Fortnightly, 18 October 2017

Fortnightly, 18 October 2017

October 18, 2017


18 October 2017
28 Tishrei 5778
28 Muharram 1439




1.1  PM Netanyahu Announces Winners of $1 Million Prize for Alternative Transport Fuels


2.1  Beeper & Mantaro Receive BIRD Funding to Develop Unmanned First Responders
2.2  Israel-Based Manufacturer Picks Indiana for North American Headquarters
2.3  Gazprom and Delek Sign Memorandum to Cooperate in Israeli NGV Market
2.4  OurCrowd Forms Strategic Partnership with Cardumen Capital
2.5  Kryon Systems Raises $12 Million Series B Funding Round to Lead the Next-Generation of RPA
2.6  INFINIDAT Raises $95 Million Series C to Accelerate Disruption of Data Storage Market
2.7  PacketLight Networks to Provide the US Government with Optical Fiber Networking Solutions
2.8  Powerup Dart Raises $1.2 Million
2.9  Alibaba to Open Israel R&D Center
2.10  Intel Israel setting Up AI Center


3.1  Delphi Packard Transfers Activities from Tunisia to Morocco
3.2  MOGAS Authorized Repair Center Established in Turkey
3.3  Aselsan Signs $44 Million Sale of Communications Equipment to Ukraine


4.1  Orad to Build 4 Negev Solar Power Stations
4.2  Masdar & EDF Submit Lowest Bid to Supply Saudi Solar Power
4.3  Saudi Arabia to Make $67 Billion Investment in Renewable Energy Over 5 Years
4.4  EBRD Finances Solar Power Plant in Egypt
4.5  KarmSolar Signs Largest Ever Private Power Purchase Agreement (PPA) in Egypt
4.6  Green Fund Approves $31.4 Million UNDP Project to Protect Egypt’s Delta from Climate Change


5.1  Tourist Spending in Lebanon Rose by 7% by Third Quarter of 2017
5.2  Lebanon’s Total Number of Cars Fell in Third Quarter of 2017
5.3  Jordan Budget Deficit Stands at JD648.6 Million at End of August
5.4  Mafraq Will Be Hub for Syrian & Iraqi Rebuilding
5.5  Jordan’s Incoming Foreign Direct Investment Rises by 87% in Second Quarter
5.6  Jordan Second-Freest Economy in the Middle East, After UAE
5.7  Study Shows IMF Program Did Not Achieve Goals in Jordan

♦♦Arabian Gulf

5.8  New UAE Federal Law to Regulate Veterinary Products
5.9  Luxembourg & the UAE Cooperate on Exploration & Utilization of Space Resources
5.10  Saudi Arabia Purchase of Terminal High Altitude Area Defense & Related Support Approved
5.11  Riyadh to Sell Metro Stations’ Naming Rights

♦♦North Africa

5.12  Egypt’s Annual Urban Consumer Inflation Rate Falls to 31.6% in September
5.13  IMF Sees Egypt’s GDP Growth Projected at 4.5% in FY2017/18
5.14  World Bank Says Egypt’s Deficit to Drop to 8.8% in FY 2017/18
5.15  Egypt Aims to Raise Tobacco Tax Revenues by $397.5 Million in 2017-18
5.16  Egypt’s Finance Minister Said Tax Revenues Up by 31.8% for Fiscal Year 2016/17
5.17  Agreement on Russian Industrial Zone in Port Said to be Finalized Soon
5.18  Germany to Provide Egypt with $250 Million in 2018 to Plug Budget Deficit
5.19  Egypt’s Non-Oil Exports Increase 11% in First 8 Months of 2017
5.20  Free Trade Agreement Between Egypt & Mercosur Comes Into Force
5.21  Lifting Sudan Sanctions to Yield Positive Effect
5.22  IMF Says Morocco’s Economic Growth Resilient Amid MENA Tensions
5.23  Morocco to Surpass Egypt as North Africa’s Largest Automotive Market
5.24  King Mohammed VI Announces Creation of Ministry of African Affairs
5.25  IMF Reviews the Islamic Republic of Mauritania in 2017 Article IV Consultation


6.1  Fitch Raises 2017 Growth Forecast for Turkey to 5.5%
6.2  IMF Doubles 2017 Economic Growth Forecast for Turkey
6.3  Turkish Statistical Institute (TUIK) Releases Inflation Figures for September 2017
6.4  Turkey’s Automotive Sales Rise in September
6.5  Turkey & US Suspend Visa Services in Reciprocal Moves
6.6  Cyprus’ September Deflation Rate Seen at 0.4%
6.7  IMF Raises Greece’s Growth Forecast for 2018 to 2.6%
6.8  ELSTAT Says Greek Economy in Recession in 2016



