offers, making it one of the most sought after investment destinations globally.  The road show took place on 1 August at the Dan Panorama, Tel Aviv.

With a scheme to set up new R&D institutions and labs, Gujarat is also looking forward to steer public and private sector investments in defense design, security, development and manufacturing with 10% value of orders over next five years.  Gujarat is offering an attractive package of financial support and incentives for agro industrial projects to reputed companies with proven technical capability and track record to successfully conceive and implement agro industrial projects.  State government will offer 6% per annum back ended interest subsidy for first 5 years to agro industrial units from commencement of operations.  (Vibrant Gujarat Summit 2017 28.07)

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2.11  Consortium to Acquire Playtika for $4.4 Billion With Caesars Interactive Entertainment

A consortium, including an affiliate of Shanghai Giant Network Technology Co., one of China’s largest online games companies, has entered into a definitive agreement with Caesars Interactive Entertainment (CIE) to acquire CIE’s social and mobile games business Playtika in an all-cash deal for $4.4 billion.  The Consortium includes Giant Investment (HK) Limited; Yunfeng Capital, a private equity firm founded by Alibaba Group Holding Ltd. founder Jack Ma; China Oceanwide Holdings Group Co., China Minsheng Trust Co., Ltd.; CDH China HF Holdings Company Limited; and Hony Capital Fund.  Following the transaction Playtika will continue to run independently with its headquarters remaining in Herzliya, Israel and its existing management team continuing to run day-to-day operations.  The transaction is subject to customary regulatory approvals and other closing conditions, and is expected to close in the third or fourth calendar quarter of 2016.

Herzliya’s Playtika pioneered free-to-play games on social networks and mobile platforms.  It is the creator of such popular titles as Slotomania, House of Fun and Bingo Blitz, which consistently rank among the top-grossing games on Apple’s App Store, Google Play and Facebook.  Playtika’s games are played daily by more than 6 million people in 190 countries, in 12 languages and on more than 10 platforms.  (Playtika 30.07)

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2.12  CyberX Raises $9 Million to Protect the Industrial Internet

CyberX announced the completion of a $9m funding round.  The round was led by Flint Capital, including existing investors Glilot Capital Partners, Swarth Group, GlenRock, newly joined ff Venture Capital (ffVC) and additional angel investors.  CyberX has experienced rapid growth since its founding, with dozens of major deployments and a worldwide customer base in North America, EMEA and APAC.  The company’s technology is currently being successfully used in dozens of industrial and production environments worldwide.  This rapid growth is attributed to the company’s ability to deliver its unprecedented Industrial Finite State Machine (IFSM) technology, while preserving and providing immediate cyber and operational value to its customers.

With its field-proven technology being adopted across verticals, ranging from Manufacturing and Energy to IIoT environments, CyberX is positioned as the leader in the Industrial IoT security revolution.

Herzliya’s CyberX leads the way in securing the Industrial Internet by providing complete visibility into the IIoT environment as well as real-time detection and alerts of operational incidents, cyber threats and system tampering, thus minimizing disruption to operations and downtime.  Seamlessly connecting to any IIoT environment, our flagship platform XSense, which harnesses IFSM technology, provides immediate results by collecting data across the IIoT environment and utilizing Big Data and Machine Learning to optimize the detection of anomalous behaviors.  (CyberX 02.08)

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2.13  Teridion Expands With New Office in Israel

San Francisco’s Teridion, the cloud-based networking company that delivers the fastest internet experience, announced its new office in Israel, tripling the size of the former local office and getting ready for new hires.  Teridon believes that setting its R&D center in Israel, next to the Operations HQ, guarantees them the brightest minds one can get these days in the international high tech industry.  Teridion keeps growing and they are looking for talented people that will join the excellent team that already works at the company.  Among Teridion’s customers are companies such as Box and Egnyte, whose users are already experiencing the power of a faster internet.  (Teridion 01.08)

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2.14  Cloudyn Raises $4 Million from India’s Infosys

Cloudyn has raised $4 million from Infosys, India’s second largest software company, in exchange for a minority equity stake.  Infosys has had a major presence in Israel since buying enterprise software management company Panaya for $200 million in 2015.  Since establishing its $500 million innovation investment fund, Infosys also invested in Israeli cloud recovery company CloudEndure.

Rosh HaAyin’s Cloudyn enables the enterprise to monitor & optimize hybrid cloud deployments by providing unprecedented insights derived from operational & financial metrics.  The SaaS solution delivers visibility into usage, performance & cost, coupled with actionable recommendations for maximizing performance & streamlining clouds for accelerated growth.  Cloudyn enables accountability through accurate chargeback and hierarchical cost entity management.  Thousands of global customers rely on Cloudyn, including Fortune 500 leaders in manufacturing, consumer goods, financial services & technology.  (Various 03.08)

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2.15  Kaltura Announces $50 Million Investment from Goldman Sachs

Kaltura has secured a $50 million pre-IPO funding from Goldman Sachs’ Private Capital Investing group.  Kaltura will use the additional capital to extend its footprint across all six continents, and to further its unique positioning as the ‘Everything Video’ company – providing leading video products for an unprecedented array of markets and use-cases.  Kaltura offers both a wide array of out-of-the-box video products for various industries, as well as a flexible and modular API-based video platform for developers, partners, and customers that are looking to create their own custom video products.

Ramat Gan’s Kaltura has a mission to power any video experience.  A recognized leader in the OTT TV (Over the Top TV), OVP (Online Video Platform), EdVP (Education Video Platform) and EVP (Enterprise Video Platform) markets, Kaltura has emerged as the fastest growing video platform, and as the one with the widest use-case and appeal.  Kaltura is deployed globally in thousands of enterprises, media companies, service providers and educational institutions and engages hundreds of millions of viewers at home, in work, and at school.  (Kaltura 08.08)

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2.16  Innoviz Technologies Secures $9 Million in Series A Funding

Innoviz Technologies emerged from stealth mode and announced it raised $9 million in Series A financing round.  Investors include Mr. Zohar Zisapel, Vertex Venture Capital, Magma Venture Partners, Amiti Ventures and Delek Investments.  Innoviz recognized that the optimal sensing solution for Autonomous Vehicles is the LiDAR, a laser based sensor providing an accurate scan of the vehicle’s surrounding.  High performance LiDARs come at prohibitive cost for mass commercialization.  Innoviz’ game changing High Definition Solid State LiDAR (HD-SSL) is based on breakthrough technology which offers superior performance and accuracy – wider field of view, higher resolution in both axis and long range sensing – while significantly reducing size and reducing cost below $100.  Innoviz’ HD-SSL serves as the cornerstone for the sensing required for fully autonomous driving.  Innoviz intends to take a leading role in the development of the full sensing system required for this emerging industry and overtake technological challenges such as sensor fusion, 3D mapping and localization.  Innoviz plans to present its prototype product by the end of 2016.

Kfar Saba’s Innoviz is developing the key technologies of Autonomous Driving – Smart 3D Sensing, Sensor Fusion and accurate Mapping and Localization.  Their first product is a High Definition Solid State LiDAR (HD-SSL) with best in class performance and significantly lower cost and smaller size than existing solutions.  While continuing to improve their HD-SSL, Innoviz will also provide key Autonomous Vehicles technologies that rely on their LiDAR such as Object Identification & Tracking, Sensor Fusion and Mapping & Localization products.  (Innoviz 08.08)

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2.17  SoLoMoTo Enters the US Market

After successfully serving over 100,000 small and medium sized businesses, SoLoMoTo, the leading digital platform for Small and Medium Businesses, prepares to enter the US.  SoLoMoTo is a SaaS platform that puts control back in the hands of Small and Medium Businesses (SMBs).  From a very easy-to-use dashboard, SMB owners control all the relevant digital tools of their business to help them grow online.  SoLoMoTo, the leading digital platform for small and medium sized business (SMB), is an SaaS platform that puts the control back in the hands of SMB owners.  Headquartered in Tel-Aviv, and offices in Russia, Brazil and the US, SoLoMoTo was founded in 2014, and has over 100,000 customers worldwide.  SoLoMoTo closed its Series A funding in 2015 which was led by Blumberg Capital among other leading VCs.  (SoLoMoTo 08.08)

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3.1  Cold Stone Creamery Enters Lebanon Marketplace

Scottsdale, Arizona’s Cold Stone Creamery is bringing the Ultimate Ice Cream Experience to Lebanon, with plans to open multiple locations throughout the country over the next few years, beginning with Beirut.  Kahala Brands, the parent company of Cold Stone Creamery, has granted MNM Investments Lebanon SAL, part of M1 Group, the master franchise rights to Lebanon under a 10 year master franchise agreement.

M1 Group is a globally recognized corporation, which owns and manages investments and subsidiaries in diverse sectors such as: telecommunications, real estate, aviation, energy, fashion, financial asset management, infrastructure and manufacturing.  MNM Investments was recently established as a new division of M1 Group with the purpose of owning and operating food and beverage establishments in Lebanon and abroad that fit within its vast portfolio.  (Cold Stone Creamery 02.08)

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3.2  ArabiaWeather Forms Standalone Meteorology Department

Amman, Jordan’s ArabiaWeather announced the formation of a standalone meteorology department within the company, allowing for closer integration between its hyperlocal end-to-end weather technology and its growing team of meteorologists, operational staff and customer support specialists.  The department will house ArabiaWeather’s new and existing weather, technology, operations, customer care, and quality control functions and teams.  It will be supported by an accreditation team that ensures the company’s operations are compliant with global standards, including those of the World Meteorological Organization and the International Civil Aviation Organization.  (ArabiaWeather 31.07)

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3.3  Dubai To Invest $275 Million in New Tech Innovation Initiative

Dubai announced on that AED1 billion ($275 million) is set to be invested over 5 years in projects and companies taking part in a new technology innovation program.  Dubai Future Accelerators was launched last month by the Dubai Government and Dubai Holding designed to advance innovation in strategically important sectors across the UAE.  The program encourages participants to propose innovative solutions for seven “future challenges” common to governments around the world, including healthcare, transportation, renewable energy, sustainability, education, security and urban planning.  It seeks solutions which take advantage of the most recent innovations in science and technology, including robotics, artificial intelligence, 3D printing, biomimicry and biotechnology.  (WAM 02.08)

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3.4  Covalon Wins $7.6 Million Twelve Month Saudi Arabia Contract to Supply Wound Dressings

Mississauga, Ontario’s Covalon Technologies, an advanced medical technologies company, has won a major contract to supply its advanced ColActive Plus and ColActive Plus Ag wound care dressings to Ministry of Health facilities in Saudi Arabia at a minimum guaranteed value of $7.6 million over twelve months.  The contract was awarded to Covalon through the Executive Board of Health Ministers’ Council for GCC States (called SGH).  The SGH contract was awarded to Covalon following a highly competitive bidding process that resulted in Saudi Arabian wound care physicians selecting Covalon’s ColActive Plus product line as its exclusive advanced collagen wound dressing.  The contract is for a term of one year and delivery of the products under the contract are expected to commence within the next four months.  Prior to making their decision to select ColActive Plus, leading wound care physicians in Saudi Arabia trialed ColActive Plus products for over a year.  (Covalon 03.08)

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3.5  As FX Shortage Bites, Egypt’s CIB Limits Use of Bank Cards Abroad

Egypt’s largest listed bank, Commercial International Bank (CIB), told customers on 28 July that it was reducing the amount of foreign currency customers can spend and withdraw when using their debit and credit cards abroad.  Egypt has suffered from a shortage of dollars in the banking system that has sapped its ability to import since a 2011 uprising drove away tourists and foreign investors, both crucial sources of hard currency.

CIB did not specify which cards would be affected or give the new limits, but the move will impact both credit and debit cards with limits cut by about 50%.  CIB cut Classic Card owners’ maximum purchases outside of Egypt to $2,500 a month from $5,000, and $3,500 a month from $7,500 a month for Gold Card owners.  The move follows similar measures taken by a number of other banks recently.  Emirates NBD Egypt told customers that it would suspend use of Egyptian credit and debit cards abroad entirely, but later rowed back on the decision and said it would set new limits instead.  (Reuters 27.07)

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3.6  Chinese Electric Car Company Invests MAD 1 Billion in Morocco

Yangtse Automobile, a Chinese electric car company, announced that it would invest MAD 1 billion in Morocco.  The company plans to build a factory in Tangier, specializing in electric cars and buses to be made available for sale domestically and abroad.  Construction of the factory will begin soon, and that the factory will create about 2,000 jobs.  The company selected Tangier because of its strategic location close to Europe, the Middle East, and Africa, its skilled workforce in the automotive industry, and the supply of investment facilities.  (MWN 05.08)

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4.1  Solar Plane Completes Epic Round-the-World Trip

On 26 July, Solar Impulse 2 completed its historic round-the-world journey, becoming the first airplane to circle the globe powered only by the sun to promote renewable energy.  Cheers and applause broke out as the plane touched down before dawn in Abu Dhabi after the final leg of its marathon trip which began on 9 March.  It capped a remarkable 43,000 kilometer journey across four continents, two oceans and three seas, accomplished in 23 days of flying without a drop of fuel.  No heavier than a car but with the wingspan of a Boeing 747, the four-engine, battery-powered aircraft relies on around 17,000 solar cells embedded in its wings.  The plane clocked an average speed of 80 kilometers an hour.  (Various 28.07)

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5.1  Lebanon’s Trade Deficit Reached $7.93 Billion by June 2016

According to data retrieved from the Lebanese Customs, Lebanon’s trade deficit increased by 9.72% from $7.23B by June 2015 to $7.93B by June 2016.  Accordingly, exports fell by a yearly 5.67% to $1.46B while imports increased by 7% y-o-y to $9.40B.  This increase in the value of imports was due to the increase in imported volume of goods from 7.58M tons by June 2015 to 9.08M by June 2016.  , the drop in exports was almost entirely accounted for by a drop in volume from 1.03M tons by June 2015 to 0.8M by June 2016.  This fall can be associated with the political conditions in the countries surrounding Lebanon.  As for imports, mineral products accounted for 22.37% of the total value of imported goods, which increased 42.15% y-o-y to $2.1B by June 2016.  Moreover, products of the chemical or allied industries registered 11.08% of the total value of imported goods, which accounted for a yearly rise of 4.79% to $1.04B.  As for machinery and electrical instruments, they held a share of 9.94%, which dropped by 7.46% from June 2015 to $934.17M by June 2016.

Specifically, pearls, precious stones and metals grasped the highest share of exported goods, where they grew by 27.92% year-on-year (y-o-y) to $303.80M in H1/16.  As for prepared foodstuffs, beverages and tobacco, they accounted for 15.98% of exported goods, worth $234.03M by June 2016, compared to $253.57M by June 2015.  Moreover, exports of machinery and electrical instruments, that take up to 13.57% of the total exports, fell by 13.18% y-o-y to $198.73M by H1/16.  The top import destinations for the first half of the year of the year were China, Italy, USA, Germany and Holland with respective shares of 10.79%, 7.65%, 7.08%, 5.97% and 5.26%.  The top export destinations for the same period were South Africa, Saudi Arabia, UAE, Syria and Iraq with respective shares of 15.92%, 10.59%, 9.07%, 6.21% and 6.15%.  (LC 01.08)

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5.2  Number of Lebanese Tourists Up by 7.7% by June 2016

According to the Lebanese Ministry of Tourism, the number of tourists that visited Lebanon in H1/16 increased by a yearly 7.70% and totaled 723,105.  The progress witnessed in H1/16 is mainly linked to the gradual recovery of tourism from the very low base reached in 2013 and 2014.  Still, the partial stabilization of the security condition boosted the number of European incomers.  The number of European visitors, constituting a third of total tourists, improved by a yearly 10.24% to 238,345 by June.  French tourists saw their number rise by an annual 8.1% to 60,720, and visitors from Germany and Sweden also rose in number by 16.73% and 16.13% to 32,646 and 14,878, respectively, by June 2016.  Arab tourists (30.2% of the total) stood second with their number barely rising by 0.5% year-on-year to 218,432 by June this year.  In details, the number of Iraqi tourists grew by an annual 20.6% to 98,858, while the number of number of Egyptian tourists rose by an annual 4.26% to 36,670 by June 2016.  In fact, Arab incomers to Lebanon were mainly nationals of countries having similar security situation and are either escaping the turmoil in their countries or looking for a job in Lebanon.  However, knowing that GCC governments warned its citizens from visiting Lebanon due to the insecurity spreading in the country and its neighboring nations, the number of incomers from Saudi Arabia, Kuwait and the UAE all recorded annual falls of 37.69%, 41.14% and 64.44% to reach 14,415, 9,121, and 1,279, respectively.  American tourists, representing the third largest share of the total (18% of total tourists), also increased by an annual 12.74% to 129,551 by June 2016.  The number of visitors from the US and Canada rose from 58,560 and 40,526 by June 2015 to 66,818 and 44,715 by June 2016, respectively.  (Blom 06.08)

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5.3  Jordan Signs Letter Accepting Terms of $700 Million Deal with IMF

On 26 July, Jordan signed a letter of intent with the International Monetary Fund (IMF) for a $700 million Extended Fund Facility (EFF) program.  The letter, which was signed on behalf of the Kingdom by the Ministry of Finance and the Central Bank of Jordan (CBJ), was sent to the IMF, paving the way for the approval of the final agreement by the fund’s board at its meeting slated for late August.  In October, the IMF will send a delegation to conduct the first review of the Jordanian economy after which Amman may receive some $100 – $150 million.  A total of $700 million will be deposited at the CBJ over the years of the program that spans over 36 months.  Every six months, the IMF will conduct a review of the Jordanian economy, progress in the program and reforms.