7.1  Over 80% of Saudi Women Said to Apply for Driving Licenses
7.2  Saudi University to Open Women’s Driving School


8.1  CartiHeal Performs the First 16 Cases in the Agili-C Implant IDE Multinational Pivotal Study
8.2  Cathworks Announces Completion of $15.8 Million Series B Financing
8.3  Medial EarlySign’s Machine Learning Platform Identifies High Risk Patients for Colorectal Cancer
8.4  Anlit Introduces Omega Bites Under the Meijer Children’s Brand
8.5  Kitov Announces Filing by FDA of New Drug Application for KIT-302
8.6  MATTER and Sheba Medical Center Partner to Advance Healthcare Innovation
8.7  NRGene’s Genomic Analysis Project With Monsanto Advances
8.8  DarioHealth Launches into the German Diabetes Market
8.9  CIITECH Cannabis-Based Botanical Supplements Now on Sale in the UK
8.10  Vibrant Shows Efficacy of World’s First Vibrating Capsule to Treat Chronic Constipation
8.11  CorNeat Vision Unveils a Revolutionary Artificial Cornea
8.12  Therapix Development and Clinical Manufacturing Agreement with Catalent for THX-TS01
8.13  Lonza Announces Formation of New R&D Collaborative Innovation Center in Israel
8.14  Azura Ophthalmics Receives $16 Million in Series B Funding to Treat Dry Eye Disease
8.15  NRGene Delivers Major Breakthrough in Sunflower Genome
8.16  Soft Suit Exoskeleton Technology Begins Next Phase of Testing in Pre-Clinical Study
8.17  BrainStorm Enrolls First Patients in Phase 3 Trial of NurOwn in ALS


9.1  Reduxio Continues to Gain Momentum in Education Sector with New Customer Wins
9.2  DBT-CEV Fast Charging Station Combines With Chakratec’s Kinetic Power Booster
9.3  OTI Selected as One of 10 Fastest Growing IoT Companies of 2017
9.4  Friendly Leverages Its Expertise in Approach for File-Based IP Phone Management
9.5  Xsight Systems Boosts Runway Safety & Operational Availability Efficiency at the IAF
9.6  IAI Unmanned Helicopter Performs Proof-Of-Concept Demo
9.7  Reduxio Wins 2017 MarTech Stackie Award for Visionary Marketing Organization Stack
9.8  OTI Receives Second Batch Purchase Order of 2,000 Cashless Payment Systems from Japan
9.9  ECI Expands Service Provider Offering With Mercury uCPE Solution
9.10  IAI’s TaxiBot Obtained FAA Certification for the Boeing 737 Family
9.11  NICE Machine Learning Capabilities Drive Next Evolution of Cognitive Process Automation
9.12  Cronus Cyber Technologies Named 2017 Cyber Defense Magazine Cyber Security Leader
9.13  DOTVOX Selects AudioCodes for Hosted Communications Service
9.14  IAI to Provide the TopGun Course Correction Fuze to the IDF
9.15  Qmarkets Announces Set of Updates to Supercharge End-user Engagement Across Alltheir Platforms
9.16  Illusive Networks’ Addresses Missing Link to Secure Against Sophisticated Cyber Attacks
9.17  BT Selects AudioCodes for Business Voice Services
9.18  Friendly Technologies’ One-IoT Platform & LwM2M Client Selected by OriginGPS


10.1  Israel’s CPI Rises by Only 0.1% in September
10.2  IMF Raises Growth Forecast for Israel’s Economy
10.3  Israel Stands Well in Global Bribery-Risk Ranking
10.4  Israel’s Record Tax Revenues Push Budget Deficit Below 2%
10.5  Israel’s Foreign Currency Reserves Achieve New Record Level
10.6  Mastercard Ranks Tel Aviv 62nd for Tourist Spending


11.1  ISRAEL: Israel Expects to Export $1 Billion Worth of Medical Cannabis Annually
11.2  UAE: Parents Call the Shots in UAE School Market
11.3  OMAN: Fitch Says Oman Still Faces Fiscal Risks Despite Spending Reduction
11.4  SAUDI ARABIA: Future of the Saudi Arabia Defense Industry to 2022
11.5  EGYPT: University’s New Dress Code Makes Waves in Egypt
11.6  ALGERIA: Future of the Algeria Defense Industry to 2022
11.7  ALGERIA: Algeria’s Entwined Economic and Political Policy
11.8  MOROCCO: Morocco’s ‘BBB-/A-3’ Ratings Affirmed; Outlook Remains Stable
11.9  TURKEY: Turks Brace for Tax Hikes as Ankara Scrambles to Bridge Budget Gaps
11.10  CYPRUS: Staff Concluding Statement of the 2017 Article IV Mission


1.1  PM Netanyahu Announces Winners of $1 Million Prize for Alternative Transport Fuels

Prime Minister Benjamin Netanyahu and Science and Technology Minister Ofir Akunis announced on 3 October the winners of the fifth Eric and Sheila Samson Prime Minister’s Prize for Innovation in Alternative Fuels for Transportation: Professor Jens Nielsen of Chalmers University of Technology in Sweden and Professor Jean-Marie Tarascon of the Collège de France in Paris.

The Prime Minister’s Prize for Innovation in Alternative Fuels for Transportation is the largest monetary prize for alternative energy research in the world.  Each recipient is awarded $1 million.  Winners are recommended by an international committee and approved by a panel.  The prize is part of a government plan that seeks to have all transportation in Israel running on alternative fuels by 2025, reducing the amount of oil-dependent transportation in the country as well as oil dependency throughout the world.

Nielsen has developed next-generation fuel sources that are more efficient than ethanol, including a species of bacteria that creates fatty acids that are efficient fuel sources for aircraft.  He has also proved that giving up bio-ethanol for advanced biofuels can significantly reduce the production of greenhouse gases.  Tarascon is a leading figure in the field of batteries and storing electrical energy.  His work stresses the discovery of new materials to reduce energy transfer loss with the goal of developing high-performance batteries for electric cars.  The batteries in Renault-Nissan electric vehicles are based on Tarascon’s discoveries.

The prize will be awarded on 31 October at an international conference on alternative fuel sources.  (Israel Hayom 06.10)

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2.1  Beeper & Mantaro Receive BIRD Funding to Develop Unmanned First Responders

Germantown, Maryland’s Mantaro Networks and Beeper Communications Israel have formally received funding from The BIRD Foundation, to support their development of Unmanned Search and Rescue Systems (USRS.) The joint project aims to fill in “capability gaps” for first responders, as identified by Homeland Security and supported by the National Technology Plan for Emergency Response to Catastrophic Incidents.  Project USRS has been awarded $900K in funding over an 18 month time-frame.

The companies state that a significant development of USRS will be the ability of autonomous operation of robotic unmanned devices and their cooperative action with First Responders, supported by broadband and resilient communication network.  The project proposes new methods and algorithms for distributed-decentralized command and control of First responder teams and autonomous robots.  The effective operation of autonomous robot will be enabled by communication infrastructure setup by Beeper.  The successful completion of this project will produce wireless broadband infrastructure – the means to transfer large amounts of data utilizing a full spectrum of communication frequencies and optimization algorithms.  This high-bandwidth connectivity will enable easily exchange media-rich information with first responders teams at field and autonomous robots for remote monitoring of incident landscape in real time and FR progress status.

Technically USRS will create the most effective and detailed Common Operational Picture (COP) for the responding agencies. The data from the field will be accessible and shared amongst varied agencies and eliminate interoperability challenges that exist currently.

Ramat Gan’s Beeper Communications Israel was established in 1988 by Motorola and local partners.  Since then, has served as the premier provider of emergency communication and critical messaging services for the leading security, military and homeland defense organizations.  The Company operates a highly reliable independent wireless communication infrastructure based on combined satellite and ground RF transmission systems, providing comprehensive and reliable coverage throughout the country.  (Beeper Communications 02.10)

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2.2  Israel-Based Manufacturer Picks Indiana for North American Headquarters

MCP USA, a manufacturer of ready-made meal trays, announced plans today to locate its North American headquarters in northwest Indiana, creating up to 60 new jobs by 2019.  The company, which is a subsidiary of Israel based Plazit Industries Group and Kibbutz HaMaapil, will invest $11.38 million to lease and equip a 91,000-square-foot facility at 6750 Daniel Burnham Drive in Portage.  Renovations, which are scheduled to begin early next year, include the build-out of new headquarters office space and the installation of one extrusion line and three thermoforming machines.  With its new Indiana operations slated to launch in summer 2018, the company will produce its heat- and cold-resistant plastic meal trays for customers in the retail, airline, institutional and bakery markets across North and South America.

MCP, which currently employs 150 people at its Israel facilities, plans to begin hiring for various positions later this year, including machine operators and machine technicians, as well as logistics, maintenance, quality assurance, marketing and finance professionals.  These positions are expected to pay an average wage above the Porter County average.

Founded in 1976, MCP is a developer and manufacturer of advanced custom co-extruded thermoplastics for the food industry.  The company’s ready-made meal trays are suitable for a wide range of temperatures, including freezing, refrigeration and shelf-stable applications. MCP sells 400 million meal trays annually around the world, including markets in Australia, New Zealand, Asia, Europe, Africa and the Americas.  The company currently has 12 distributors in the United States, which will be supplied by this new facility.

The Indiana Economic Development Corporation (IEDC) will offer MCP USA Inc. up to $600,000 in conditional tax credits and up to $100,000 in training grants based on the company’s job creation plans.  These incentives are performance based, meaning until Hoosiers are hired, the company is not eligible to claim incentives.  The city of Portage approved additional incentives.

This agreement was facilitated by the Israel Office of the IEDC, operated by Atid, EDI, based in Jerusalem.  (IEDC 03.10)

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2.3  Gazprom and Delek Sign Memorandum to Cooperate in Israeli NGV Market

 Gazprom and Delek Drilling LP signed a Memorandum of Understanding by which the parties will jointly examine the possibilities of using natural gas as a fuel for vehicles (road, rail and water transport) and special equipment (agricultural, material-handling and other equipment) in Israel.  The Memorandum was signed pursuant to the MoU signed in June 2016, between the Ministry of Energy of the Russian Federation and the Ministry of National Infrastructure, Energy and Water Resources of the State of Israel.  The document provides for the establishment of a joint working group.