Under the new deal, the government and the IMF agreed on six conditions that aim at reducing public debt to safe levels and stimulating the economy.  The IMF requested that the government keeps the debt ratio to GDP by the end of 2016 the same as registered by the end of last year.  Public debt registered by the end of last year was nearly JD24.9 billion or 93% of the GDP.  The IMF also demanded the government to reduce public debt ratio to GDP to 77% by 2021.  The agreement entails establishing a public investment unit to review the government’s priority capital projects.  The new facility will be housed by the Ministry of Planning and International Cooperation.  In August 2015, Jordan completed a three-year Stand-By Arrangement with the IMF in the amount of nearly $2 billion.  (JT 27.07)

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5.4  Jordan’s Exports Decline During First Five Months of 2016

The value of Jordanian exports decreased during the first five months of 2016 by 5.6% compared to the same period last year.  According to statements issued by the Jordanian Department of Statistics (DOS), the trade deficit rose during the first five months of the year by 2.8%, compared to the period from January until the end of May 2015.  Foreign trade data showed a reduction in the value of Jordanian exports to the Greater Arab Free Trade Area (GAFTA) by 9.8%, and to the North American Free Trade Agreement (NAFTA) by 1.6%.  Jordanian exports to the non-Arab Asian countries also dropped by 19.1%.  As for imports, the value of imports from the North American Free Trade Agreement countries rose by 10.3%, while falling 18.7% from the European Union countries.  (AMMONNEWS 25.07)

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►►Arabian Gulf

5.5  Findings Say 50,000 Schools Needed Across Arabian Gulf by 2020

More than 50,000 new schools are required in the GCC by 2020 to cope with rising demand in the education sector, it has been claimed.  The International and Private Schools Education Forum (IPSEF) has warned that new schools are needed to address an anticipated surge in the Gulf student population from 12.6 million in 2015 to an estimated 15 million by 2020.  This would be a significant addition of 7,000 more schools than the current number to address the burgeoning school student population across the region.  According to the report, 41,678 new schools will be established in the GCC in the public education sector by 2020, as well as 9,301 private schools.

Of these, 44,441 new schools are expected to be set up in Saudi Arabia, 2,054 in Oman and 1,497 in Kuwait. A total of 1,406 new schools are expected to be established in the UAE, 1,107 in Qatar and 503 in Bahrain, Alpen Capital said.  Its report identified more than 500 educational projects totaling $50 million in various stages of development across the Gulf.  (AB 01.08)

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5.6  Kuwait Plans to Raise Fuel Prices By 73% from September

Kuwait’s cabinet said on 1 August that it would raise the prices of gasoline in the energy-rich Gulf state beginning in September.  The cabinet also endorsed a plan to “start rationalizing fuel subsidies” whereby the prices will be restructured in harmony with the average rates in the other member states of the Gulf Cooperation Council.  Kuwait is making subsidy and spending cuts to save money as low oil prices push state finances into the red.  Indeed, Kuwaiti Finance ministry undersecretary Khalifa Hamada said at the end of 2015 that “rationalizing” subsidies would save the government 2.6 billion Kuwaiti dinars ($8.7 billion) over three years.

Kuwait plans to issue up to 3 billion dinars ($10 billion) in US dollar-denominated bonds and sukuk in international markets to help plug its budget deficit for the current 2016-17 fiscal year, the finance minister said last month.  It will also borrow up to 2 billion dinars ($6.6 billion) in debt from the domestic market in conventional and Islamic instruments.  Earlier this year, ratings agency Moody’s said that while fuel subsidy reforms in the Gulf region will help address pressure from low oil prices on public finances, these measures alone will not be enough to bring the governments’ budgets back into surplus.  Savings from increased fuel prices in the six Gulf nations will average 0.5% of GDP – around $7 billion – this year against an estimated deficit of 12.4% of GDP.  (AB 01.08)

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5.7  Third Reactor Vessel Installed at UAE’s Nuclear Power Site

The Emirates Nuclear Energy Corporation (ENEC) announced the installation of the reactor vessel in Unit 3, another milestone in the construction of the country’s first nuclear energy project at Barakah.  The installation is a critical step in the delivery of the country’s third nuclear energy unit and follows the installation of the Barakah Unit 2 reactor vessel in 2015 and the Unit 1 reactor vessel in 2014.  The reactor vessel is one of the most important features and largest components in a nuclear energy plant.  Weighing over 400 tonnes, it will contain the controlled nuclear reaction that will generate the nuclear energy that will feed into the UAE grid.

ENEC said the project at Barakah is progressing steadily.  Overall, construction of Units 1 to 4 is now more than 65% complete.  When the four reactors are completed, the UAE’s nuclear energy program will provide approximately 25% of the UAE’s electricity needs and save up to 12 million tons of greenhouse gas emissions each year.  (AB 30.07)

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5.8  South Korea Signs $920 Million Deal for UAE Reactors

State-owned Korea Hydro & Nuclear Power Co. (KHNP) signed a $920m deal with Emirates Nuclear Energy Corporation (ENEC) to operate four nuclear reactors, currently under construction, in Barakah in Abu Dhabi.  It is the first time for the firm that has been providing nuclear components and construction services to be in charge of maintenance and operation of a nuclear operation overseas.

Based on the agreement signed, KHNP will dispatch a total of 3,000 employees to the UAE until 2030 – about 210 every year – starting May, next year.  They will be responsible for the operations of four advanced power reactor (APR)-1400 nuclear reactors that are under construction as part of UAE’s project to build its first nuclear power station.  ENEC will pay for the labor and living cost and other staff expenses.  The total size of the deal is estimated to be $920m – $600m in service fees and $320m for expatriate packages on housing and education subsidies.

In 2009, KHNP participated in a consortium led by the state-run Korea Electric Power Corporation (Kepco) that won a deal to build four nuclear reactors in the UAE.  It was Korea’s first deal to export nuclear reactor technology.  KHNP has completed installing the first of the four reactors in May, last year, after breaking ground in July, 2012.  The construction of all four reactors will be complete by May 2020.  (AB 26.07)

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5.9  UAE’s Hotel Construction Pipeline Set to Peak in 2018

The UAE’s hotel construction pipeline is forecast to peak in 2017 and 2018 as the country gears up for the World Expo event in 2020.  According to a new report by TOPHOTELPROJECTS, there are 183 hotel projects and 54,000 hotel rooms in the UAE pipeline.  The hotel construction report prepared for The Hotel Show Dubai 2016 reveals that the majority of the new hotels are expected to open before 2020.  The busiest years are forecast to be 2017 (56 project openings) and 2018 (58 project openings).  Hotels opening in this time include Paramount Hotel Dubai (2017), Hard Rock Hotel Abu Dhabi (2017), Citymax Hotel Ras Al Khaimah (2017) and Marriott Dubai Jumeirah (2018).

Dubai and Abu Dhabi continue to lead in hotel construction across the UAE with a combined 155 hotel projects and 47,619 rooms in the pipeline.  Other emirates with hotel construction underway include Sharjah with 6 projects (959 rooms) and Ras Al-Khaimah with 5 projects (1,847 rooms), the report said.  (AB 26.07)

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5.10  Occupier Demand for UAE Offices Falls for Third Straight Quarter

Occupier demand in the UAE’s commercial property market fell for the third consecutive quarter between April and June with 23% more surveyors reporting a fall in tenant interest, according to a new report from the Royal Institution of Chartered Surveyors (RICS).  The RICS Global Cities Commercial Property Monitor showed that the supply of available space continued to increase as the development activity of recent years fed into the marketplace.  It added that the impact of a regional economic slowdown had also added to more vacancies.  The RICS report also said investor demand fell across all segments of the UAE market for the third consecutive quarter with demand from international buyers also easing.  It said 10% of contributors reported a deterioration in credit conditions in Q2, the third consecutive tightening in lending standards.  The largest proportion (45%) of contributors said they think that current prices are around fair value while 42% think that they are still expensive relative to fundamentals.  (AB 07.08)

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5.11  Dubai-Run Hospitals See 524,000 Patients in First Half of 2016

Dubai Health Authority (DHA) has announced that its hospitals received more than 524,000 patients in the first half of 2016.  Giving the breakdown of the visits, nearly 38% (199,450 patients) visited Dubai Hospital, 12% (64,596 patients) visited Hatta Hospital, 33% (173,833 patients) visited Rashid Hospital and nearly 17% (87,013 patients) visited Latifa Hospital.  The total number of outpatient visits across these facilities were 280,766, while the total number of accident and emergency cases and walk-ins were 202,598, and the remaining 41,528 were admissions.  In 2015, the four DHA-run hospitals and specialty centers received over one million patients.  (DHA 30.07)

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5.12  Sharjah’s Ratings Outlook Downgraded by S&P

The outlook on Sharjah’s long-term ratings have been downgraded to negative by Standard & Poor’s, which says the emirate’s fiscal position could weaken beyond its current projections.  Updated population data provided by Sharjah following the 2015 population census has also resulted in a significant downward revision of GDP per capita.  At the same time, S&P said it has revised down our economic and fiscal performance projections for Sharjah for 2016-2019 and has therefore revised its outlook, while affirming ‘A/A-1’ ratings.

The agency revised down its 2016-2019 real economic growth estimates, based on lower-than-expected 2015 GDP data.  In S&P’s view, Sharjah’s economy and fiscal position are, largely, not exposed to oil price movements.  However, data point to major second-round regional demand effects from low oil prices, as its key trading partners have significant exposure.  .

S&P said the Sharjah government relaxed its fiscal stance over 2015 by postponing various revenue-raising measures and maintaining expenditures to help offset slowing demand, allowing the fiscal deficit to reach 4.2% of GDP.  It estimates that government net debt increased to 10% of GDP in 2015, from 5% in the previous year, but could increase further.  (S&P 08.08)

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5.13  Oman Posts $6.6 Billion Budget Deficit in First 5 Months of 2016

Oman’s government has posted a budget deficit of 2.54 billion rials ($6.6 billion) in the first five months of 2016.  This compares to a deficit of 1.60 billion rials a year earlier, as low oil export prices slashed its revenues, provisional Finance Ministry data showed.  The government’s original 2016 budget plan envisaged state expenditure of 11.9 billion rials and revenues at 8.6 billion rials.  Officials said their 2016 economic plans assumed an average oil price of $45 a barrel.  Oman is imposing a series of austerity measures after it posted a budget deficit of about 4.5 billion rials last year.  Gasoline and diesel price subsidies have been cut and similar cuts are planned for electricity and liquid petroleum gas.  (AB 08.08)

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5.14  Oman Said Set to Slash Subsidy Bill by 64% in 2016

Oman’s subsidy bill is expected to fall by 64% this year as the government seeks to reform its finances amid lower oil prices.  The deregulation of fuel prices in the sultanate began in mid-January, with diesel and petrol prices increasing by up to 33%.  Fuel prices are revised on a monthly basis.

Due to a slump in oil prices, the World Bank estimates, Oman lost as much as $10 billion in revenues in 2015, and it projects a deficit of 16.8% of the country’s GDP in 2016.  The World Bank said in a report that the Oman government has taken “bold steps” to increase revenues from non-oil sources including turning to debt markets for the first time and taking on some reforms such as subsidy cuts, reduced benefits for public sector workers and increased fees.  The World Bank also hailed the government’s measures to boost non-hydrocarbon revenue by revising electricity and water tariffs for commercial and industrial users and increasing fees for some government services, Muscat Daily reported.  The World Bank estimates that GCC countries lost $157 billion in oil revenues last year and is expected to lose another $100 billion this year.  (AB 06.08)

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5.15  Saudi Arabia Increases Visa Fees & Traffic Fines

Saudi Arabia’s cabinet recently approved proposals to raise a range of government fees including visa charges and fines for some traffic violations.  The moves come as the country seeks to boost state revenues in an era of low oil prices.

Cheap oil has slashed the government’s revenues from oil exports, saddling it with a budget deficit that totaled almost $100 billion in 2015 and forcing it to find new ways to raise money.  New visa fees approved by the cabinet include a charge of 8,000 riyals ($2,133) for a two-year multiple entry permit.  A three-month multiple exit and re-entry visa will cost 500 riyals; previously, such a visa cost 500 riyals for six months.

SPA did not say how much money the government expected to raise with the new fees, which could affect business travel to Saudi Arabia and visits by family members of the nearly 10 million foreigners estimated to live and work in the kingdom.  (Reuters 09.08)

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►►North Africa

5.16  Egypt Has Proposed 18-Month Reform Program to IMF

Cairo has proposed to IMF delegates an 18-month reform program in return for a $12 billion loan over three years to shore up its economy, but differences remain between the two sides on how to proceed.  The two sides are at odds over the size of a proposed devaluation of the Egyptian pound and the timetable for implementing some of the more politically sensitive reforms, like reducing or removing state subsidies on fuel, electricity and food staples.  It has been reported that the IMF has rejected Egyptian requests for a delay or a staggered implementation of some of the proposed reforms.

The IMF delegates view 11.60 pounds to the U.S. dollar as a realistic exchange rate.  Such a rate would be nearly three pounds more than the current official rate of 8.87 pounds available at banks but close to the thriving black market rate of 12-12.50 pounds.  The Egyptians, according to the media reports, want the pound’s exchange rate to be only 10.60 to the dollar.  The pound’s exchange rate is crucial to a country like Egypt, whose survival is heavily dependent on imports, not just of staple food items, but industrial components and raw materials to keep the manufacturing sector going.  Much of the imports needed by the private sector are financed by dollars bought on the black market.

Egypt is struggling to keep its economy afloat, amid a slump in tourism, foreign currency shortages and double digit inflation and unemployment.  The government is also fighting an insurgency in the strategic Sinai Peninsula while continuing to show little tolerance for domestic political dissent. On 8 August, the central bank reported a drop by about $2 billion in foreign currency reserves, down to $15.54 billion at the end of July after honoring a number of foreign debt repayments.

Egypt’s economic crisis has taken on a serious political dimension, with critics now blaming President Abdel-Fattah el-Sisi for exacerbating it by embarking on massive costly infrastructure projects they say have drained the country’s meager funds and done little to revive the economy.  El-, in office since June 2014, counters that the projects, like a nationwide road network and an expansion of the Suez Canal, are vital if the country was to attract investors and their benefits would filter down in time.  He has repeatedly vowed in recent days to shield the poor and middle class from a virtually inevitable wave of price hikes when reforms are implemented.  For its part, his government announced higher electricity charges for domestic use as part of a plan to lift state subsidies in the energy sector.

As part of the planned reforms, Egypt was considering the partial privatization of several state-owned enterprises, possibly including oil companies. These, according to officials, would initially earn the treasury about $10 billion.  (AP 08.08)

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5.17  CAPMAS Says 88.1% of Egyptian Families Own Mobile Phones

An average of  22.1% of Egyptian families own smartphones, while 88.1% of families own mobile phones, according to the recent Central Agency for Public Mobilisation and Statistics’ (CAPMAS) 2015 Household Income, Expenditure and Consumption report.  The report also noted that 27.4% of families are subscribed to landline telephone service.  An average of 32.2% families in Egypt own computers, whereas only an average of 18.8% of families have access to the internet and 3.7% of families own tablets.  The survey, conducted in 2015, relies on a sample made of nearly 25,000 families from governorates throughout the 91 million strong country.  Orange, Vodafone and Etisalat are the three main providers of mobile services in Egypt.

The survey discovered that in urban areas an average 86.4% of the families own mobile phones, 31.7% of the families own smartphones and 39.7% of families are subscribed to landline telephone service.  On the other hand, an average of 89.6% of families in rural areas own a mobile phones, while 13.9% of families own smartphones and 17% are subscribed to landline telephone service.  The survey also found that an average of 45.5% of families in urban areas own computers, while only 20.9% of the families in rural areas own computers.  Families in urban areas have more access to the internet.  The survey showed 29.1% of the families in urban areas use internet, while only 10.1% of the families in rural areas have and use an internet connection.  On average, 6.4% of families in urban areas own tablets, whereas only 1.4% of the rural areas families own tablets.  (CAPMAS 26.07)

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5.18  Nearly 40% of Egyptians’ Education Spending Pays for Private Tutorials

In its latest published findings on annual income and spending, the Central Agency for Public Mobilisation and Statistics (CAPMAS) said almost 40% of Egyptians’ annual spending on education is directed to private tutoring.  The figure presented by the agency is 7.5% higher than that of school fees and expenses, which account for 31.9% of annual education spending, CAPMAS said.  Private tutorials are deemed a must in Egypt as they offset perceived low-quality public education.  Egyptian families in urban areas whose members include students spend an average of around EGP 5500 ($620) on education a year – 11% of their income, while families in rural areas spend around EGP 2333 ($263) yearly — 6.7% of their earnings.  (CAPMAS 26.07)

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5.19  27.8% of Egyptian Population Lives Below Poverty Line

On 26 July, CAPMAS said that the Egyptian poverty line stands at an income of LE5,787.9 annually and LE482 monthly, 48% higher than in 2012/2013.  About 27.8% of the Egyptian population is currently living below the poverty line, according to a CAPMAS survey addressing income and expenditures in 2015.  The poverty line is defined as the minimum income deemed adequate for an individual to meet his basic needs.  The poverty line in Egypt differs from one area to another depending on the cost of living in each area.

The Egyptian poverty line was raised from LE326 monthly in the 2012/2013 survey to LE482 in 2015, an increase of 48%.  The annual rate of inflation in consumer prices reached 14.8% in June.  The data from the survey indicates that 2015 saw the highest poverty levels since 2000.  Poverty rates have hiked to 27.8% in 2015 compared to 26.3% in 2012/2013 and 25.2% in 2010/2011.  The current poverty line means that a family made up of 5 individuals needs LE2,372 monthly to float above the line.

The CAPMAS survey pointed out that the urban population is richer than the rural one but the former suffers higher levels of income inequality.  Rural areas, on the other hand, witnessed increased levels of inequality and poverty during the past two years compared to the urban areas where inequality levels decreased and poverty levels stabilized.