In June 2016, the Ministry of Energy of the Russian Federation and the Ministry of National Infrastructure, Energy and Water Resources of the State of Israel signed the Memorandum of Understanding confirming, inter alia, their mutual interest in combining efforts to develop the existing and new technologies in order to promote the use of natural gas as a vehicle fuel as part of the bilateral cooperation of the two governments.  (Gazprom 02.10)

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2.4  OurCrowd Forms Strategic Partnership with Cardumen Capital

OurCrowd announced that it has formed a strategic partnership with Cardumen Capital, a Spanish-Israeli venture capital fund focused on Deep Tech startup investments.  The fund, authorized by the Spanish Securities Market Commission (CNMV) is led by former head of Samsung Ventures Israel.  This partnership is part of a growing group of global alliances announced by OurCrowd recently, such as: United Overseas Bank Limited (UOB) in Singapore, The National Australia Bank (NAB) in Australia, The Shanghai Commercial & Savings Bank (SCSB) in Taiwan, Reliance Private Client in India and Innogy SE in Germany.

Jerusalem’s OurCrowd is the leading global equity crowdfunding platform for accredited investors. Managed by a team of seasoned investment professionals, OurCrowd vets and selects opportunities, invests its own capital, and brings companies to its accredited membership of global investors.  OurCrowd provides post-investment support to its portfolio companies, assigns industry experts as mentors, and takes board seats.  The OurCrowd community of almost 20,000 investors from over 112 countries has invested over $450m into 120 portfolio companies and funds.  (OurCrowd 03.10)

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2.5  Kryon Systems Raises $12 Million Series B Funding Round to Lead the Next-Generation of RPA

Kryon Systems has closed $12 million in Series B funding, led by Aquiline Technology Growth (ATG) and Vertex Ventures.  The new capital will be used to accelerate the development of Kryon’s next-generation RPA platform as well as drive the company’s global market expansion.  Kryon’s industry-leading RPA solutions utilize patented visual recognition and deep-learning technologies to empower enterprises to offload process execution to a virtual workforce and drive digital transformation throughout the organization.  Expected to reach $5 billion by 2024, the market for RPA services is rapidly growing as part of the digital revolution, enabling enterprises to focus on their core business, while a workforce of digital employees conducts internal processes more efficiently, accurately and productively.

Tel Aviv’s Kryon Systems delivers innovative, intelligent Robotic Process Automation (RPA) solutions empowering companies to transcend the processes which consume their most valuable resource – time.  While other RPA vendors provide tools that focus solely automating repetitive process- oriented tasks, Kryon aims for a complete and lasting solution, ultimately removing these tasks entirely from the day-to-day workflow of enterprises.  Using patented visual and deep learning technologies Kryon’s RPA enables companies to discover the innovators and creators among them by reducing the noise, complexity, errors and wasted time which go hand in hand with process execution.  (Kryon 02.10)

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2.6  INFINIDAT Raises $95 Million Series C to Accelerate Disruption of Data Storage Market

INFINIDAT has closed a $95 million Series C financing round.  The round was led by Goldman Sachs Private Capital Investing (PCI) with strong participation from Series B leader, TPG Growth. Equity raised by the company to date totals $325 million.  With several hundred enterprise customers adopting the InfiniBox platform and more than two exabytes (two billion gigabytes) of storage deployed globally, INFINIDAT has established itself as a new leader in the $40 billion data storage industry.

INFINIDAT was founded in 2011 and started selling its flagship InfiniBox product in 2014.  Its early customers include several of the world’s largest telcos, banks and cloud service providers, who deploy InfiniBox to consolidate large numbers of legacy enterprise systems onto a more efficient platform.  Each InfiniBox system manages over 5 petabytes (5 million gigabytes) of data and provides industry-leading performance and reliability.  Unlike traditional enterprise storage systems that rely on expensive flash hardware for performance, InfiniBox takes a software approach, using machine learning algorithms to extract very high performance and reliability out of low-cost hardware, including the same ultra-high capacity disk drive types typically employed by Google, Facebook and other hyper scale cloud operators for large-scale data storage.

Herzliya Pituah’s INFINIDAT helps customers unlock the full potential of their data. INFINIDAT’s software-focused architecture, an evolution and revolution in data management design over 30 years in the making, solves the conflicting requirements of bigger, faster and less expensive. INFINIDAT technology simultaneously delivers sub-millisecond latency, seven 9’s of reliability and hyper scale capacity with a significantly lower total cost of ownership than incumbent storage technologies.  (INFINIDAT 03.10)

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2.7  PacketLight Networks to Provide the US Government with Optical Fiber Networking Solutions

PacketLight Networks announced their General Services Administration (GSA) certification, which allows their full suite of DWDM and optical transport networking (OTN) solutions to be sold to the US government and agencies.  Under this certification, federal, state, and local government agencies can purchase PacketLight products through GSA Advantage!, the government’s electronic online ordering system.