The survey’s results signified that food subsidies protected 4.6% of Egyptians from falling below the poverty line, according to the data.  The results also indicated that 77% of the 10% of Egyptians with the highest spending used subsidy cards in 2015.  This is more than previous years, which shows inefficiency in Egypt’s subsidy system supposedly tailored to benefit lower income groups.  (CAPMAS 26.07)

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5.20  Egypt Signs Exploration Deals with US & Cypriot Firms

Egypt’s minister of petroleum and mineral resources has signed two agreements for oil and gas exploration in upper Egypt with U.S. company IPR and Cyprus subsidiary Mediterra.  The agreements include the drilling of three exploration wells located in sectors 7 and 8 in the country’s southern Al-Baraka field in Aswan, investments worth a minimum $4.3 million and a one-off fee for the license called a signature bonus, totaling $200,000.  The contracts were signed between Egypt’s Ganoub El-Wadi Petroleum Holding Company (GANOPE), IPR and Mediterra.  Minister of Petroleum Tarek al-Molla said the deals will help increase oil production to meet local needs.  Al-Molla added that the new agreements will intensify research activities in the southern area of the country which has promising petroleum prospects.  (Al-Masry Al-Youm 27.07)

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5.21  Libya’s Petroleum Facilities Guard Reopens 4 Ports to Resume Oil Exports

On 28 July, the Petroleum Facilities Guard (PFG) under the leadership of Executive Director Ibrahim Jadhran and key members’ of the Government of National Accord’s (GNA) Presidential Council signed an agreement to reopen the ports of Ras Lanuf, Zuwetina, Es Sidra and Brega.  This move marks a resumption of national oil export activities as requested by the Presidential Council and reiterates the recognition of the GNA by the PFG and willingness to cooperate for the future of Libya.

The physical security of the regional infrastructure to include the ports was made possible through extensive counter terrorism operations conducted by the PFG from June 2015 to July 2016 and resulted in the liberation of the cities of Bin Jawad, Nawfaliyah, and Harawah from ISIS and virtual elimination of terrorist activities in the critical Oil Crescent Region of Libya.  The resuming of port operations in the region is expected to bring in an additional $700m in revenue to the struggling Libyan economy over the next several months.

The PFG is the singular paramilitary security force within Libya entrusted to secure the oil infrastructure of the country.  The PFG operates in conjunction with the Libyan Government of National Accord and its Presidential Council.  (PFG 29.07)

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5.22  China Delivers Third C28A Corvette to Algeria

China delivered a third C28A-class corvette to the Algerian navy earlier this month.  The stealth guided-missile ship was commissioned by the Algerian navy on 12 July at a Hudong-Zhonghua Shipbuilding Group port in Shanghai, the report states.  Featuring a displacement of 3,000 metric tons, the 360-foot-long corvette can conduct offshore defense operations and long-distance combat missions.  It is larger than previous warships China has sold to foreign customers.  The ship also features new equipment, a stealth design and a higher level of automation.  The contract for the corvettes was signed in 2011.  The first ship in the class was delivered in September, with the second handed over in January.  (UPI 22.07)

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5.23  Number of Internet Users in Morocco Increases by 34%

Morocco’s National Agency of Telecommunication Regulations (ANRT) reported Monday that the number of internet users in Morocco increased by 34.4% in 2016.  The total number of internet users is now 13.69 million users.  The entire sector is experiencing growth.  The number of mobile users increased by 3.65%, connecting more Moroccans to each other and the rest of the globe through text messages, phone calls, and the internet.  The average internet bill in Morocco increased by 4% this year, to MAD 24 per month.  The average mobile user spends 13% more on mobile data this year, at 17 MAD per month.  (MWN 28.07)

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5.24  Morocco Receives First US Abrams Tanks for Royal Armed Forces

Upon the instructions of the King, Supreme Commander and Chief of General Staff of the Royal Armed Forces (FAR) held a ceremony to receive the first US Abrams Tanks M1A1 for Morocco.  Chaired by Major General, Inspector of the Armored Corps, the ceremony was attended by the wali of greater Casablanca and US Consul General in Casablanca, as well as by two important Moroccan and American delegations.  The Abrams Tanks were part of a purchase contract and will be delivered in batches over 2017 and 2018.  This transaction mirrors the shared will by Morocco and the USA to deepen their defense cooperation and contributes to fostering interoperability between the FAR and US armed forces.  The Abrams tank acquisition is part of the FAR’s major upgrade plan.  (MWN 26.07)

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6.1  Turkey’s Tourism Revenue Sees Steepest Q2 Plunge Since 1999

Turkey’s tourism revenue fell 35.6% in the second quarter of the year compared to the same period of 2015, to $5 billion, data from the Turkish Statistics Institute (TUIK).  This was the steepest decline since 1999, due to rising security concerns and the dramatic decline in the number of Russians visiting Turkey.

Turkey’s tourism revenue regressed to $9 billion in the first half of the year from $12.6 billion in the same period of 2015.  The number of foreigners visiting Turkey plummeted more than 40% in June, official data showed on 28 July, marking the biggest drop in at least 22 years, as tensions with Russia and a series of deadly bombings kept tourists away.

Analysts expected at least $5 billion in losses to annual tourism revenue over this year, pushing down the gross domestic product by more than 0.5%.  While Ankara and Moscow have recently started to rebuild ties, tourist arrivals from Russia dropped 87% in the first six months of the year.  (TUIK 29.07)

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6.2  Greek Government Reports Nearly €1 Billion in Tax Evasion Fines, Asset Seizures

The Government of Greece has opened hundreds of tax-evasion cases against citizens suspected of hiding assets outside of country borders, already assessing some €810 million in fines from suspected scofflaws.  The government, which began examining suspected income tax evaders in early 2015, recently ratcheted up efforts to recover back-taxes due, after the agency increased the number of investigators from a handful to several dozen over the past few months.

Most of the investigative leads have come from the so-called “Lagarde” and “Borjans” lists, which the Greek government acquired via leaks from Swiss banking whistleblowers.  The Lagarde list, contained on a thumb-drive, had records on 2,000 Greek citizens who maintain Swiss bank accounts.  Between 1 January 2015 and 15 July 2016, investigators have 191 legal cases pending against Greek citizens who were on the Lagarde list, with 94 cases closed.  The Borjans list was acquired by anti-corruption Secretary General Vassiliadis in November 2015; since then over 1,000 cases have been initiated against people suspected of tax evasion.

In addition, an anti-corruption crackdown has led to fines and asset seizures of nearly €500 million.  The anti-corruption cases deal with a disparate class of businesses, including the defense industry, shipping, hospitals and drug suppliers and finance.  Over 1,300 cases had been investigated since July 2013, and of those, more than 200 were deemed relevant and were concluded while more than 130 are pending.  The Special Prosecutor against Corruption says that corruption cases involving defense contracting have yielded over €40 million in cash settlements, while seized assets are valued at an additional €450 million.  Assets seized include cash, artwork, jewelry and luxury automobiles.  (Government of Greece 29.07)

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7.1  Tisha B’Av to Be Observed on 13/14 August

Tisha B’Av will be observed this year from night fall on 13 August until the evening of 14 August.  Tisha B’Av (or the Ninth of Av) is an annual fast day in Judaism, named for the ninth day (tisha) of the month of Av in the Hebrew calendar.  Tisha B’Av is the culmination of a three week period of increasing mourning, beginning with the fast of the 17th of Tammuz.  The fast commemorates the destruction of both the First Temple and Second Temple in Judaism’s holiest site, Jerusalem, which occurred about 656 years apart, but on the same Hebrew calendar date.   Accordingly, the day has been called the “saddest day in Jewish history”.  While the day recalls general tragedies which have befallen the Jewish people over the ages, the day focuses on commemoration of five events: the destruction of the two ancient Temples in Jerusalem, the sin of the ten spies sent by Moses, who spoke disparagingly about the Land of Israel, the razing of Jerusalem following the siege of Jerusalem in 70 CE and the failure of Bar Kokhba’s revolt against the Roman Empire.

The fast lasts about 25 hours, beginning at sunset on the eve of Tisha B’Av and ending at nightfall the next day.  In addition to the prohibitions against eating or drinking, observant Jews also observe prohibitions against washing or bathing, applying creams or oils, wearing leather shoes, or having marital relations.  In addition, mourning customs similar to those applicable to the shiva period immediately following the death of a close relative are traditionally followed for at least part of the day, including sitting on low stools, refraining from work and not greeting others.  The Book of Lamentations (Eicha) is traditionally read, followed by the kinnot, a series of liturgical lamentations.  This year, when the ninth of Av falls on Saturday, the observance is deferred to Saturday night and Sunday.

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7.2  NBA’s Amar’e Stoudemire Joins Hapoel Jerusalem Basketball Club

Hapoel Jerusalem Basketball Club announced that six-time NBA All-Star Amar’e Stoudemire is joining the team on a two-year deal.  Per team policy, terms of the deal were not disclosed.  Stoudemire is a 14 year NBA veteran who was drafted by the Phoenix Suns with the ninth pick of the 2002 NBA draft, going on to play eight seasons for the team.  In 2010, he signed with the New York Knicks and then played half a season with the Dallas Mavericks before ending his NBA career with the Miami Heat.  Over his career, Stoudemire averaged nearly 19 points and 8 rebounds per game.

Dr. Ori Allon, President and majority owner of Hapoel Jerusalem, led an ownership group in July 2013 – including Stoudemire – in the acquisition of Hapoel Jerusalem.  As part of his contract with Hapoel Jerusalem, Stoudemire will sell his shares in the club to Allon.

Hapoel Jerusalem Basketball Club was founded in 1943 and has played in the Israeli Basketball League’s top division since 1955.  The team has won four Israeli State Cups, three Israeli League Cups, one Israeli Championship and one EuroCup Championship, making it one of Israel’s most successful basketball clubs.  (Hapoel Jerusalem Basketball Club 01.08)

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7.3  Israeli University Offers Degree in Winemaking

The Hebrew University of Jerusalem plans to introduce a degree in winemaking in the coming academic year.  The program, recently accredited by the Israel Council for Higher Education, will offer viticulture, enology and winery-oriented business management studies.  The course will be the first of its kind in Israel and cater to students with undergraduate degrees in life sciences and applied sciences.  The 18-month program includes traveling to Europe to attend professional workshops hosted by international experts.  Graduates will also have the opportunity to intern in commercial wineries in Israel and abroad.  The program aims to meet the growing demand among Israelis to for university-level winemaking studies, which arises from the growth of the Israeli wine industry in recent years, increasing wine consumption in Israel, and what has been described as Israeli consumers’ “professional approach” to fine wines.  This trend prompted the Robert H. Smith Faculty of Agriculture, Food and Environment at the Hebrew University to formulate the degree in an effort to further advance the field in Israel.  (Israel Hayom 07.08)

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8.1  LabStyle Innovations Now DarioHealth

Labstyle Innovations Corp. announced that it is changing its corporate name to DarioHealth Corp.  The name change reflects the company’s growth and development in the Digital Health and mHealth space – a $10 billion industry that according to research2guidance, is expected to grow to $31 billion by 2020.  DarioHealth will continue to trade on Nasdaq under the ticker “DRIO”.  DarioHealth’s flagship product, The Dario Smart Diabetes Management Solution, is a platform for diabetes management that combines an all-in-one blood glucose meter and a robust, real-time native smartphone app that includes a wide variety of tools to support and engage users living with diabetes, their doctors and the healthcare system.  The new name was effective Thursday, 28 July 2016 and will be implemented across the company’s products and services throughout the rest of the calendar year 2016.

Caesarea’s DarioHealth is a leader in digital health self-management solutions.  DarioHealth delivers the ability to combine and analyze consumer health data to personalize treatment and advance medical knowledge.  The Dario Smart Diabetes Management Solution is a platform for diabetes management that combines an all-in-one blood glucose meter, native smart phone app, website portal and a wide variety of treatment tools to support more proactive and better informed decisions by users living with diabetes, their doctors and healthcare systems.  (DarioHealth 27.07)

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8.2  Gamida’s First Sickle Cell Patient Transplanted in Study of CordIn as the Sole Graft Source

Gamida Cell announced that the first patient with sickle cell disease (SCD) has been transplanted with CordIn.  The transplant took place at UCSF Benioff Children’s Hospital Oakland.  CordIn is an experimental curative treatment for rare non-malignant diseases where bone marrow transplantation is the only currently available cure.  These include hemoglobinopathies such as SCD and thalassemia, bone marrow failure syndromes such as aplastic anemia, genetic metabolic diseases and refractory autoimmune diseases.  This unmet medical need represents a multi-billion dollar market potential.  Eight patients with SCD were transplanted in the first Phase 1/2 study performed in a double graft configuration.  This study is still ongoing. Preliminary data from the first study will be summarized and published later this year.  A Phase 1/2 of CordIn for the treatment of patients with aplastic anemia will commence later this year.

Jerusalem’s Gamida Cell is a world leader in cellular and immune therapies for the treatment of cancer and orphan genetic diseases.  The company’s pipeline of products are in development to treat a wide range of conditions including cancer, genetic hematological diseases such as sickle cell disease and thalassemia, bone marrow failure syndromes such as aplastic anemia, genetic metabolic diseases and refractory autoimmune diseases.  (Gamida Cell 27.07)

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8.3  Quark Awarded Key Patent for QPI-1007 Ocular Neuroprotectant Treatment

Quark Pharmaceuticals announced that the United States Patent and Trademark Office has granted a key patent covering the treatment of patients suffering from non-arteritic anterior ischemic optic neuropathy (NAION) with the Company’s ocular neuroprotectant QPI-1007.  The patent will expire in 2033 with potential for term extension.

QPI-1007 received Orphan Drug status from the FDA for this indication and it is currently being evaluated in a global Phase II/III study, QRK207, to determine the effect of QPI-1007 on visual function in subjects with acute NAION.   QRK207 study is already enrolling in several countries, including the US and India with additional sites in Israel, Germany, Australia, Italy, and China opening soon.  The clinical study is run by Quark in collaboration with Quark’s partners Biocon in India and the Chinese joint venture company of Quark in China, Kunshan RiboQuark Pharmaceutical Technology Co.

Quark Pharmaceuticals is a late clinical-stage pharmaceutical company, discovering and developing novel RNAi-based therapeutics for unmet medical needs.  Two products, QPI -1002 for Delayed Graft Function (DGF) and QP -1007 for Non Arteritic Ischemic Optic Neuropathy (NAION) are in global phase III pivotal clinical studies, each of which was granted Orphan designation.  Quark is headquartered in Fremont, California and operates research facilities in Ness Ziona, Israel.  (Quark 29.07)

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8.4  Teva Completes Acquisition of Actavis Generics

Teva Pharmaceutical Industries and Allergan announced that Teva has completed its acquisition of Allergan’s generics business (Actavis Generics).  This strategic acquisition brings together two leading generics businesses with complementary strengths, R&D capabilities, product pipelines and portfolios, geographical footprints, operational networks and cultures.  The result is a stronger, more competitive Teva, well positioned to thrive in an evolving global marketplace, to realize the opportunities the very attractive global and U.S. generics markets offer, and to deliver the highest-quality generic medicines at the most competitive prices, unlocking value to patients, healthcare systems and investors around the world.

With the acquisition, Teva now has approximately 338 product registrations pending FDA approval and holds the leading position in first-to-file opportunities with approximately 115 pending ANDAs in the U.S. In Europe, after divestitures; Teva will have a pipeline capable of over 5000 launches across the region.  In Teva growth markets including, Asia, Africa, Latin America, Middle East, Russia and CIS, there are now approximately 600 pending product approvals.  Overall, Teva is planning for 1,500 generic launches globally in 2017.  Teva’s products generated approximately $215 billion in savings in the last decade to the U.S. healthcare system; this number will continue to increase and even accelerate as a result of the acquisition.

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by millions of patients every day.  Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area.  (Teva 02.08)

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8.5  Aeterna Zentaris and Rafa Laboratories Sign Exclusive Agreement for Zoptrex in Israel

Charleston, South Carolina’s Aeterna Zentaris and Rafa Laboratories signed an exclusive license agreement for the Company’s lead anti-cancer compound, Zoptrex (zoptarelin doxorubicin), for the initial indication of endometrial cancer, for Israel and the Palestinian Authority.  Zoptrex, a novel synthetic peptide carrier linked to doxorubicin, is currently in a fully-enrolled Phase 3 clinical trial in endometrial cancer.  The Company expects to complete the Phase 3 clinical trial in Q3/16 and, if the results of the trial warrant doing so, to file a new drug application for Zoptrex in the first half of 2017.

Under the terms of the License Agreement, Aeterna Zentaris will be entitled to receive a non-refundable upfront payment in consideration for the license to Rafa of the Company’s intellectual property related to Zoptrex and the grant to Rafa of the right to commercialize Zoptrex in the territory.  Rafa has also agreed to make additional payments to the Company upon achieving certain pre-established regulatory and commercial milestones.  Furthermore, the Company will receive double-digit royalties on future net sales of Zoptrex in the territory.  Rafa will be responsible for the development, registration, reimbursement and commercialization of the product.  The Company and Rafa have also entered into a supply agreement, pursuant to which the Company will supply Zoptrex to Rafa for the duration of the license agreement.

Jerusalem’s Rafa is a pharmaceutical company in Israel that markets, manufactures and distributes prescription (Rx) and over-the-counter (OTC) medicines, mainly proprietary formulations, as well as generic formulations, and consumer health products.  With a history of over 75 years, Rafa is a trusted partner of some of the leading pharmaceutical companies, such as Mundipharma, Purdue, United Therapeutics, Napp, Ony, Galderma, Dr. Falk Pharma, Zambon and more.  (Aeterna Zentaris 01.08)

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8.6  Check-Cap Awarded $1.25 Million Grant for 2016 from Israel’s OCS

Check-Cap announced that Israel’s Office of the Chief Scientist (the OCS) has awarded the Company a grant of NIS 4.8 million (approximately equivalent to $1.25 million based on the current exchange rate) for 2016.  Charged with execution of government policy for support of R&D, the goal of the OCS is to assist in the development of technology in Israel as a means of fostering economic growth, encouraging technological innovation and entrepreneurship, leveraging Israel’s scientific potential, enhancing the knowledge base of industry in Israel, stimulating high value-added R&D and encouraging R&D collaboration both nationally and internationally.  The grant will be used by Check-Cap to support the ongoing clinical development of its proprietary ingestible capsule technology and is subject to certain customary conditions and obligations.

Usfiya’s Check-Cap is a clinical-stage medical diagnostics company developing the world’s first ingestible capsule system for preparation-free, less-invasive colorectal cancer screening.  The capsule utilizes innovative ultra-low dose X-ray and wireless communication technologies to scan the inside of the colon as it moves naturally, while the patient follows his or her normal daily routine.   After passage, the system generates a 3D map of the inner surface of the colon which enables detection of polyps and cancer.  Designed to increase the willingness of individuals to participate in recommended colorectal cancer screening, the Check-Cap system addresses many frequently-cited barriers, including laxative bowel preparation, invasiveness, and sedation.  The Check-Cap system is currently not cleared for marketing in any jurisdiction.  (Check-Cap 02.08)

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8.7  POP Medical Receives FDA Approval for Pelvic Device

POP Medical has obtained FDA approval for marketing of its medical device for treatment of pelvic floor prolapse.  Some 20% of the women in the world suffer from this condition at any given moment and 30% at some time in their lives.  The condition causes internal organs to exert pressure on the pelvic floor, which can lead to repeat urinary tract infections, vaginal bleeding, pain, discomfort in sexual relations, etc.  The accepted treatment was formerly a hysterectomy.  In recent years, solutions involving anchoring through an alternative artificial pelvic floor have been developed, but these do not last, and feature bleeding and other side effects.

The newest methods for treating the problem are based on anchoring the existing pelvic floor tissue to the tendons above it.  POP Medical’s products is a new method of anchoring the pelvic floor to tendons that significantly shortens the duration of treatment (15 minutes, compared with an hour or more in the current methods), reduces pain, and simplifies the treatment, thereby substantially reducing the risk incurred.  The product was tested on 15 women in a clinical trial in Israel.  In every case, a solution for pelvic floor prolapse was achieved, with no side effects recorded.

Tel Aviv’s POP Medical Solutions is developing a novel technology to repair pelvic floor organ prolapse.  POP Medical Solutions is developing NeuGuide, a minimally-invasive, meshless and dissectionless anchoring system to treat uterine prolapse in a standardized, safer and cost-effective manner.  POP was founded in the Rad Biomed incubator, and received a follow-up investment from the Triventures fund.  (POP Medical 07.08)

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8.8  Intec Pharma to Pursue Development of Accordion Pill for Cannabinoid Therapies

Intec Pharma announced the initiation of a new clinical development program for its Accordion Pill platform with the two primary cannabinoids contained in Cannabis sativa.  Intec Pharma plans to formulate and test Cannabidiol (CBD) and Tetrahydrocannabinol (THC), or AP-CBD/THC, for the treatment of various indications, including pain management.  The Company plans to initiate a Phase I clinical trial with AP-CBD/THC during Q1/17.

Jerusalem’s Intec Pharma is a clinical stage biopharmaceutical company focused on developing drugs based on its proprietary Accordion Pill platform technology.  The Company’s Accordion Pill is an oral drug delivery system that is designed to improve the efficacy and safety of existing drugs and drugs in development by utilizing an efficient gastric retention and specific release mechanism.  The Company’s product pipeline currently includes three product candidates in clinical trial stages: Accordion Pill Carbidopa/Levodopa, or AP-CDLD, which is being developed for the indication of treatment of Parkinson’s disease symptoms in advanced Parkinson’s disease patients, Accordion Pill Zaleplon, or AP-ZP, which is being developed for the indication of treatment of insomnia, including sleep induction and the improvement of sleep maintenance, and an Accordion Pill that is being developed for the prevention and treatment of gastroduodenal and small bowel Nonsteroidal Anti-Inflammatory Drug induced ulcers.  (Intec Pharma 04.08)

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8.9  Teva Announces Acquisition of Anda

Teva Pharmaceutical Industries has entered into a definitive agreement to purchase Allergan’s Anda, the 4th largest distributor of generic pharmaceuticals in the U.S., for $500 million.  Anda distributes generic, brand, specialty and over-the-counter pharmaceutical products from more than 300 manufacturers to retail independent and chain pharmacies, nursing homes, mail order pharmacies, hospitals, clinics and physician offices across the United States.  As part of the deal, Teva will acquire three distribution centers in Olive Branch, MS; Weston, FL and Groveport, OH, with a total of over 650 employees.  The closing of this transaction is subject to antitrust clearance and satisfaction of other conditions.  The transaction is expected to close in H2/16.

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by millions of patients every day.  Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area.  (Teva 03.08)

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8.10  InSeal Medical Announces CE Mark for InClosure Large Bore Vascular Closure Device

InSeal Medical announced that it has received CE Mark approval for its InClosure VCD, a large bore vascular closure device.  The InClosure VCD is a first-in-class, intravascular closure device based on InSeal Medical’s proprietary and patented technology.  The InClosure VCD is a dedicated vascular closure device designed to close large bore arterial punctures ranging from 12F to 21F.  Such large bore delivery systems are used in various catheter based procedures, including transcatheter aortic valve replacement (TAVR) and percutaneous endovascular treatment of abdominal aortic aneurysms (PEVAR).  The InClosure VCD is implanted percutaneously and requires no pre-procedure or sheath exchange.  It is based on a biodegradable membrane coupled to vessel wall by a thin Nitinol frame.  The flexible membrane exploits blood pressure to improve sealing, resulting in a fast and reliable hemostasis even in calcified arteries.

InSeal Medical is a privately held company based in Caesarea, Israel.  The Company is focus on the development of novel closure solutions for cardiovascular applications based on its patented InClosure technology and know-how.  (InSeal Medical 08.08)

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8.11  FDA Approves EyeYon Corneal Edema Treatment

EyeYon Medical has received US marketing authorization for its medical contact lens for the treatment of corneal edema.  The product is already approved for marketing in Europe, and has been sold there since early 2016.  EyeYon’s lenses are constructed in such a manner that they create a space above the eye where medical drops can be stored.  This enables them to have extended contact with the eye, making them more effective.  The product is undergoing clinical trials in both the US and Europe, although it already received authorization.  The trials involve 100 patients. So far, the product has been field-tested on more than 1,000 patients, who reported a significant reduction in pain and immediate improvement in vision.

Edema-treatment drops are the first application of this technology, with the medical agent here being salt water. In the future, this same technology could be used for various other kinds of treatment.  The stored medicine could be antibiotics, steroids, anti-inflammatory agents, dry eye medicine and more.  The company is currently holding clinical trials in Holland for the treatment of dry eye syndrome using the lens.

Ness Ziona’s EyeYon Medical develops and brings to market exclusive medical ophthalmic devices, which offer relief to unmet clinical need for millions of patients. Its innovative technologies are proven in clinical studies.  EyeYon’s first product, Hyper-CL, for treating corneal edema, has received the CE Mark and FDA clearance and is approved for marketing in Europe and in the USA.  (Globes 09.08)

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9.1  Stratoscale Symphony V2 Delivers the Public Cloud Experience in the Enterprise Data Center

Stratoscale announced the availability of Stratoscale Symphony V2, the second generation of Stratoscale’s comprehensive cloud data center software developed in direct response to customer demands and industry trends.  The latest version of Stratoscale Symphony further differentiates itself from other approaches on the market – deploying, managing and scaling cloud infrastructure has never been so achievable.  Stratoscale Symphony continues to add capabilities to support enterprise-grade private cloud deployments, with capabilities that are only available in web-scale environments.  For businesses of all sizes looking to augment their aging VMware infrastructure, Stratoscale Symphony can be deployed on any x86 server, and provides an Amazon Web Services (AWS) experience in hours.  Since introducing Symphony V1 in December 2015, Stratoscale has been committed to continuous, rapid innovation in cloud infrastructure with major enhancements released every few months.

Stratoscale Symphony V2 introduces significant new capabilities to the Symphony architecture, addressing customer requirements and continuing Stratoscale’s commitment to provide the best cloud infrastructure to service providers, enterprise IT and development teams.

Herzliya’s Stratoscale is the cloud infrastructure company, providing comprehensive cloud infrastructure software solutions for service providers, enterprise IT and development teams.  The company’s comprehensive cloud data center software, Stratoscale Symphony, can be deployed in minutes on commodity x86 servers, providing an Amazon Web Services (AWS) experience with the ability to augment aging VMware infrastructure.  (Stratoscale 26.07)

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9.2  Mellanox Receives Baidu’s Award for Technology Leadership

Mellanox Technologies has been honored with the Award for Technology Innovation from global web 2.0 service leader Baidu.  The award recognizes Mellanox’s achievements in designing and delivering a high-performance, low latency interconnect technology solution that positively impacts Baidu’s business.  Mellanox Technologies received the award at the 2016 Baidu Datacenter Partner Conference, Baidu’s annual gathering of key datacenter partners, and was the only interconnect provider in this category.

Gartner reports state that beginning in 2009, the cloud market in China has been growing more than 60% year over year.  The estimate for 2016 should exceed $50 billion.  In order to address this explosive market, Mellanox Technologies set up local offices in China as the markets were expanding and quickly added an R&D center in Beijing.  The R&D center focuses on developing customized solutions for local customers including software optimization, switch and NIC features to accelerate performance and better address specific customer environments.  Baidu is the leading Chinese language Internet search provider.  As a technology-based media company, Baidu aims to provide the best and most equitable way for people to find what they’re looking for.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand intelligent interconnect solutions and services for servers, storage and hyper-converged infrastructure.  Mellanox intelligent interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance.  (Mellanox 25.07)

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9.3  NUA – the Smart Carry-On Suitcase That Follows You Around

Israel’s NUA Robotics plans to make traveling a little bit easier with its newly developed hands-free carry-on suitcase that follows you around, just like a loyal pet.  The carry-on has a built-in camera that detects the location of its owner.  The case connects to a smartphone app via Bluetooth, so one knows where their luggage is at all times.

The luggage is able to do more than just follow you around and carry your clothes.  It can charge its own battery on the go, as well as charge your phone, computer, or tablet.  It can also communicate its weight through the app and it has a built-in anti-theft alarm.  The alarm will react if the distance between you and your luggage becomes larger than 10 meters.  If you forget your luggage somewhere, it will send a notification to your smartphone.

NUA expects to price the suitcase at $599; about six times the price of same-size suitcases, most of which cost about $100.  While the luggage is not yet available for consumers, they can register to purchase it on the company’s website.  The design of the luggage is slick, but basic, made to fulfill airlines’ carry-on sizing standards and with handles for when the traveler chooses to forgo the “follow me” function.  Despite the exciting features that come in this robotic carry-on suitcase, there are still a few kinks NUA has to figure out. For example, the pace of the bag is currently set to slow/medium, so the company might have to further customize it based on the speed of the user.  Founded in early 2015, NUA Robotics has raised $125,000 in funding from venture capital firm SOSV, and is currently raising its seed round.  (NoCamels 27.07)

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9.4  Medallia Deploys Mellanox Solution to Supercharge Real-Time Analytics

Mellanox Technologies announced that Medallia, the leading Customer Experience Management (CEM) provider, has chosen Mellanox Open Composable Network (OCN) Ethernet devices for its next generation of 100GbE end-to-end solution.  With the addition of Mellanox OCN architecture and devices, Medallia can now seamlessly upgrade its current 40/100GbE data center to 50/100 GbE as the company reaches Hyperscale Infrastructure efficiency, achieves unprecedented throughput and latency, and delivers lightning-fast, rock-solid application performance for its customers.

As part of its mission to help the world’s leading brands hardwire their organizations with customer feedback and drive stronger alignment, agility and business performance, Medallia selected Spectrum SN2700 Open Ethernet switches, ConnectX-4 NICs and LinkX cables from the Mellanox OCN Ethernet portfolio.  Mellanox OCN solutions supply the efficient network fabric that is essential to handling the large amount of east-west traffic generated from inter-container communication, storage access, and scale-out storage cluster operations.  The Mellanox OCN architecture also allows Medallia to enjoy the best of both worlds by continuing to use the Cumulus Linux switch operating system that simplifies its infrastructure management, and by benefitting from the performance and efficiency boost provided by the Spectrum switches.

The Spectrum SN2700 switch delivers the highest 100GbE performance and easily addresses the increased demands of today’s data center environments. Spectrum provides customers with an ideal spine and top-of-rack (ToR) solution for maximum flexibility, and includes port speeds covering 10Gb/s to 100 Gb/s per port and port density, while enabling full rack connectivity to any server at any speed. Powered by the Spectrum ASIC and packed with 32 ports running at 100GbE, Spectrum offers massive switching capacity of 6.4Tb/s with breakthrough 4.77Bpps processing capacity in a compact 1RU form factor.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage.  Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability.  (Mellanox Technologies 27.07)

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9.5  BillRun Implements Billing and CRM Systems at Monaco Telecom

BillRun Technologies, a Tel Aviv based billing company specializing in open-source and cloud solutions, has completed implementation of an advanced billing system for quad-play communication services at Monaco Telecom (MT).  The financial scope of the project is worth several hundreds of thousands of dollars.  MT services the Principality of Monaco, which is located on the French Riviera and hosts more than 300,000 tourists a year, of which one third are guests at conferences and meetings.  This demographic constraint presents a challenge for MT which has chosen BillRun to implement its new comprehensive billing and customer care solution, following BillRun’s successful implementation of a billing system at Tel Aviv-based Golan Telecom.  (BillRun 27.07)

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9.6  Pontis Recognized as One of the 100 Most Promising Big Data Solution Providers

Published from Fremont, California, CIOReview is a print magazine that explores and understands the plethora of ways adopted by firms to execute the smooth functioning of their businesses.  The companies selected for their 100 Most Promising Big Data Solution Providers 2016 list are an elite group of companies whose products and solutions are changing their respective industries.  CIOReview was proud to feature Pontis in this edition for its effort in helping organizations to easily and quickly adopt Big Data analytics as a core part of their business and accelerate conversion of data into valuable business insights.

Pontis leverages real-time Big Data Analytics to provide a unified and contextual view of every customer.  It helps to understand and manage the real-time, multidimensional customer state by continuously processing and analyzing events, driving actions and adapting engagements in real time.  Pontis Engage is a complete solution for Digital Customer Engagement, with real time complex event processing to capture all customer events, big data analytics, real-time execution of digital customer engagements, and real-time personalized fulfillment to close the loop.  This results in maximum agility, flexibility, and ease of management.

Pontis is the worldwide leader in providing Digital Customer Engagement solutions for revolutionizing how businesses engage with their customers.  The company has over a decade’s worth of experience and expertise in driving Digital Customer Engagements with over 600,000,000 customers worldwide.  With extensive experience and domain expertise Pontis enables businesses to achieve engaging results and improve strategic KPIs such as improving customer satisfaction and loyalty, and increasing revenues.  (Pontis 27.07)

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9.7  Matomy Launches mtmy – the First Mobile Performance Advertising Agency

Matomy Media Group announced the launch of mtmy – a mobile advertising agency offering a fully-managed service.  Charged with Matomy’s own Data Management Platform (DMP), mtmy couples powerful targeting of global media with cross-channel optimization to maximize returns on advertising budgets.  mtmy generates data on app-specific user behavior and applies these insights across multiple channels, therefore optimizing audience-targeting between channels.  This unique approach identifies high lifetime-value and ‘lookalike’ users with behavioral patterns that are similar to existing customer base.  This cross-channel integration of marketing activities also maximizes return on investment for real-time bidding (“RTB”) buys and streamlines the process of working with multiple media partners.  For every stage of the product lifecycle, mtmy is able to provide tailored media plans powered by Matomy’s sophisticated technology.  A true advertising partner, mtmy is built to meet client goals from branding to market penetration, and user acquisition to retention.

Matomy Media Group is a world-leading media company delivering smart technology solutions and a personalized approach to advertising.  By providing customized performance and programmatic solutions supported by internal media capabilities, big data analytics, and optimization technology, Matomy empowers advertising and media partners to meet their evolving growth-driven goals.  Matomy offers a single gateway to digital media channels including mobile, video, display, social, email marketing, search marketing (SEM, SEO, and ASO), and domain monetization. Founded in 2007 with headquarters in Tel Aviv and nine offices around the world, Matomy is dual listed on the London and Tel Aviv Stock Exchanges.  (Matomy Media Group 27.07)

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9.8  GuardiCore Unveils Infection Monkey Open Source Cyber Security Testing Tool

 GuardiCore made its Infection Monkey testing tool freely available to the public security community at large.  Designed to test the resiliency of modern data centers against cyber-attacks, the Infection Monkey was developed as an open source tool by GuardiCore’s research group.  The Infection Monkey is a self-propagating testing tool that is able to identify and visualize the path of least resistance in the data center network.  It scans the network, checking for open ports and fingerprinting machines using multiple network protocols.  After detecting accessible machines, it attempts to attack every single machine using methods such as intelligent password guessing and safe exploits.  It does this by leveraging available data on systems it has breached, such as stolen credentials, to automatically spread and infect other machines, clearly highlighting all vulnerable systems in its path.

The Infection Monkey provides detailed information about the specific vulnerability exploited and the effect vulnerable segments can have on the entire network, giving security teams the insights they need to make informed decisions and enforce tighter security policies. It is designed to be 100% safe, with no reconnaissance or propagation features that can impact server or network stability.

Tel Aviv’s GuardiCore is an innovator in internal data center security focused on delivering more accurate and effective ways to stop advanced threats through real-time breach detection and response. Developed by the top cyber security experts in their field, GuardiCore is changing the way organizations are fighting cyber-attacks in their data centers.  (GuardiCore 27.07)

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9.9  TrekAce Unveils Navigator for Bikers & Hikers

At a recent conference for IDF intelligence and special forces in the Tel Aviv Exhibition Grounds, TrekAce displayed a navigational tool that is ideal for bicycle riders, hikers, skiers and soldiers.  The product is a sleeve worn on the arm that gives the user real-time directions where he should go, based on a predefined route, through the use of sensory stimulation.  Kfar Saba’s TrekAce makes a sleeve-worn product that directs the user through sensory stimulation, is also ideal for soldiers.  TrekAce’s navigational sleeve comes in two versions: a 120-gram version for sports and hikes, which will cost $400-500, and a 180-gram version for extreme sports and the military, which will cost $500.  (Globes 28.07)

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9.10  Celliboost Launches Mobile System for Rugged Terrain

Celliboost has developed a standalone mobile system that uses ordinary mobile infrastructure for fast transmission of large-volume, landline-quality, high-resolution data, audio, and video communications.  The company has won its first customers in Mexico and Chile and plans to recruit business partners and distributors to expand its foothold in global markets.  The Celliboost system is designed for communications in rural and open areas. It is suitable for militaries, security and homeland security organizations, law enforcement, and emergency services, as well as telecommunications companies, such as radio and television stations.