PacketLight DWDM and OTN solutions are carrier-grade quality and offer up to 200G over a single fiber for systems interconnect, metro and long haul networks.  Products can be integrated seamlessly within existing infrastructure and come equipped with onboard point-to-point Layer-1 security to ensure safe transfer of all information over the fiber, such as mission critical communication and personally identifiable information (PII). Implementing security at the physical layer, as opposed to Layer-2 or Layer-3, significantly reduces latency across the network.

Tel Aviv’s PacketLight Networks offers a suite of leading 1U metro and long haul CWDM/DWDM and OTN solutions, as well as Layer-1 optical encryption for transport of data, storage, voice and video applications over dark fiber and WDM networks.  PacketLight provides the entire optical layer transport solution within a highly integrated compact platform, designed for maximum flexibility, easy maintenance and operation, with real pay-as-you-grow architecture, while maintaining high level of reliability and low cost.  (PacketLight Networks 04.10)

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2.8  Powerup Dart Raises $1.2 Million

Tel Aviv’s Powerup Dart, a smart paper plane company, has raised over $1.2 million on crowdfunding site Kickstarter.  The company has developed a paper airplane controlled by a smartphone app capable of undertaking a wide range of aerobatic tricks including loops, flicks and barrel-rolls.  The company gave itself a very modest target of $25,000 and has raised at least $1.234 million.  It has been one of the most successful campaigns ever on Kickstarter.  Users need only fold the small paper plane, attach the DART module and then connect it to their phone.  (Various 10.10)

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2.9  Alibaba to Open Israel R&D Center

Chinese ecommerce giant Alibaba announced it is opening an R&D lab in Israel.  Speaking at Alibaba’s Computing Conference in China, CTO Jeff Zhang unveiled a $15 billion global research program, which includes opening seven R&D labs worldwide over the next three years in Tel Aviv, Beijing, Hangzhou, San Mateo, Bellevue, Moscow and Singapore.  Zhang said that Alibaba is initially seeking to recruit 100 talented researchers from around the world.  Zhang will head the academy overseeing the worldwide R&D labs, which will be called DAMO – Academy of Discovery, Adventure, Momentum and Outlook.  Alibaba has already invested in Israel startups including $15 million in Infinity Augmented Reality and ecommerce search company Twiggle.  (Globes 11.10)

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2.10  Intel Israel setting Up AI Center

On 16 October, Intel Israel announced that it would hire dozens of new employees to work in a new artificial intelligence (AI) center being established by the company.  The new development center will operate on the company’s campuses in Ra’anana and Haifa, where several dozen software personnel, chip architect specialists, developers, and engineers are already employed.  The new center in Israel is part of the development of an Intel-led global AI group.  Intel has 10,000 employees in Israel at its Kiryat Gat fab, and in development centers in Yakum, Ra’anana, Jerusalem, Petah Tikva and Haifa.  (Globes 16.10)

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3.1  Delphi Packard Transfers Activities from Tunisia to Morocco

American automotive manufacturer Delphi Packard is moving its activities, launched in 2015 in Tunisia, to its production unit based in Meknes, Morocco.  The move was motivated by repetitive strikes and an unfavorable business climate in Tunisia, versus better political stability and finer infrastructure quality in Morocco.  The American manufacturer and supplier of automotive technologies, one of the first OEMs to establish their subsidiaries in Morocco with a plant in Tangier in 1999.  For the time being, Delphi has still not disclosed the nature and level of activity that would be conducted in the kingdom.

This move will only intensifies the fierce competition between the two North African neighbors in terms of the automotive industry.  While the two countries share similar geographic and socio-economic particularities, Tunisia has been losing ground to Morocco for the past couple of years, still recovering from post-Arab Spring political and economic unrest.  Today, with a worldwide turnover of $16.7 billion, the group employs in its four Moroccan production sites, the last of which was built in Meknes in early 2016, nearly 10,000 employees.  (MWN 11.10)

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3.2  MOGAS Authorized Repair Center Established in Turkey

Houston, Texas’ MOGAS Industries and Opak Madencilik, an Ankara-based mining services company, have entered into an agreement for Opak to represent MOGAS as an Authorized Repair Center (ARC) in Turkey.  ARCs are supported and trained in the service and repair of MOGAS severe-service ball valves.  In Turkey, MOGAS valves see a lot of critical service in multiple autoclave plants, where acidic properties and high pressures and temperatures are very demanding on the valve’s specialized materials of construction.  Having local support and repair will benefit plants through quicker turnarounds, reduced labor costs, improved relationship and shared industry expertise.  MOGAS Industries is the leading global severe service ball valve manufacturer, providing isolation and control valve solutions and engineering services for critical applications in power, mining, oil & gas, refining, chemical/petrochemical and specialty industries.  Products include floating and trunnion ball designs for quarter-turn isolation, and custom trim designs for flow control.  (MOGAS Industries 04.10)

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3.3  Aselsan Signs $44 Million Sale of Communications Equipment to Ukraine

The Turkish electronics company Aselsan has signed a $43.6 million agreement for the sale of its communications systems to Ukraine’s state owned defense conglomerate UkrOboronProm.  As per Turkey’s state owned Anadolu Agency, Aselsan announced the sale on 10 October.  The company expects to begin deliveries in 2018.

In May, Aselsan announced that it was looking to secure a contract to supply very high frequency (VHF) radios to the Ukrainian armed forces.  Ukraine issued a tender in 2016 for the contract, which could see up to 600 VHF systems being bought.  Kiev and Istanbul began undertaking serious steps to strengthening bilateral defense industry relations in 2016.  During the 2017 International Defence Industry Fair, which took place in Istanbul in May, UkroBoronProm signed a memorandum-of-understanding (MoU) with Aselsan to source an avionics suite for the Antonov An-158 airliner and An-178 military transport aircraft.

UkrOboronProm also expressed interest in collaborating with Turkey in various other fields.  These include a MoU with Havelsan to collaborate in joint radar production. It also signed a MoU with Turkey’s Undersecretariat for Defence Industries (SSM) to collaborate in joint radar production and “development and production of aircraft and composite materials.”  Ukraine has been seeking overseas partners to help it revive and/or secure many of its defense programs, which have been in standstill due to insufficient state funding.

Likewise, Aselsan’s products, notably its line of software defined radios, have also made in-roads in the Saudi and Pakistani markets.  The Turkish and Ukrainian industries share common markets, which may provide incentive for collaboration as well.  (IDI 10.10)

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4.1  Orad to Build 4 Negev Solar Power Stations

Orad announced it had signed a NIS 100 million contract to build four photovoltaic solar energy production plants in the Negev with an aggregate capacity of 35.5 MW.  Orad is planning to finance the work from equity and credit from banks. Infrastructure group Shikun & Binui Holdings, which won a tender published by the Public Utilities Authority (electricity), is commissioning the project.  The agreement states that in addition to constructing the plants, Orad subsidiary Solarpower will operate and maintain them for 10 years (with exit points every three years) for a total of NIS 20 million.  Solarpower designs, builds, and maintains photovoltaic solar electricity production systems.

Shikun & Binui is an important renewable energy player in Israel.  The company expanded this activity this year by completing the financing for its 120 MW solar power project in Tze’elim, winning a Public Utilities Authority (electricity) tender for projects totaling 64 MW and obtaining a conditional license for a 186 MW natural gas power station at Ashdod Port.

Under the current contract, Orad will perform civil engineering work on the sites, construct a solar energy field, connect points to Israel Electric Corporation with electrical cables, and provide security systems for the fields in accordance with the regulator’s demands.  Orad is a provider of integration services, and provides security, safety, control and communications, and solar energy solutions, mainly in Israel, but also overseas.  (Globes 09.10)

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4.2  Masdar & EDF Submit Lowest Bid to Supply Saudi Solar Power

Saudi Arabia has received offers to supply solar electricity for the cheapest prices ever recorded, marking the start of a $50 billion program to diversify the oil producer’s domestic energy supplies away from fossil fuels.  The energy ministry said Abu Dhabi’s Masdar and Electricité de France bid to supply power from a 300-megawatt photovoltaic plant for as little as 1.79 cents.  If awarded, that would beat the previous record for a solar project in Abu Dhabi for 2.42 cents a kilowatt-hour.

Saudi Arabia and its neighbors are among Middle Eastern oil producers looking to renewables to feed growing domestic consumption that’s soaking up crude they’d rather export to generate income.  While the offers submitted are remarkably low, the actual cost of power coming from the projects may be inflated by terms within the contracts that aren’t yet published, according to Bloomberg New Energy Finance in Zurich.  Saudi Arabia’s price may reflect a “base rate” paid at periods of peak demand or a price that applies only for part of the project’s life.  It also could include a payment to the winning developer, land grants or other incentives to get the solar industry started in Saudi Arabia.

Even so, the announcement is a milestone in Saudi Arabia’s nascent solar program.  The country that gets less than 1% of its power from renewables currently plans to develop 30 solar and wind projects over the next 10 years.  The plant will be the first awarded under the renewables program, which targets 9,500 megawatts of electricity generation capacity using solar and wind by 2030.  The project is set to start producing power by June 2019, according to the bid.  (AB 04.10)

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4.3  Saudi Arabia to Make $67 Billion Investment in Renewable Energy Over 5 Years

On 10 October, Saudi Arabia Tuesday announced it would invest over the coming five years close to $67b to meet its energy demand with focus on renewable energies.  The investment, according to energy minister Khalid al-Falih, will fuel production of 80,000 megawatts (MW).  The investment to be sponsored by the private sector falls within the kingdom’s plans to diversify its energy sources.  The world’s large oil exporter envisions production of 17.6 gigawatts of nuclear energy by 2032.