Celliboost’s system is based on a standalone mobile system that uses ordinary mobile infrastructure for fast transmission of large-volume landline-quality high-resolution data, audio, and video communications, in all types of terrain and all kinds of mobile coverage from 3G, through GSM, to LTE.  The platform allows the simultaneous use of up to four mobile channels, independent of the mobile operator, and supports two operating methods bonding and load balancing.  The algorithm-supported system can link to any communications interface, including satellite and ADSL, across all operating characteristics of the broadband channel.

Rosh HaAyin’s Celliboost was founded in late 2015.  CelliBoost is a standalone mobile broadband solution that has been proven effective in supporting multiple operational scenarios.  Scalable, versatile and durable, CelliBoost utilizes the standard cellular infrastructure to offer a superior, cost-effective, high-volume data transfer solution for government, law enforcement and emergency services.  (Various 02.08)

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9.11  Optimal+ Announces Availability of Electronics Solution with Release 6.5

Optimal+ announced the availability of Release 6.5.  This latest release includes an extension of the company’s Global Ops solution to serve the needs of electronics manufacturing operations. Global Ops for Electronics is the foundation of a comprehensive platform for electronics companies developing end-market products (smartphones, networking servers, data servers or automotive systems such as ADAS or Car-to-X systems) to collect, analyze and act on manufacturing and in-use data across a distributed supply chain.

In addition to Global Ops for Electronics, release 6.5 also includes numerous enhancements to the company’s industry-leading semiconductor solutions including: manufacturing execution system (MES) tracking, support for “R” within the Sequoia scripting environment and the ability to perform multivariate analysis during part average test (PAT) which enables users to rapidly identify and remove suspect devices from good populations, reducing future RMAs.  Big data analytics is now available across all semiconductor solutions which allows correlations and statistical analysis across all unit level data in any application.  For customers using the NPI for Semiconductor Characterization solution, the new limits application provides powerful analytic capabilities within a given analysis or in a cross operational mode with results automatically populating bi-variate outlier detection analysis.

Holon’s Optimal+ is a global provider of Manufacturing Intelligence software solutions, enabling semiconductor and electronics companies to seamlessly aggregate, organize and act upon the global manufacturing and test data they generate across their internal and external supply chains to measurably improve yield, quality and productivity.  The company’s real-time, Big Data analytics solutions are deployed in virtually every major foundry and OSAT currently serving the semiconductor ecosystem, processing tens of billions of chips every year on behalf of its customers and ushering in an era of unprecedented supply chain visibility that translates into strong and measurable ROI.  (Optimal+ 02.08)

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9.12  NICE Scenario Analyzer Enhances Customer Journey Analytics

NICE announced the launch of Scenario Analyzer, which allows organizations to conduct precise, in-depth analysis of various business challenges related to the cross-channel customer journey.  Part of the NICE Customer Journey Optimization solution, Scenario Analyzer is the first application of its kind, empowering enterprises to weed out inefficiencies, bottlenecks and stress points in the customer journey, apply relevant business intelligence in real time, and leverage a more comprehensive understanding of the customer to deliver a perfect customer experience, every time.

Scenario Analyzer lets analysts zoom in on deflections from one channel to another based on specific use cases.  They can then examine underlying factors such as initial contact reasoning, customer profile, number of transfers, and time spent on each channel.  This information enables organizations to understand why customers move between channels and take prompt action to resolve recurring issues.

Ra’anana’s NICE is the worldwide leading provider of enterprise software solutions that empower organizations to make smarter decisions based on advanced analytics of structured and unstructured data. NICE solutions help the world’s largest organizations deliver better customer service, ensure compliance, combat fraud and safeguard citizens. Over 25,000 organizations in more than 150 countries, including over 80 of the Fortune 100 companies, are using NICE solutions.  (NICE 08.08)

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10.1  Unemployment Down to 4.8% in Israel in Second Quarter

The proportion of the population employed rose to 61.2% in the second quarter, the Central Bureau of Statistics reports.  The unemployment rate in the 15+ age bracket fell from 5.2% in the first quarter to 4.8% in the second quarter, according to a survey published today for June and the second quarter by the Central Bureau of Statistics.  The unemployment rate in June was 4.8%, the same as in April and May.  The survey showed that the proportion of the population gainfully employed rose from 60.8% in the first quarter to 61.2% in the second quarter.  The rate for June was 61.1%, the same as in May.  The most prominent increase in employment was in the southern region, where the rate rose from 57.4% in the first quarter to 58.8% in the second quarter.  The average weekly number of hours worked was up from 36.1 in the first quarter to 36.5 in the second quarter.  The average weekly number of hours per employee was up from 36 in the first quarter to 36.4 in the second quarter.  (CBS 28.07)

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11.1  ISRAEL:  S&P ‘A+/A-1’ Ratings Affirmed; Outlook Stable

On 5 August, S&P Global Ratings affirmed its ‘A+/A-1’ long- and short-term foreign and local currency sovereign credit ratings on the State of Israel.  The outlook is stable.


The ratings are supported by Israel’s prosperous and diverse economy, strong external balance sheet, and flexible monetary framework.  The ratings are constrained by Israel’s high general government debt burden and significant security and geopolitical risks.

With per capita GDP at an estimated $37,000 in 2015, the economy is prosperous and well diversified, with high value-added manufacturing and service sectors.  This is underpinned by high expenditure on research and development, amounting to 4.1% of GDP in 2014, the second-highest among member countries of the Organization for Economic Co-operation and Development (OECD).  The information and communication sector has a 9.8% share of gross value added (GVA) and scientific and technical activities have 2.8%.

We assume Israel’s economy will grow at an average rate of about 2.5% in 2016-2019, despite risks of weaker global demand, partly thanks to a major investment by Intel.  We expect the key drivers of this growth will be robust private consumption, continued corporate investment activity and healthy service exports, supported by both loose monetary policy and continued fiscal stimulus.  In per capita terms, this equates to growth of around 1% per year, reflecting robust population growth.

The government recently approved a new development plan for the Leviathan gas field, after the supreme court had blocked a previous deal.  We believe the development of Israel’s gas resources would benefit the economy and its fiscal position, but further court suits could cause more delays.  Moreover, in our view, the lack of gas distribution network infrastructure could also limit how much domestic input cost reduction the gas field could bring to the Israeli economy.

The March 2015 general elections resulted in a right-wing government coalition with 61 of 120 seats in Israel’s parliament, the Knesset.  In May 2016, a new right-wing coalition partner, Israel Beitenu, joined in the government, increasing the number of supporters to 66 from 61 and resulting in a more stable coalition.  Nevertheless, it also adds to the already heterogeneous coalition structure; hence the inclusion of a new partner is unlikely to enhance the government’s capacity to deliver sustainable public finances and measures that boost economic prospects.

We believe infrastructure enhancements, especially to transportation, could support productivity gains that have been lacking in the Israel economy.  However, we expect the infrastructure gap to remain, given the capacity and administrative constraints facing the sector.  We foresee somewhat muted progress in tackling the other structural issues facing the Israeli economy, given that any controversial measures are unlikely to receive coalition support.  Moreover, some previously implemented measures to boost educational attainment and labor supply have been reversed in order to secure support from Ultra Orthodox parties, Shas and United Torah Judaism.

In 2015, the central government deficit was 2.2% of GDP and general government deficit was 2.4% of GDP, a relatively positive fiscal performance arising mostly from better-than-expected tax revenue collection.  This trend continued in first half of 2016, which has now given the government confidence to cut taxes.  The new coalition government has reached a consensus regarding the biannual 2017-2018 budget, maintaining the deficit ceiling of 2.9%.  The new budget envisages expansionary fiscal measures, cuts to personal and corporate income taxes, and increased spending on health, education and infrastructure.  Given the government’s reasonable track record of containing fiscal pressures within a stringent framework, and the potential for a snap election should additional parliamentary approval on budgetary matters be required, we expect the general government deficit to remain at 2.9% of GDP over the next two years.

A substantial reduction in interest expenditures in 2015 significantly improved Israel’s debt ratios.  Amid the low-inflation environment (around one-half of general government debt is CPI linked) and low funding costs, we expect this trend to continue over the forecast horizon.  Subtracting liquid assets (mostly in the form of deposits at the central bank) from gross government debt, we estimate that net general government debt remained at below 62% of GDP at the end of 2015.  Even without taking into account possible land sales and privatization proceeds, which could reduce government financing needs, we expect the net debt ratio could increase slightly to 64% of GDP in 2019.

As a result of Israel’s strong export performance and sustained current account surpluses, its external balance sheet is strong and its net creditor position versus the rest of the world continues to grow.  We forecast that its liquid external assets will outstrip its gross external debt over the next three years. This dynamic is also lowering the country’s gross external financing needs, indicating low dependency on external financing.

We also consider Israel’s monetary policy flexibility to be a credit strength.  The Bank of Israel (BoI, the central bank) has become increasingly interventionist, over and above its commitment to purchase foreign currencies to offset the impact of domestic natural gas production on the balance of payments.  We view the exchange rate regime as a managed float, which somewhat hampers monetary policy flexibility.

In addition to making frequent interventions in the foreign exchange market, the BoI has eased its stance on monetary policy, countering the strength of the Israeli new shekel in order to maintain the competitiveness of Israeli exports.  It lowered its policy rate to a historical low of 0.1% in March 2015, but the shekel continued to appreciate against Israel’s key trading partners.  During 2015, the shekel weakened by 0.3% against the dollar, but strengthened by about 7.3% against the currencies of Israel’s main trading partners, in terms of the nominal effective exchange rate.  Since the beginning of the year, the shekel continued to appreciate vis-à-vis main trading partners.

One of the key challenges to monetary policy continues to be Israel’s rising house prices.  Real house prices have increased by around 69% since the end of 2007 and the International Monetary Fund (IMF) assesses that the house prices in Israel are currently overvalued by 30%.  The BoI’s earlier attempt to dampen the housing market by raising interest rates yielded little, and significantly pushed up the foreign exchange rate of the shekel.  The government has implemented a comprehensive set of measures to address supply-side issues, including freeing up more land for development, changing the tendering criteria to give first time buyers a discount to market price, and speeding up administrative processes for construction permissions.  Given the capacity constraints in the construction industry, the extended time needed to build houses and continued growth in demand, we do not expect government measures to fully address the supply shortage in the near term.  The first half of 2016 saw little impact on supply of housing from these measures; house prices recorded above the 5% annual growth rate in March, however, we understand that house price data currently do not take into account of the aforementioned discount for first time buyers.

The tightening of macro-prudential measures has reduced systemic risks to Israel’s banking industry and constrains mortgage leading growth, but any meaningful correction in house prices could have other negative economic effects.  We expect that by the end of 2016 the Knesset will pass general legislation to establish a formal Financial Stability Committee, as recommended by the IMF, to enhance policy co-ordination.

Overall, institutional and governance structures in Israel are generally effective, with a satisfactory degree of transparency and accountability.  However, we consider that the persistent territorial dispute with the Palestinians threatens political stability and weighs on policy predictability.

Geopolitical risks continue to weigh on the ratings.  Repeated violent clashes with the Palestinians not only inflict social and economic costs, but also elicit negative reaction from the international community.  In Israel’s neighboring region, the conflict in Syria and Iraq, as well as instability in the Sinai region, pose medium-term security risks.  Any significant armed conflict could have a negative impact on the ratings if it significantly deterred investment, weakened the economy’s growth potential, or strained fiscal flexibility.  We do not expect the nuclear agreement between Iran and the international community to be either positive or negative for Israel over the forecast period, given the continued regional tensions and inherent uncertainty regarding the implementation of the agreement.


The stable outlook on Israel reflects our opinion that the government will maintain prudent macroeconomic policies and ensure the stabilization of government debt over 2016-2019, despite higher spending concessions agreed by the coalition.  The stable outlook also reflects our expectation that security risks to the Israeli economy will not increase materially.

We could consider raising our ratings if fiscal consolidation exceeds our expectations, or additional income from gas fields sustainably reduces the net debt burden to below 60% of GDP, or if there is marked progress in defusing external security risks.

Conversely, we could lower the ratings if the economic growth outlook were to weaken substantially, due to an abrupt correction in the housing market or unaddressed structural weaknesses.  A downgrade would also become more likely if the government yields to pressures for more social or security spending and allows deficits to widen and government debt to increase significantly above our current expectations. Moreover, if a perceived loss of international support were to further isolate the Israeli economy, we could lower the ratings.  (S&P 05.08)

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11.2  ISRAEL:  Private Equity Deals Fall By 24% in First Half of 2016

Private equity investment in Israel in the first half of 2016 fell 24% to $1.6 billion in 29 private equity deals from $2.1 billion in 53 deals in the corresponding period of 2015, according to the IVC and Shibolet & Co. report.  However, the average private equity deal in the first half of 2016 was $53 million, up from the $39 million average in the first half of 2016.

In the second quarter of 2016, 13 Israeli private equity deals accounted for $1.3 billion, up from $270 million invested in the preceding quarter, but below the $1.6 billion in the corresponding quarter of 2015.  The average deal amount climbed to $98 million, the highest quarterly average in the past four years.

The two largest private equity deals took place in the second quarter, accounting for 67% of total capital investments: the $643 million buyout of Xura (formerly Comverse) by US private equity fund Siris Capital, and the $400 million buyout of Sintec Media by Francisco Partners.  In the first quarter of 2016, no private equity deals passed the $100 million threshold.

In the second quarter of 2016, Israeli private equity funds invested $184 million, or 19% of total private equity investments, up 55% from the $119 million invested in the first quarter of 2016.  The largest deal performed by an Israeli fund in the second quarter was the $90 million buyout of Arena Mall Herzliya, by real estate fund Reality Investment.  In the first half of 2016, investments performed by Israeli private equity funds reached $303 million, representing a year-on-year decline.

Foreign private equity funds led in the second quarter of 2016, with $1.1 billion, including the two largest buyouts so far.  The share of foreign private equity funds increased to 86% out of total investments, as compared with 81% in the second quarter of 2016.

Shibolet & Co partner Omer Ben-Zvi said, “After a weak first quarter, we are happy to see the second quarter of 2016 scope of private equity deals growing again, as we have previously foreseen.  We believe that this is evidence of the overall further strengthening in the local industry.  This is especially true in the Israeli high-tech sector, which is producing more and more mature companies that become potential targets for private equity investors.  A case in point in the second quarter was the continuous activity of Francisco Partners, a long time player in the Israeli PE market, alongside newcomer Siris Capital Group, which made its first investment in Israel,”

He added, “Obviously, the local PE market is sensitive to macroeconomic fluctuations, such as the US interest rate expected markup and Asian markets slowdown.”

The Israeli technology sector continued to lead private equity investments in the second quarter of 2016, with $1.1 billion invested in eight deals, 87% of investments.

The first six months of 2016 clearly demonstrated private equity investors’ preferences – $1.4 billion, or 88%, of all PE investments were made in the technology sector.  This was the largest share for this period so far, exceeding even the first half of 2015’s 76% share, when $1.6 billion was invested in the Israeli high-tech industry by private equity funds.

According to the IVC-Shibolet PE Survey findings, straight equity deals performance was considerably down in the second quarter of 2016, as well as the first half of 2016.  Only 19 straight equity transactions totaled $204 million (16%) in the first half of 2016, 50% down from 40 deals performed in both the first halves of 2015 and 2014, when they were the preferred tool by PE funds.  The decrease in the number of straight equity deals accounted for the 74% drop in the amount invested in the first half of 2016, with a mere $204 million, as compared with the record high $774 million invested in the same period of 2015.  The largest straight equity deal in the first half of 2016 was a $30 million investment in ForeScout, by Wellington, a US-based PE fund.

IVC research manager Marianna Shapira said, “Indeed it seems global economy trends have influenced the Israeli private equity market in the first half of 2016.  PE funds have certainly taken a cautious approach to their asset allocation, minimizing risks and sticking to classic PE investment strategies, especially evident in the second quarter, which featured preference for more traditional private equity mechanisms, such as buyouts, and decrease in riskier minority-stake straight equity transactions.”

According to the IVC-Online Database, 41 Israeli private equity management companies are currently active, with a total of nearly $10.8 billion under management.  To date, five Israeli private equity funds raised capital in 2016, closing $1.7 billion in total, with FIMI’s sixth fund of $1.1 billion the most prominent.  Three more funds are in the midst of capital raising, targeting an approximate total amount of $600 million.  (IVC 26.07)

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11.3  JORDAN:  Why Many Jordanians Have Little Stomach for Upcoming Elections

Aaron Magid cited in Al-Monitor on 25 July that an astounding 87% of Jordanians said their parliament had not made even one praiseworthy accomplishment during the 2013-16 term, according to an April poll conducted by the International Republican Institute.  Faced with such public skepticism, the Jordanian government is campaigning to increase voter turnout for the country’s most important elections, to be held in two months.

The Independent Election Commission has launched a new website in Arabic and in English and has taken to the streets to explain the voting list system enacted in March in a new election law that did away with the previous one-person, one-vote system.  “The King, the government and the Independent Election Committee have done all that is possible to prepare the groundwork for the new elections,” said a 12 June editorial in the Jordan Times.  Nonetheless, with the 20 September contest approaching, former Foreign Minister Marwan Muasher told Al-Monitor, “There is a noticeable indifference toward the elections.”

The parliament’s 2 May ratification of constitutional amendments was a worrying development for citizens who want an independent legislative branch.  The new amendments gave the king absolute power to appoint the head of the paramilitary police force, members of the constitutional court and the crown prince.  Before the 2 May decision, the king required the prime minister and certain ministers to recommend these critical nominees.