As part of the plan, it was announced that a contract to award building of the first Saudi nuclear power plant will be signed by the end of next year.  In addition to the nuclear plant-produced energy, authorities expect to produce 3,500 MW from renewable of energy by 2020.  The output could increase to reach 9,500 MW by 2023.  (AB 11.10)

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4.4  EBRD Finances Solar Power Plant in Egypt

The EBRD is continuing to roll out its $ 500 million framework for renewable energy in Egypt by providing a $ 28.5 million (€24 million equivalent) loan for the construction of a 50 MW solar plant in Egypt’s Aswan province.  It will be built by Alfanar Energy, a Saudi-based construction and electric manufacturing company.  Following the signing of two projects last month, this is the third project under the EBRD’s framework, which is expected to finance a total of 16 such projects, delivering 750 MW of solar power.  The new solar plant is located at the Benban complex in Upper Egypt, which upon completion will be the largest solar installation in the world with a planned total capacity of 1.8 GW.  The EBRD loan will be complemented by a parallel loan of up to $ 28.5 million from the Islamic Corporation for the Development of the Private Sector (ICD).  (EBRD 02.10)

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4.5  KarmSolar Signs Largest Ever Private Power Purchase Agreement (PPA) in Egypt

KarmSolar, the Cairo-based solar technology start-up, has signed a deal with Dakahlia Group subsidiaries Dakahlia South Valley Poultry and Dakahlia Wadi El Natroun Agriculture to provide 75% energy needs over 30 years.  KarmSolar will generate and supply the energy through two stations in Menia governorate and Wadi Natroun area, located in Beheira Governorate, occupying around 360,000 square meters of land.  The two stations will be built with an investment of $ 23 million and will generate around 23.5 megawatts (MW) of electricity, making this the largest ever private power purchase agreement (PPA) signed in Egypt.  Since its founding in 2011, KarmSolar has been Egypt’s largest private off-grid solar energy integrator; it delivers innovative solar solutions to the agricultural, industrial, tourism and business sectors.  Egypt receives between 9 and 11 hours of sunlight per day, but wind and solar, combined make up about 1% of the nation’s consumed energy.  (Ahram Weekly 04.10)

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4.6  Green Fund Approves $31.4 Million UNDP Project to Protect Egypt’s Delta from Climate Change

The Green Climate Fund (GCF) approved a $31.4 million United Nations Development Program (UNDP) project to protect Egypt’s Nile Delta from rising sea levels due to climate change.  The project, named “Enhancing Climate Change Adaptation in the North Coast of Egypt,” will be implemented by the Egyptian Ministry of Water Resources and Irrigation over seven years.

Egypt’s irrigation ministry will contribute EGP 140 million to the project, which is centered on the construction of dikes to prevent flooding of homes and farmland due to rising sea levels and extreme weather due to climate change.  The irrigation ministry said that the project is the biggest grant Egypt has obtained from the GCF to help adapt to climate change.

Some scientists have predicted that Egypt will suffer environmental calamities as a result of climate change, with the Nile Delta particularly at risk from flooding by the Mediterranean Sea.  According to the UNDP, rising sea levels will have a critical impact on Egypt’s infrastructure and development along the low-lying coastal areas, eventually having an impact on Egypt’s entire economy.  (Ahram Online 03.10)

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5.1  Tourist Spending in Lebanon Rose by 7% by Third Quarter of 2017

According to Global Blue, tourist spending in Lebanon rose by a yearly 7% by Q3/17, compared to the same period last year.  The rise is mainly attributed to an increasing tourist spending of GCC nationals, specifically Kuwaitis and Saudis.  Similarly, on a quarterly basis, the occurrence of both Eid el Adha and Eid el Fitr holidays during the Q3/17 prompted an improvement in tourist spending as it also increased by 7% y-o-y.  On a year-to-date basis, tourist spending by Kuwaiti visitors escalated by a yearly 45% by Q3/17, when compared to the same period last year.  Similarly, spending by both Saudi and Syrian tourists rose by a similar 22% and spending by Qatari tourists increased by 9% over the same period.  However, Jordanian and Egyptian tourist spending fell by 4% and 28%, respectively.  During the first 9 months of the year, fashion and clothing accounted for 70% of the spending distribution by category, followed by 15% for watches and jewelry. In details, spending on fashion and clothing, watches and jewelry, and souvenirs and gifts witnessed respective rises of 6%, 5%, and 4%.  (GB 09.10)

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5.2  Lebanon’s Total Number of Cars Fell in Third Quarter of 2017

According to the Association of Lebanese Car Importers, the number of newly registered commercial and passenger cars registered a slight drop of 1.88% year-on-year (y-o-y) to 29,985 cars by September 2017.  This drop in the number of registered cars was mainly due to the 2.26% yearly fall in the number of newly registered passenger cars to 27,934 and the 3.64% growth in newly registered commercial vehicles to 2,051 by September 2017.  In terms of car brands, Kia attained the largest share of newly registered cars of 19.26%, followed by Toyota, Hyundai and Nissan with respective shares of 12.26, 12.04% and 9.11%.  As for sales per importer, Natco obtained the highest share of newly registered cars with 19.27% of the total, followed by Rasamny-Younis Motor with 14%, BUMC with 12.49% and Century Motor Co. with 12.05%.  (ALCI 11.10)