The changes were passed overwhelmingly in only about two weeks by 123 members of parliament out of 142 who attended the session, and with little public debate.  Rana Sabbagh, the director of the Arab Reporters for Investigative Journalism and former editor-in-chief of the Jordan Times, told Al-Monitor that many Jordanians view parliament as being a “rubber stamp” for the king’s policies and not operating as a strong independent body monitoring the executive branch.  “Jordanians don’t believe that this parliament is actually stopping wrongdoing in the system,” she said.

A poll by the Civil Coalition for Monitoring Elections published 10 July said a larger share of Jordanians (39.5%) intend to “boycott” the elections than those who plan to vote (31.5%).  Suspicions of dishonesty in the legislative branch have fueled mistrust about the elections.

In April, the Jordan Times reported that hundreds of parliamentarians’ relatives had been appointed administrators at the legislature.  “MPs cannot risk rejecting wasta [obtaining privileges through connections] requests from people in their constituencies, because they fear losing them as voters,” said Tarek Khoury, a parliamentarian.  “This is a big problem for the lower house.”  With representatives themselves acknowledging their unethical behavior, it is no surprise that citizens are less than enthusiastic about taking the time to legitimize the legislative branch.

Previous instances of electoral fraud are also behind Jordanians questioning the utility of voting in September and staying away from the polls.  In 2007, a former intelligence chief acknowledged falsifying parliamentary election results.  In addition, the newspaper Al-Arab al-Youm exposed multiple cases of vote buying in the 2010 elections, with candidates’ campaigns offering citizens more than 100 Jordanian dinars (about $140) per vote.  During the last parliamentary contest, in 2013, the Muslim Brotherhood accused the government of fraud.

Despite these issues, Sabbagh noted that given the current violence and turmoil across the region, there are voices in Jordan who believe that holding elections is a positive sign for the kingdom.  The elections might benefit from the fact that the original Muslim Brotherhood’s political wing, the Islamic Action Front (IAF), is participating this year after boycotting the previous races in 2010 and 2013.  The IAF’s decision to compete in September lends legitimacy to the elections.

Given the challenging financial conditions facing Jordanians, it is difficult to divorce the weak economy from attitudes about the parliament and therefore the elections.  According to the International Labor Organization, youth unemployment stands at approximately 28%, twice the international average.  The government’s decision in June to raise fuel prices has further strained the resources of many with already limited means.

“People feel manipulated, and they see [elections] as repetition of the same thing and done for someone else’s benefit,” Naseem Tarawnah, author of the popular Jordanian political blog Black Iris, told Al-Monitor.  Because economic conditions are not improving, many in the kingdom view regular elections as “putting lipstick on the pig and dressing it up in different ways,” Tarawnah said.  With average Jordanians struggling to support their families, participating in elections that appear to have a limited impact on their daily lives is not a priority.

Mohammad Momani, the minister of state for media affairs and government spokesman, declined Al-Monitor’s request for comment on the public’s attitude toward the elections.

Sitting at a cafe near the University of Jordan, student Abdalshaheed Abu-Khalil said he would not vote in the September race.  “The elections are a big show,” he remarked.  “The last parliament failed.”  Lana Abu-Joudeh, however, is more hopeful.  She explained to Al-Monitor, “It is important for all of us to be part of elections because we want Jordan to be a better place to live.”  She said that while the last elections were “dishonest,” she nonetheless intends to vote in September.

King Abdullah II touted the new electoral legislation as a “milestone in our national reform process.”  There appears to be a major divide, however, in how the Royal Palace and the people view the law.  According to the International Republican Institute poll, 58% of Jordanians know nothing about the legislation, which requires candidates to run on multi-candidate lists.  Voters select one list and then select candidates from that list.  This process replaces the single, non-transferable vote system — sawt wahid or one vote — which had reduced opposition parties’ representation after the 1989 election in favor of tribal loyalists.  In 1989, the Muslim Brotherhood and its allies won about one-third of the contested seats and became the largest parliamentary bloc, an unwelcome development for the monarchy.  The Sawt wahid system created heavily gerrymandered districts that were disadvantageous for the urban areas where many Jordanian-Palestinians who supported the Brotherhood lived.

Although the purpose of the legislation was to create strong parliamentary political blocs, Muasher was cautious about the bill’s potential for success.  “It is clear in most districts that lists are not going to be formed according to ideology but rather by tribal affiliation,” Muasher said.

Some of the attacks against the legislative branch are rooted in the country’s restrictions on political speech.  “You can’t criticize the king and the upper echelons of power,” Tarawnah said.  Therefore the legislative branch becomes one of the few government institutions that citizens can attack, causing “parliament to be the scapegoat,” he added.

The ongoing economic problems, previous cases of electoral fraud and consolidation of the king’s power have pushed many Jordanians to consider staying away from the ballot box in September.  “People feel that parliament is not an effective decision maker or a voice that is representative of most Jordanians,” Muasher noted. “There is a big trust gap between citizens and the government in Jordan.”  (Al-Monitor 25.07)

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11.4  UAE:  Emirate of Abu Dhabi ‘AA/A-1+’ Ratings Affirmed; Outlook Stable

On Aug. 5, 2016, S&P Global Ratings affirmed its ‘AA’ long-term and ‘A-1+’ short-term foreign and local currency sovereign credit ratings on the Emirate of Abu Dhabi, a member of the United Arab Emirates (UAE).  The outlook is stable.


The ratings are supported by Abu Dhabi’s strong fiscal and external positions.  The exceptional strength of the government’s net asset position provides a buffer to counter the negative impact of oil price declines on economic growth and government revenues, as well as on the external account.

The ratings are constrained by our assessment that the emirate has less-developed political institutions than non-regional peers in the same rating category.  Limited monetary policy flexibility (given the UAE dirham’s peg to the U.S. dollar), gaps and delays in the provision of economic and fiscal data, and the underdeveloped local currency domestic bond market also weigh on the ratings.

We expect the emirate will maintain its extremely strong net fiscal asset position, which we project at about 260% of GDP on average over 2016-2019.  This is one of the highest net government asset ratios among the sovereigns we rate.  We have recently amended our approach to estimating Abu Dhabi Investment Authority (ADIA)’s investment income.  Our estimates now reflect the 20-year annualized return of 6.5% published in ADIA’s 2015 review, rather than the 30-year annualized return of 8.4% from 2014.  We previously projected the government’s net asset position over 2016-2019 at 320% of GDP.

Despite the recent decline in oil prices, Abu Dhabi maintains one of the highest GDP per capita levels in the world, and its very strong net government asset position, mostly in foreign currency, makes the emirate’s economy resilient to shocks in the commodity market.  We estimate Abu Dhabi’s GDP per capita at about $68,000 in 2016.  The average change in real GDP per capita, weighted as per our criteria, will likely show a contraction of about 3% on average in 2016-2019, largely due to high levels of immigration.  We estimate that the population increased by 70% between 2008 and 2015 to 2.8 million, and will reach about 3.5 million by 2020. Real GDP per capita growth is well below that of peers in the same GDP-per-capita category.  But, in our view, wealth levels in the economy could substantially cushion potential risks.  Abu Dhabi’s nominal GDP fell by about 14% in 2015, due to the sharp drop in oil prices.  Nevertheless, the real economic growth rate, at 6%, was much stronger than the previously expected 2%, as oil production increased.

In 2015, Abu Dhabi derived about 50% of its real GDP and 80% of government revenues from the hydrocarbons sector: oil taxes and royalties, plus dividends from state-owned oil producer, refiner and distributor Abu Dhabi National Oil Co. (ADNOC).  We assume an average Brent oil price of $46 per barrel (/bbl) in 2016-2019.  In our view, government policy to encourage the economic contribution of the non-oil private sector is likely to have a significant effect only over the medium to long term.

With revenues declining by 21% due to falling oil and gas income, we estimate the general government deficit will widen to 5% of GDP in 2016, from around 4% in 2015, based on the government’s preliminary approved budget.  Our estimate of the government’s fiscal balance does not include our estimate of investment income from ADIA.  We understand these funds are held and re-invested by ADIA.  However, we estimate the general government balance including ADNOC dividends.  The government has yet to agree on a 2016 budget and currently limits spending to one-twelfth of the 2015 budget per month.  Nevertheless, we assume that upcoming budgets will include further measures to contain expenditures in light of the low oil price.  We project Abu Dhabi’s fiscal balance will show a deficit of about 4% of GDP on average in 2016-2019.

The Abu Dhabi government has made some progress with subsidy reform, which we expect will support the fiscal balance over the next few years.  It cut utility subsidies in 2015, and the UAE federal government announced a change to the policy of fixed fuel prices, which affected Abu Dhabi and the other emirates.  From 1 August 2015, petrol prices have been set in accordance with global oil price benchmarks (after adding transportation, operation, and distribution costs).  We understand that these fuel subsidies were covered by losses at the distribution company level, and largely met by ADNOC.  We therefore expect only an indirect impact on the government’s budget through dividends that ADNOC pays to Abu Dhabi. Between August 2015 and July 2016, petrol and diesel prices fell by about 17% and 10%, respectively, suggesting that the positive impact on ADNOC’s profitability of the adjusted subsidy regime will be offset to some extent by the decline in oil prices in the short term.

The government’s oversight of the public sector aims for sustainability and the prevention of financial stress at government-related entities (GREs).  We estimate the debt of Abu Dhabi’s GREs at about 30% of GDP in 2016, including parent-level debt at Mubadala Development Co., International Petroleum Investment Co., and Tourism Development and Investment Co.  These entities are backed by the government’s 2010 statement of support, most recently reiterated to us by senior officials this year and restated in the prospectus for its May 2016 $5 billion notes issuance.  We anticipate that in the event of financial distress, the smaller emirates would receive extraordinary financial support from the UAE (with Abu Dhabi’s backing), although we do not expect that the need will arise.  However, even taking this potential exposure into account, which we estimate at around 30% of GDP (summing our estimates of the outstanding direct debt of the governments of Dubai, Ras Al Khaimah and Sharjah), we assess Abu Dhabi’s contingent liabilities as limited in relation to the strength of the government’s net asset position.

Despite some progress in strengthening its economic institutions, in our view, the emirate has weaker political institutions and lower disclosure standards than non-regional peers in the same rating category.  It has established a debt management office, undertaken a public expenditure review, and set up a medium-term budget framework.  However, in our view, there are substantial shortcomings and material gaps in the dissemination of macroeconomic data, including relatively weak transparency and reporting delays.  Disclosure related to the government’s external assets is limited compared with that of similarly rated peers.  Moreover, we believe political institutions in the UAE are in a nascent stage of development compared with those of non-regional peers.  The decision-making process remains highly centralized, with checks and balances between institutions largely absent.

Through its regional and international alliances, the UAE government strives to maintain a balanced foreign policy to safeguard both its strategic and commercial interests.  We believe trade and investment between Abu Dhabi and Iran could benefit from a lifting of economic and financial sanctions on Iran by the E.U. and U.S. in January 2016.  In its energy and foreign policy, Abu Dhabi has been proactively mitigating its exposure to geopolitical risks as well as securing its oil supply to strategic end users.  To this end, the government completed the Abu Dhabi Oil Pipeline in 2012, which now has the capacity to deliver about 50% of Abu Dhabi’s oil exports directly to the Fujairah terminal on the Indian Ocean, bypassing the Strait of Hormuz.  We do not expect material spillover effects on Abu Dhabi from the conflicts in Yemen and Syria.

There are only limited external trade, balance of payments, and international investment position data available for Abu Dhabi.  We therefore base our assessment of Abu Dhabi’s external position on that of its federation, the UAE.  That is, we define the UAE as the “host country” and use our estimates of the UAE’s external position as a starting point.  We then adjust the initial assessment downward due to data gaps, which, in our view, reduce the visibility of external risks.  That said, our estimates of Abu Dhabi’s significant external assets, held by ADIA and including our estimate of ADIA’s investment income, lead us to assess the emirate’s overall external position as a strength.  Using our narrow net external debt metric, we expect the UAE’s external creditor position will average about 105% of current account receipts (CARs) in 2016-2019, albeit on a declining trend over that period.  We estimate the UAE’s gross external financing needs at about 110% of usable reserves of the UAE central bank and CARs on average over the same period.

We expect the UAE’s exchange rate peg to remain in place over the next several years.  In our view, the UAE has more than sufficient reserves to defend the peg, while considerations of macroeconomic and social stability would also outweigh the potential benefits of amending the exchange rate regime.


The stable outlook on Abu Dhabi reflects our view of balanced risks to the ratings over the next two years.  We believe that Abu Dhabi’s economy will remain resilient and its fiscal position will remain extremely strong, but we also anticipate continued structural and institutional weaknesses.

We could consider raising the ratings on Abu Dhabi if we observed pronounced improvements in data transparency, including on fiscal assets and external data, alongside further progress in institutional reforms.  What’s more, measures to improve the effectiveness of monetary policy, such as developing domestic capital markets, could be positive for the ratings over time.

We might consider a negative rating action if we expected a deterioration in Abu Dhabi’s currently very strong fiscal balance sheet and net external asset position.  If fiscal deficits or the materialization of contingent liabilities led to a drop in liquid assets to below 100% of GDP, downward pressure on the ratings would develop.  A negative rating action could also occur if domestic or regional events compromised political and economic stability in Abu Dhabi.  (S&P 05.08)

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11.5  SAUDI ARABIA:  The Potential of Saudi Economic Reforms

Nathan Field posted in Fikra Forum on 22 July that few countries have received as much negative attention in Washington as Saudi Arabia over the last two years.  Some of this is due to the politics of the Iranian nuclear deal and the Saudi response.  It is also due to an attempt to make sense of the unprecedented breakdown of regional stability in the Middle East.  The Kingdom, however, now ultimately serves as a convenient scapegoat.

It is certainly fair for U.S. policy makers to question some of Riyadh’s policies in the region.  For example, it is unclear how the Kingdom’s military operations in Yemen or the stoking of sectarian tensions in the Syrian Civil War helps the United States.

On the other hand, the often overlooked fact is that Saudi regional adventurism is fundamentally driven by a sense of insecurity that leads the leadership to think it needs to act unilaterally to project strength.  For example, with the Iran deal, the Saudis feel the United States is no longer quite the ally it once was.  Long-time allies and bulwarks of regional stability like Egypt’s President Mubarak were overthrown almost overnight.  The government now faces an even thornier, populist brand of ISIS-style jihadism than its former challenges with al-Qaeda.

Therefore, the most practical approach for the United States is to support efforts to ensure a more healthy, confident and secure Kingdom – and this begins with a serious look at the country’s ongoing domestic economic reforms.  Ever since the Arab Spring, and especially during the past year under the direction of the new King Salman, the country has been undergoing serious economic reforms critical to establishing the foundation for that security.  If these reforms continue and expand, they will build a stronger foundation for a mutually beneficial U.S.-Saudi relationship over the long-term.

While they did not receive much attention given more dramatic events elsewhere in the region at the time, in 2011, the government began a series of Labor reforms aimed at solving the drastic long-term unemployment problem, a major aspect of Mubarak and Ali’s downfalls.  The consensus of international firms working in Saudi Arabia, who have had to adjust their strategies to comply with the new laws, is that the government is taking its economic reforms very seriously.

Further evidence of this commitment to reform is the vaunted “Saudi 2030” plan.  Only time will tell if these plans succeed, but based on the amount of political capital the government has expended, as well as the seniority and rank of the officials involved, it is clear that success is the highest possible government priority.  However, the boldness of the Saudi 2030 plans has prompted skeptics to question whether this is a realistic vision.  There are two core points made by skeptics.

First, there is a tendency by many in U.S. media to dwell on whether the individual Saudi Princes at the top are “up for the job?”  This reflects a pattern amongst Western commentators to overly focus on personalities or to speculate about how rivalries within the Royal Family might affect the country’s politics.  This is a mistake.

While policy in Saudi Arabia has a number of high-profile Royals at its head, the success and implementation of major decisions reflect a buy-in from a large number of major stakeholders within the system.  No major decision – and these ongoing reforms are a major decision – is made without the general buy-in of dozens of different interest groups, ranging from the religious establishment, but just as importantly the powerful merchant class.

In regards to the 2030 vision, it may be the case that some older Royals are resentful of the 30-year old Deputy Crown Prince’s power.  Even so, members of the Royal Family operate as politicians, whose political and financial interests are tied to the country’s successes and failures and to some extent are not unlike politicians in other Democratic countries.  The majority of Royals are aware that they have little chance of ascending the throne or obtaining the riches of the royal elite.  For these royals, status and power is tied to the healthy maintenance of “the system.”  They are well aware of the fate of Mubarak’s senior Egyptian politicians and businessmen still in jail.

The second critique of Saudi’s economic reforms is over their ambition.  Are they too ambitious?  Will good intentions translate into positive results? Evidence suggests the affirmative, even if only in part.  In any case, it is clearly in the US interest for the programs to succeed.

In some ways, even partially successful ambitious policies will benefit the Kingdom.

One example is the Kingdom’s goal to develop an automobile-manufacturing industry.  Two years ago the Kingdom opened its first factory and the goal is to eventually produce 300,000 cars per year.  To provide the workers needed to staff these industries, the “2030 plan” calls for an increase in vocational enrollment from the current 104,000 students to 950,000 by 2030.

In the highly competitive global economy, it is quite possible the project will not succeed.  However, if only implemented in part, it will still provide a significant number of new, good jobs.  But even if the plan is a total failure, the experience of failing on a specific high-level industrial project will still provide hundreds of thousands of Saudis relevant experience and skills that can be applied to other areas of the economy.

On the other hand, unsuccessful implementation of highly ambitious policies in other areas could lead to clear negative consequences.  One example is the de facto policy of sending 78% of high school students to universities, the highest rate in the world.  This policy is based on the historically-unproven assumption of a linear relationship between more degree holders and economic growth and job creation.

It is hard to see how the economy will ever produce enough jobs to provide for these newly educated citizens even in a best-case scenario.  Without careful management of opportunities in relation to higher education, Saudi Arabia’s educational reforms could lead to a greater number of disgruntled, unemployed youth, susceptible to the appeal of anti-establishment groups like ISIS.  This is a scenario where working closely with an ally like the United States could make a meaningful difference in both domestic and international security.

Nor is the “Saudi 2030” vision, or earlier attempts at reform, without domestic detractors.  However, these mainly emerge as a facet of tactical differences within the government over how to implement these reforms, not whether to undergo reform in itself.  Under any leadership, Saudi Arabia will have to face two key voices in protest to economic reforms: social conservatives and businessmen.

While the government and senior Royals are in some sense more “liberal” than the population at large, the social conservatism of the Saudi public continues to effect what the government can achieve by way of reforms.  There are plenty of situations where, for example, the best candidate for a position is a woman who, given the country’s current social conservatism, is unlikely to be hired.  As one Saudi put it, “60% of Saudi men will not marry a women who works in a co-ed work environment.”  In this arena, the government can only do so much short-term.

Some businesses are also pushing back against specific aspects of the economic reforms that require them adjust their strategies, especially those regarding labor laws.  The Saudi government is in essence forcefully interfering with the free market in an attempt to encourage higher Saudi employment.  In practice, this means that Saudi firms that chose not to hire more expensive Saudi nationals may face taxes or other penalties.  Some sectors are more able to cope with new requirements than others, but pushback from firms less able to adapt is a constant theme in Saudi media.  For example, just this week, the Saudi Labor Minister has had to reject a petition by cell phone companies – an industry reliant on foreign labor – to ease the process.

Nevertheless, Saudi firms know that they will make no money at all in the event of an Egypt-style revolution and will continue to adjust over time.  Much of the social conservatism is something only time can solve.  There is every reason to believe that with each passing year, social mores will be modified to accommodate with the needs of ongoing reform, and become more in line with those in other Muslim countries.

The country of Saudi Arabia is what it is.  That being said, it is in the United States’ interests to work closely with, rather than neglect, the country.  With “Saudi 2030,” the Kingdom has a chance to succeed in its economic reform policies, which is the first step to ensuring that Saudi Arabia – led by a government more healthily confident on its domestic front – has a productive relationship with the US over the long-run.

Nathan Field is the co-founder of Industry Arabic and the author of a forthcoming textbook on spoken Arabic and spent two years living in Saudi Arabia working on consulting projects in the environmental sector.  (Fikra 22.07)

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11.6  EGYPT:  What Will $12 Billion IMF Loan Cost Egypt?

Ismael El-Kholy posted on 3 August in Al-Monitor that Egypt, facing a huge budget gap, is seeking to borrow from international agencies, but doing so is likely to bring harsh financial restrictions.

On July 28, Egyptian Finance Minister Amr El Garhy announced that Egypt would seek a $21 billion loan package to fill the budget’s financing gap.  Of this amount, $12 billion would be in the form of a loan from the International Monetary Fund — Egypt is in the final stages of negotiations to borrow the money — and the rest would come from two loans from the World Bank and the African Development Bank, as well as a bond sale and other loans from funding bodies and countries that the Finance Ministry has yet to announce.

Ahmed Kouchouk, vice minister of finance for fiscal policies and institutional reform, has made press statements that the financing program Egypt is negotiating with the IMF would reach $12 billion in three years and would support the foreign exchange reserves held by the Central Bank of Egypt.  The loan would also allow additional financing to reduce the budget deficit and pay for projects that would contribute to lowering the deficit and inflation.

The IMF mission arrived July 30 at Cairo International Airport to start official negotiations with Egypt on the $12 billion loan.

Egypt’s economy suffers from increased accumulated debts.  Egyptian Prime Minister Sherif Ismail told parliament in March that the servicing of public debt constitutes 30% of public spending.  Meanwhile, Egypt’s domestic debt has reached about 2.25 trillion Egyptian pounds ($253 billion), while its foreign debt reached $53 billion, raising doubts about Egypt’s ability to borrow.

Medhat Nafei, professor of economics at Misr International University, told Al-Monitor that several factors will determine whether the IMF approves the loan, such as reducing the budget deficit, lifting fuel subsidies, forcing the domestic currency to depreciate, reforming the taxation system, and limiting national projects that are eating liquidity and replacing them with projects that would have short-term economic outcomes.

Nafei said that Egypt has already started satisfying a number of these conditions, such as gradually lifting fuel subsidies, depreciating the Egyptian pound over the past few years, and, in terms of tax reform, the submission to parliament of the value added tax bill.  “The government wants to portray that these economic steps come from within, as part of efforts at economic reform, yet they are triggered by the IMF reform program,” Nafei told Al-Monitor.

Nevertheless, the Egyptian Finance Ministry issued a statement 31 July assuring that the IMF has imposed no conditionality to approve Egypt’s reform program and that the IMF is offering a loan to help fund the government’s budget.  The government asserted that the reform it is discussing with the IMF mission is “100% Egyptian.”

Nafei said, “The loan is useful for Egypt as the current economic context underlines that there is a large gap that will only be filled by borrowing, especially as Egypt is suffering from large financing problems that cause its continuous budget deficit.”  He continued, “The foreign debt would not [normally] allow for new loans, especially since the interest rate is high.  However, there is no alternative as the economic community in the government is lacking.”

“Perhaps the situation will improve as the IMF will propose economic programs that will have to be adopted in order for the loan to be approved.  These programs are better than those proposed by the government anyway.  The loan would also provide confidence for Egypt’s economy,” he added.

Hesham Ibrahim, professor of finance at Cairo University, said, “Borrowing such large amounts is very worrisome.  There need to be some regulations on foreign loans.”  He added, “This loan completely contradicts the results of President [Abdel Fattah al-] Sisi’s meeting with Sahar Nasr, the minister of investment, last June on the conditions that should be present before taking out foreign loans.”

In her meeting with the president, the minister of investment said there is agreement on how necessary it is to double-check Egypt’s ability to repay before taking any loans and to evaluate the readiness of the ministry that will receive the loan to implement the financed project.  She added that the economic consequences of the projects should be analyzed and the resulting developmental outcomes and social dimensions should be determined.

Ibrahim said, “No one knows where the next loan package would go.  The state cannot afford all these loans. How will the country repay while there is a deficit in foreign exchange resources?”

He said the reason for borrowing now is the depreciation of the Egyptian pound’s value relative to the US dollar.  “You cannot solve this issue through borrowing. The problem has been there for three years now and repayment is usually done through borrowing and aid coming from Gulf states.  Any received foreign exchange would be exhausted to plug the foreign exchange demand gap.  Investment is the only way out, besides regulating imports and halting smuggling at customs.”

Ibrahim doubted that Egypt would get any help from the IMF, telling Al-Monitor, “The IMF will not approve a loan for a country that has unsound economic indicators such as Egypt.  The service of public debt forms 30% [of public spending], which is a serious defect.  The IMF will also refuse funding Egypt at a time when there is a 12% budget deficit.  “The IMF will only approve the loan once Egypt adopts a tough economic program, the disadvantages of which will only be endured by the poorer classes.” he said, adding, “Egypt will not be able to sign an agreement with the IMF in 2016.”

Despite the many statements made by the Egyptian finance minister that Egypt will receive the first payment of the IMF loan two to three months after the negotiations end successfully, the indicators we see do not appear to back this up.  However, a quick understanding could take place between Egypt and the IMF through which the latter may impose economic programs that protect its interests.  The largest challenge, however, is to make use of the funds by investing them in projects with real economic yields.

Ismael El-Kholy, an Egyptian journalist, worked as an editor and then deputy newsroom manager for the ShoroukNews website from June 2011 until January 2013.  Currently, he is a managing editor for the Egyptian news channel OntvLive, leading a team of editors covering Egyptian and world news.  (Al-Monitor 03.08)

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11.7  EGYPT:  Can Sisi’s New Investment Council Save Egypt’s Economy?

Amr Eltohamy posted in Al-Monitor on 4 August that while recent talk of a $12 billion loan from the IMF has boosted spirits in Egypt’s economic circles and increased prospects for more investment, attracting foreign capital will require concerted efforts and reform. In this regard, last month Egyptian President Abdel Fattah al-Sisi issued a decree to establish a Supreme Council for Investment.  According to the 3 July decree, the council will specialize in supervising the state’s investment policies in all sectors and provinces and will be under the direct supervision of his presidency.

Investment Minister Dalia Khorshid said that once the council is established, it will meet at least once every two months and sessions will be headed by Sisi himself. Khorshid also noted that the council will assure all Egyptians and foreign investors that the investment system will witness a qualitative leap in the upcoming stage.  She explained that the new council will have its specific terms of reference that would not interfere with the prerogatives of other authorities, noting that various authorities will operate in harmony in terms of performance, work and coordination.

A 25 July report on a study by the World Bank, conducted in collaboration with the European Investment Bank and the European Bank for Reconstruction, showed that 50% of companies surveyed in Egypt believe that the political instability is the main obstacle they face, in addition to electricity and funding problems.  The report covered 6,000 companies in the Middle East and North Africa, including 1,500 Egyptian companies.

Sharif al-Jabali, one of the most prominent names in the fertilizer business in Egypt, told Al-Monitor he believes the establishment of the council “is a good step,” since it is directly supervised by Sisi while institutions and agencies concerned with investment issues in Egypt are unable to create a suitable climate for investment.  However, he noted that he has not received any information from the presidency about activating the council, setting prerogatives and mechanisms for the upcoming period or even news about who its members are going to be.

The government agencies concerned with helping investors overcome obstacles in Egypt are the General Authority for Investments and Free Zones headed by the Minister of Investment, the National Center for Development and Investment Promotion, a Committee of Grievances against the Decisions of the Investment Authority, a ministerial committee to manage investment conflicts and another ministerial committee to manage conflicts in investment contracts, in addition to competent courts for economic conflicts and other investment departments in the administrative judiciary.

Jabali, who heads the Chamber of Chemical Industries and the department of exporters at the Chambers of Commerce Union, expressed his view that only the head of the executive authority can eliminate obstacles and everyone should report to the president.  He explained that historically, resorting to the president has always been the solution to every problem facing investment in Egypt, because people are desperate and they no longer believe concerned institutions are competent since they cannot even respond quickly to complaints about the financial sector in Egypt.

Speaking about the most important problems investors face, Jabali said, “We face several problems, such as privatizing and pricing real estate, administrative complexities, the investment law in its current form, procedures for tax assessment, the customs complexities in all its forms, energy saving, bureaucratic procedures to obtain approvals for investment projects and licenses, in addition to the conflict management system.”  He also noted that several executive authorities within the state intervene in investment problems, but only the presidency can settle such issues.

Meanwhile, Sheriff Sami, Chairman of the Egyptian Financial Supervisory Authority, told Al-Monitor over the phone that the decision to establish a Supreme Council for Investment headed by the president is proof of the state’s wish to encourage investors and eliminate all obstacles standing in the way of investment.  He also explained that the fact that the council is directly affiliated with the presidency represents a new phase in the state’s interest in investments and investors as well as illustrates the state’s seriousness in dealing with the issues investors face more efficiently.

Sami added that investment problems are not the responsibility of only one ministry, especially since investors in Egypt mostly face problems resulting from conflicts involving decisions issued by the concerned ministries and the laws governing the process of investment, noting that a council similar to the Supreme Council of Investment headed by the president was established in the 1980s.

Abla Abdel Latif, chairman of the Special Council for Economic Development affiliated with the presidency, who also serves as the president’s adviser on economic affairs, refused to disclose the presidency’s role in forming the council or determining its prerogatives.  She told Al-Monitor by phone that the mechanism of forming the council and determining its prerogatives will be announced in the “coming weeks.”

Meanwhile, Amr Ismail, a researcher at the Carnegie Middle East Center, sees the presidential decree to establish a Supreme Council for Investment from a different perspective.  He believes it has to do with the lack of efficiency within the state administration and the government bodies’ inability to overcome investment problems, in addition to the absence of harmony between authorities. Ismail said that resorting to the president to settle the problems that investors face will change the way the state administration deals with issues in general.

He told Al-Monitor that resorting to the political leadership to resolve conflicts usually happens in countries in which chaos prevails and where institutes are incompetent.  He explained that these were not sustainable solutions and they drive institutions toward further incompetence and bureaucracy.  Such solutions need to truly decode investment crises in Egypt as structural problems with social and economic dimensions.

He said the investment issues in Egypt are structural problems with social and economic dimensions, and they are linked to the political turmoil in Egypt and in the region, in addition to the drop in oil prices around the world.  He noted that while Egypt is not a major oil-exporting country, this drop still has an impact since Egyptians living in oil-rich countries send remittances home and Egypt receives substantial monetary support from Gulf states that rely heavily on oil revenue.

Ismail explained that the bulk of foreign investment flows come from the extractive industries, while the situation has been unstable after the Russian jet crash in Sinai and in light of stagnation in the European Union, which is the largest trading partner for Egypt.  (AL-Monitor 04.08)

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11.8  EGYPT:  Wealthiest 10% in Egypt Responsible for 25% of Spending

The wealthiest 10% of citizens in Egypt are responsible for 25% of the total expenditure of Egyptians, while the poorest 10% are responsible for only 4% of the total expenditure, reflecting the huge gap in living standards, according to the Central Agency for Public Mobilisation and Statistics (CAPMAS).  These figures were part of the 2015 (2013/2014) Household Income, Expenditure and Consumption Survey (HIECS) – issued every two years.

The socioeconomic gap between the country’s citizens is reflected in the number of Egyptians who benefit from social insurance: 81.8% of Egyptians living under the poverty line are not subscribed or do not benefit from social insurance.  This comes as 77.4% of the 10% who spend the most in Egypt benefit from smart card subsidies.  The subsidies are mostly used for food commodities, especially oil, rice and sugar, with, for example, 70% of oil consumption coming from the smart card subsidies.  Statistics and figures issued by CAPMAS are used by the state as a guide in implementing official policies.

One family spends on average around EGP 36,700 per year and has an average income of about EGP 44,200, which means Egyptians spend 83% of their income.  Expenditure is worth an estimated average of EGP 42,400 in urban areas and EGP 31,800 in rural areas annually per family, according to the survey, which means urban residents spend 25% more than rural residents.

The numbers do not strictly reflect the purchasing power of citizens, but they stem from price differences and disparities in income between rural and urban areas, the latter being more expensive.

Income is estimated at a yearly average of EGP 51,200 in urban areas versus EGP 38,300 in rural areas per family, which correlates to the 25% difference in expenditure.

Where do Egyptians spend their money?

An average of 34.4% of yearly expenditure per person in Egypt goes to food and beverages, down from 37.6% the previous year, according to the survey.  The numbers are nominal, which means they do not take into account inflation, says CAPMAS president Abo Bakr El-Guindy, who adds that an increase in spending on food indicates an improved standard of living.

However, Egyptians living under the poverty line represent 27.8% of the population, an increase from 26.3% in 2012/2013, up by around 10%age points from 1999/2000 when 16.7% of Egyptians lived under the poverty line, says statistics professor Ellaithy in a presentation about social inequality.  Household expenditures come in second after food spending, taking up 17.5% of overall expenditure per person, down from 18.1% in 2012/2013.

Ten percent of expenditure is spent on health services, an increase from 9.2% the previous year, and 6.3% on transportation compared to 5.2% the previous year.

Education falls in a lower category, representing only 4.8% of Egyptians’ expenses, even less than spending on clothing, which takes up 5.6%, and a little higher than the spending on smoking, which is estimated at 4.7%.

Other expenses are furniture and maintenance (4.1%), hotels and restaurants (4%), various goods and services (3.9%), communications (2.5%) and culture and entertainment (2.1%).  (CAPMAS 26.07)

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11.9  EGYPT:  Political Instability, Poor Access to Finance Hold Back Private Sector

Political instability, poor access to finance and unreliable electricity are the top obstacles cited by Egyptian private sector companies in a new report by the European Bank for Reconstruction and Development (EBRD), the European Investment Bank (EIB), and the World Bank Group (WBG).

The report, titled “What’s holding back the private sector in MENA?” is based on a survey of 6,000 private sector companies in the Middle East and North Africa, including almost 3,000 Egyptian firms.

Conducted in 2013 and 2014, the MENA Enterprise Survey found that firms in Djibouti, Egypt, Jordan, Lebanon, Morocco, Tunisia and the Palestinian Authority consistently cited political instability, corruption, electricity and access to finance as the key factors holding back their companies.

In Egypt, nearly half of the firms surveyed pointed to political instability as their top obstacle.  “The uncertain business environment that followed the 2011 uprising and developments in the summer of 2013 was reflected in firms’ economic performance: between 2009 and 2012, the typical firm in Egypt saw revenues decline by 6.4% per year and employment by more than 1% per year,” the report notes.

Some 10% of firms cited access to financing as their top obstacle.  Banks account for only 2% of company financing in Egypt, the report found, compared to an average of 12% in the eight countries surveyed.  In fact, the survey found that many firms have almost no interaction with banks, with only 60% of formal private sector firms having a checking or savings account.

Electricity came third, with firms reporting an average of 16.3 electricity cuts per month, though the report notes that the situation may have improved in the two years since the survey was completed.  Corruption was also cited as a major issue, with 17% of firms reporting at least one bribe request from officials.

Labor productivity was found to be about average for similar economies, but Egypt lags behind when it comes to total factor productivity, which measures how efficiently companies make use of labor, intermediate inputs and capital.  The study found that Egypt is more capital-intensive than peer economies.  “This can partly be explained by the presence of energy subsidies, which distort production structures by promoting energy- and capital-intensive industries,” the report notes.

Egypt is also suffering from a mismatch between labor supply and demand, the report found — particularly when it comes to vocational and technical skills.  The general level of post-secondary vocational training was found to be poor, and companies were not stepping in to fill the gap.  Just 5% of firms in Egypt reported offering formal training, compared to the survey average of 17%.

The concerns reported by firms were consistent across the region, the report notes, although the order of priority varied by country.  “Almost all firms in the region are severely affected by issues of political instability, corruption, and unreliable electricity supply,” the report notes.  “Firm innovation and growth are also constrained by barriers to trade and a scarcity of appropriately trained workers.  In many places, there is a striking disconnect between firms and formal financing channels, with the result that firms are not seeking external finance, inevitably reducing their growth potential.”

The study includes several policy recommendations, including subsidy reform, anti-corruption measure and regulations and training to support bank loans to small and medium enterprises.  “The formal private sector in the MENA ES economies is relatively small, but its size belies its significance for economic development,” the report concludes. “It is possible to see the potential of the private sector in the region to grow and meet the aspirations of the growing workforce for rewarding employment.”  (Mada Masr 26.07)

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11.10  MOROCCO:  Why Morocco Really Wants Back in the African Union

Ayah Aman observed on 27 July in Al-Monitor that the king of Morocco’s recent declaration that his country wants to return to the African Union after a 32-year absence appears to be a political maneuver to gain ground in the Western Sahara dispute.

In a lengthy letter to a recent African Union (AU) summit in Rwanda, King Mohammed VI of Morocco declared his country’s intention to once again become a member of the union.  Morocco withdrew from the AU’s predecessor, the Organization of African Unity (OAU), 32 years ago in protest of the group’s support for the Polisario Front separatist movement and OAU’s recognition of the Sahrawi Arab Democratic Republic (SADR).

The king’s 17 July message wasn’t void of reproach and blame toward the AU for its support of SADR, which has been a conflict zone since the Polisario was founded in 1973 to liberate Western Sahara from what it deemed “Moroccan colonialism.”  However, the king did not explicitly call for the suspension of SADR’s membership as a condition of Morocco’s return to the AU.

Referring to Morocco’s anger over the AU’s support for SADR, Mohammed said, “That immoral fait accompli, that coup against international legality, led the Kingdom of Morocco to seek to avoid the division of Africa and the price Morocco had to pay was the painful decision to leave its institutional family.”  Yet, the king wrote, “On reflection, it has become clear to us that when a body is sick, it is treated more effectively from the inside than from the outside. … Morocco firmly believes in the wisdom of the AU and its ability to restore legality and correct mistakes along the way.”

An official at the AU general secretariat told Al-Monitor, on condition of anonymity, “The AU general secretariat is concerned that Morocco wants to return in order to argue the SADR issue from within the AU.”  The official added, “Of course the African family welcomes Morocco’s return, but no one wants any debates or diplomatic disputes between member states.  We want to work together for the benefit of the continent.”

The official added, “Morocco has now realized the AU’s importance and strength as a strong and influential entity and that leaving it is a significant diplomatic loss for any African country.”

Morocco suspended its AU membership to pressure African countries, the official said.  “It might be counting on [convincing] 16 African countries to withdraw their recognition of SADR and form a front to expel SADR from the AU.  However, such action is neither recognized in international law nor in the AU charters.”

On the same day the Moroccan king conveyed his message to the AU, 28 of the union’s 53 member countries signed a statement and had it delivered to AU Chairman Idriss Deby asking him to take legal action to suspend SADR’s membership, to enable the AU to contribute to the United Nations’ efforts to solve the regional dispute.  At the same time, AU Commission Chairwoman Nkosazana Dlamini-Zuma reaffirmed the AU’s support for Western Sahara’s independence.

Despite Egypt and Tunisia’s links to Morocco by virtue of a common Arab identity and geographic location, the two countries did not sign the statement to suspend SADR, nor did they issue any statements or official comments regarding Morocco’s return to the AU.

In this regard, Moroccan Foreign Minister Salaheddine Mezouar noted in a 21 July press conference in the country’s capital, Rabat, “Friends of Morocco need some time to determine their position.”

Meanwhile, Algeria rejected any attempt to suspend SADR’s membership, with Prime Minister Abdelmalek Sellal saying in a press statement, “Demanding SADR to leave is impossible.  Algeria does not have any problem with Morocco returning to the AU, as long as it does so without conditions.”

Statements given by officials in Morocco and Algeria revealed a new diplomatic disagreement between them over Western Sahara and place each in the awkward diplomatic position of picking sides within the AU.  For instance, the Moroccan press fiercely attacked Cairo, describing Egypt’s position as “a shock.”  Although the Moroccan foreign minister had visited Cairo ahead of a summit on 10 July and informed the political administration of Morocco’s intention to return to the AU, Egypt remained silent during the entire summit.

Meanwhile, Mona Omar, former assistant to the Egyptian foreign minister on African affairs, told Al-Monitor, “Egypt had never recognized SADR, but Algeria strongly supports it, and Egypt is committed to taking neutral positions when it comes to Algeria and Morocco.”

Political science professor and expert on African affairs Hamdi Abdel-Rahman said the statement signed by 28 countries to expel SADR from the AU expresses “a political value rather than a legal action.”  “The political bonds between Egypt, Algeria and South Africa explain why Cairo did not sign,” he said.

Abdel-Rahman told Al-Monitor, “Egypt may see that cooperation with Algeria and Tunisia is more important at this stage, particularly with regard to joint coordination when it comes to the Libyan issue [the divided government and rise of the Islamic State], which directly threatens Egyptian national security.”  However, he stressed that “Morocco’s return to the AU will have major repercussions, especially since it is a pivotal country in Africa and has strong relations and a significant influence in the Western African region. Morocco is not only important on political and economic levels, but from a cultural and religious perspective.  Some Muslim countries in Western Africa praise the king of Morocco in Friday prayers as the caliph of the Muslims.”

Abdel-Rahman added, “Morocco adopts the stick-and-carrot policy in the dispute over the Sahara. First, it threatened to withdraw troops from peacekeeping missions in Africa and then pressured countries close to it to mobilize political positions to expel SADR from the AU.  But such policies will be confronted by major African powers, most notably Algeria, South Africa and Nigeria, which believe in and defend the rights of the Sahrawi people.”

Meanwhile, Sabri al-Haw, a Moroccan expert in international law, told Al-Monitor, “The issue of unity and the dispute over the Sahara are the heart of Moroccan politics, and the decision to return to the AU was necessary to break the African consensus in support of the Polisario Front and protect Moroccan interests in Africa.”  Haw considers the statement signed by the 28 countries asking the AU to expel SADR to be a major political win for Morocco.  “This statement shows a wide division within the AU and a lack of a deep-rooted doctrine to support Polisario,” Haw said.

It seems that Morocco’s new political and diplomatic orientation to return to the AU not only expresses its desire to exercise influence within the African institution, but also highlights a political maneuver through which Morocco is trying to undermine and restrict SADR since several countries have withdrawn their recognition of it during the past 10 years.  This is bound to open a new chapter in the Moroccan dispute over the Western Sahara.  (Al-Monitor 27.07)

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11.11  GREECE:  Greece ‘B-/B’ Ratings Affirmed; Outlook Remains Stable

On 22 July 2016, S&P Global Ratings affirmed its ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings on the Hellenic Republic (Greece).  The outlook is stable.


The affirmation reflects our assessment that the Greek government is meeting – albeit with delays – the formal terms of its €86 billion financial support program (Third Economic Adjustment Program) financed by Eurozone member states via the European Stability Mechanism (ESM).  We understand that one of the objectives of Greece’s Third Economic Adjustment Programme is to enable the government to refinance itself fully in commercial debt markets by August 2018, when the program concludes.

We estimate that at the end of this year, Greece’s stock of net general government debt will peak at 179% of GDP, the highest of all the sovereigns we rate.  Gradually returning nominal growth, fiscal consolidation and cumulative privatization receipts of around 2% of GDP over the next four years will likely lower net general government debt to 173% of GDP by 2018, the final year of Greece’s current three-year support program.  That figure would still be the highest projected debt burden of all rated sovereigns.  Even under optimistic assumptions of recurrent nominal average GDP growth of 4.5% and an annual primary surplus of 1.5% of GDP and borrowing costs of below 2%, it will still take another 17 years before Greek net general government debt falls below 100% of GDP.

In contrast to most governments that we rate, the lion’s share of Greece’s sovereign debt–about 83%–is official, with over four-fifths lent by Eurozone governments and institutions at highly concessional rates and maturities, including grace periods on principal payments averaging between three years for the Greek Loan Facility (GLF) to 17 years for ESM loans.  The cost of servicing this debt is low, currently ranging between 1.0% and 1.5%.

By these standards, Greece’s debt burden is arguably affordable and can remain so, provided:

  1. The country can refinance itself on similarly favorable terms in commercial markets at the end of the current program; and
  1. The Greek economy can grow consistently and rapidly in real and nominal terms.
  1. The risk to public debt sustainability in Greece is that one or both of these caveats does not hold.

Flagging the high affordability of its concessional lending, the Eurogroup of Eurozone member finance ministers has maintained that, for the present, a write-down of the face value of Greece’s official obligations is not required to make debt sustainable.  Due to domestic considerations, Greece’s official creditors are understandably reluctant to grant any write-off that would transfer debt onto their own balance sheets.  In May, as an alternative to a haircut, the Eurogroup agreed to cap post-program government gross financing needs (GFN) for Greece at 15% of GDP.  This figure is equivalent to 6.4% of GDP after netting out Treasury bill refinancing amounting to 8.6% of GDP.  Greece’s official creditors are committed, as we understand it, to meeting this GFN target via further maturity extensions, debt re-profiling, and the restoration of transfers of Eurosystem profits on its Greek government bond holdings.

Although we view such offers of GFN relief to be helpful in backstopping the sustainability of Greece’s concessional debt burden, we don’t see contingent promises of net present value reductions as equivalent to frontloaded principal write-downs if the goal is to restore confidence in Greece’s solvency, and, at the same time, to enable Greece to finance itself in commercial debt markets at low interest rates and long maturities. Public debt write-offs would also, importantly, improve Greece’s net external position, since over 80% of general government debt is owed to nonresidents.

Our baseline expectation is that Greece can and will service its limited commercial debt stock (about one-sixth of the total or 30% of GDP) when it comes due.  Other than treasury bill redemptions, the next maturity of Greek commercial debt is not until 17 July 2017, for €2.09 billion, followed by a €4.03 billion redemption to the private sector on 17 April 2019.  We anticipate that by the end of this year, the small amount of Greek government bonds still in the market are likely to become eligible for purchase by the Bank of Greece under quantitative easing.  This should lower interest rates for Greece in the secondary market, versus the current approximately 7.9% yield on the 10-year benchmark government bond.

Earlier this year the government legislated fiscal measures worth about 3% of GDP, split two-thirds to one-third in favor of tax hikes versus expenditure cuts.  These included an increase in value-added tax (VAT) and excise taxes, pension cuts, and a simplification of the personal income tax framework.  Although we expect the government will meet the 0.5%-of-GDP primary surplus target this year, we think in subsequent years the government will find it difficult to operate primary surpluses above 1.5% of GDP, without creating arrears elsewhere in the public and private sector (including fresh arrears for Public Power Corp. and Athens’ rapid-transit system Attiko Metro).  About 10% of Greece’s population contributes approximately 60% of tax receipts to the state, while more than one-half of the country’s wage and pension earners are exempt from income tax (versus 9% on average in the euro area).  Focusing fiscal pressure on the most productive and mobile part of the population could stunt growth and worsen fiscal outputs, in our view.  But perhaps the largest medium-term fiscal risk remains the pension system, with current spending on pensions easily the highest in the Eurozone, at 17.5% of GDP.  Annual transfers to the social security system equate to 10% of GDP, compared with the euro area average of 2.5% of GDP.

Ultimately, fiscal outputs will reflect the performance of Greece’s economy, which has declined by 24% in euro terms over the last nine years, with investment down an estimated 66% since 2007.  For 2016, we project that the Greek economy will contract by 1%, reflecting additional fiscal drag, a blocked banking system, and moribund private-sector confidence.  We forecast that the economy will stage a statistical recovery in 2017, followed by GDP growth averaging 2.75% in real and 4.25% in nominal terms during 2018 and 2019.  Despite its small size, Greece’s economy is relatively closed, with exports as a percentage of GDP representing an estimated 31%.  On the positive side, this year’s financing arrangements under the ESM program include plans to pay down an estimated 3% of GDP of arrears (and another 2.6% of GDP between 2017 and 2019) to the private sector, where firms are likely to clear their own wage arrears to employees, who may then spend them.  On the downside, the government’s delivery on structural and particularly labor market reforms appears to us to be piecemeal, with limited success in attracting private foreign capital into sectors that could create employment.  Although down from its peak in 2014, at 23.3% in April (ELSTAT data), Greek unemployment remains the highest in the EU and the Organization for Economic Co-operation and Development.

A main stumbling block for the economy is the long-standing distress in Greece’s financial sector.  Like the government, Greece’s banks depend on official financing, with European Central Bank (ECB) and emergency liquidity assistance (ELA) lines covering 25% of assets.  Between Sept 2010 and May 2016, an estimated €136.4bn or 77% of GDP of deposits exited the Greek banking system, though levels have stabilized during the second quarter.  With nonperforming exposures at 44% of the loan book, banks are not in a position to finance private-sector investment, while companies and households may choose to prioritize payment of their rising tax debt (which the Greek tax administration estimates at 50% of GDP) rather than their bank loans.  Distress in the banking system represents a potential contingent liability to the state.  Our projections for public-sector debt don’t reflect any further government capital injections into domestic banks, although the ESM program retains €19.6 billion in reserve financing for further financial support, and there is a material risk that additional public support is required.  We think that the ECB’s reinstating of its waiver on the eligibility of Greek sovereign and sovereign guaranteed bank collateral for ECB financing, rather than costlier Bank of Greece ELA, will lift the profitability of Greece’s highly challenged banking system.  We anticipate, however, an only gradual lifting of the capital controls still in place, including withdrawal limits on household deposits.

Greece’s external liabilities, both private and public, remain high.  The economy’s net external debtor position as a percentage of current account receipts is the second highest of all rated sovereigns.  It is important to understand that 84% of Greece’s external debt is public, combining concessional lending both to the sovereign and to the banks (through the Eurosystem).  The large-scale withdrawal of deposits from Greece’s banking sector last year led to an estimated €51 billion rise in ELA to Greek banks during 2015, equating to 29% of GDP or 76% of current account receipts.  Because we classify Eurosystem national central banks as nonresidents, this led to a rise in Greece’s narrow net external debt liability to 485% of current account receipts in 2015 from 395% a year earlier.  In this context, an upfront write-down of Greece’s public debt would markedly improve the country’s external position, something that would over time, in our view, encourage private-sector nonresidents’ willingness to invest in the economy.

Greece’s current account improved by 2.1% of GDP last year to a deficit of just 0.1% of GDP, although this also indirectly reflects large capital – particularly deposit – outflows from the domestic banking system and an associated contraction in import demand.  Merchandise imports (excluding volatile oil and ships) contracted slightly in 2015, while exports (without volatile segments) continued to do relatively well, having increased 4% on average in euro terms over the past four years.  The outlook for Greece’s major services sectors is mixed. Shipping remains mired in a supply glut, combined with a global slowdown in trade.  During 2016, tourism may not repeat the strong growth it enjoyed in the summer of 2015 given Greece’s fairly large exposure to U.K.-based visitors. Over the medium term, we expect the current account deficit will widen, although not to levels far exceeding the capital account surplus (transfers), which last year totaled 1.2% of GDP.

Given the current Greek government’s narrow majority of three seats, the probability of implementing long-term reforms to, for instance, the judicial system and public administration seems low.  Still, our baseline expectation remains that, regardless of what government is in power, Greece will largely comply with the terms of the ESM program.  We take this view because we don’t think the alternative would be viable for Greece’s financial stability.


The stable outlook indicates our view that, over the next 12 months, risks to our ‘B-‘ rating on Greece are balanced.

We could consider an upgrade if we saw stronger growth performance and measureable progress in reducing the still-high ratio of nonperforming loans in Greece’s banking system. Rating upside would also stem from the lifting of capital controls, including deposit withdrawal limits, which would be a strong indication of recovered confidence in financial stability and, in turn, growth.  We could also consider raising the rating in the event of an unexpected write-down of Greece’s level of net general government debt.

We could lower the ratings on Greece if the new government didn’t implement the reforms it has agreed to with the ESM in their memorandum of understanding.  Prolonged non-implementation of the ESM program could, over time, lead to a general default on Greek government debt.  (S&P 22.07)

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11.12  CYPRUS:  Bond Issue Is a Key Post-Program Milestone

On 27 July, Fitch Ratings said Cyprus’ first market issuance is a key milestone following its exit from the EU and IMF bailout program in March.  We had already highlighted that demonstrating fiscal financing flexibility through a sustained track record of market access at affordable rates is one of several factors that could lead to an upgrade of the sovereign rating of ‘B+’ with a Positive Outlook.

The seven-year 3.75% €1b bond was priced at the lowest coupon rate achieved by Cyprus for a euro benchmark bond and was realized without support from the European Central Bank’s bond-buying scheme.

Other developments that could lead to an upgrade of the sovereign rating include further stabilization in the banking sector, a track record of economic recovery and reduction in private sector indebtedness, narrowing of the current account deficit, and continued fiscal adjustment.

At close to 109% of GDP in 2015, gross general government debt (GGGD) is more than 2x the ‘B’ rating category median, reducing Cyprus’ fiscal scope to absorb domestic or external shocks.  Banking sector assets are 4x GDP and the sector’s exceptionally weak asset quality undermines economic stability and growth.  The weak external position implies that further economic rebalancing may be needed over the medium term.

Economic recovery is under way, supported by improving household consumption in line with a fall in unemployment, and strong tourist inflows.  But the UK’s recent vote to leave the EU presents a downside risk to Cyprus’ growth outlook, mainly because it could affect trade, largely tourism related.  Total exports to the UK represent close to 10% of GDP.  A prolonged depreciation of sterling would weaken UK purchasing power and potentially dampen growth in the tourism sector.

Fiscal policy management has been strong and the government has overachieved on its targets.  We project budget surpluses of 0.2% of GDP in 2016 and 1% for 2017, reflecting a neutral fiscal stance supported by economic recovery. We project GGGD to fall below 100% of GDP by 2017.  Debt-management operations and cash buffers reduce refinancing risks.  (Fitch 27.07)

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The Fortnightly newsletter is a free service of Atid, EDI. We are a team of economic and trade development consultants, headquartered in Jerusalem, but active throughout the region and beyond. EDI works with an international clientele interested in identifying and researching business opportunities in the region. We also serve as the regional representative offices for a number of U.S. states and bilateral Chambers of Commerce, as well as European clients.