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5.3  Jordan Budget Deficit Stands at JD648.6 Million at End of August

Jordan’s budget deficit (after adding foreign grants) stood at JD648.6 million at the end of August, compared with JD372 million for the same period in 2016, according to the monthly bulletin of the Finance Ministry.  Excluding foreign grants, the budget deficit amounted to JD807.4 million in 2017, compared to a deficit of JD653.3 million during same period of 2016.  The ministry said according to the General Budget’s Law of this year, most of the financial grants are expected to be received in December.

Domestic revenues have risen to JD4.486 billion by the end of August, compared to JD4.406 billion during same period of 2016.  The ministry’s bulletin showed that the rise in domestic revenues was due to the increase in non-tax revenues which amounted to about JD93.9 million.  Foreign grants amounted to JD158.8 million to the of August, compared to JD281.3 million, reflecting a decrease of about JD122.5 compared with the same period last year.  The ministry said the total value of this year’s grants will reach about JD777 million, the majority of which is expected to be received in the fourth quarter of this year.  The total expenditure for the end of August amounted to about JD5.294 billion, compared to JD5.059 billion during same period of 2016, registering an increase of JD234.6 million or 4.6%.  (JMoF 08.10)

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5.4  Mafraq Will Be Hub for Syrian & Iraqi Rebuilding

The northeastern city of Mafraq in Jordan is going to be a launching pad for the reconstruction of Syria and Iraq, said State Minister for Investment Affairs Muhannad Shehadeh.  During the launching of the investment map in Mafraq, Shehadeh said that the future vision for the area would be realized through plans to create the proper environment to enhance the production capacity of the governorate, which, he noted, enjoys a competitive edge due to its location.  The minister said the government also seeks to promote a participatory approach in decision-making and setting priorities through cooperation between the newly elected governorate council and the executive council.  (JT 10.10)

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5.5  Jordan’s Incoming Foreign Direct Investment Rises by 87% in Second Quarter

Jordanian State Minister for Investment Affairs Shehadeh said foreign direct investment (FDI) in Jordan rose by 87% during Q2/17 compared to the same period of last year.  The remarks came during a discussion panel organized by the American Chamber of Commerce in Jordan (AmCham).  During the panel, Shehadeh outlined the ministry’s measures to encourage investment including the establishment of a fast lane for investors at the Queen Alia International Airport and reducing the number of security approvals and registration procedures.  The measures also include facilitating the process to obtain driving licenses for investors that carry investment cards.  The ministry, in cooperation with USAID, prepared a new promotional strategy that identified the countries and priority sectors that will be targeted, according to Shehadeh.  He noted that a specialized team from the ministry launched the investment strategy of Irbid, 80km north of Amman, and will visit the rest of the governorates during the next two weeks in a roadshow to complete the process.  He also stressed the “important” role that Jordan will play in Iraq and Syria’s reconstruction process.  (JT 04.10)

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5.6  Jordan Second-Freest Economy in the Middle East, After UAE

Jordan was ranked 39th freest economy globally and second regionally after the UAE in the Economic Freedom of the World (EFW): 2017 Annual Report, published by the Canadian Fraser Institute.  The Kingdom achieved a rating of 7.47 out of 10 in the EFW index, which ranks a total of 159 countries to analyze the impact of cross-country differences in economic freedom and freedom variations across three decades.  In an interview with The Jordan Times, economist Zayyan Zawaneh said such a high ranking “is a reflection of how Jordan has been following the path to the free economy since the fifties, when many other countries in the region shifted to socialist and Marxist systems….However, over the past 20 years, this free economy has not been reflected positively on the situation of the Jordanian people and on the overall economy,” he stressed.

The EFW index measures the degree to which national policies and institutions are supportive of economic freedom, highlighting personal choice, voluntary exchange, freedom to enter markets and compete and security of the person and privately owned property as the cornerstones of this freedom.  A total of 42 data points were used to construct the general summary index, and to measure the degree of economic freedom in five specific areas.  In this regard, Jordan achieved 7.38 points out of 10 in the “size of the government” area, 4.76 in “legal system and property rights”, 9.6 in “sound money”, 7.63 in “freedom to trade internationally”, and 7.92 in “regulation”.  Jordan ranked 0.49 out of 1 in the gender disparity index, entering the list of countries with the lowest scores.  The rating in gender disparity caused Jordan to go down 22 positions in the general ranking, becoming the 4th country most affected by this score after Saudi Arabia, the UAE and Kuwait.  (JT 04.10)

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5.7  Study Shows IMF Program Did Not Achieve Goals in Jordan

A study by the Jordan University’s Strategic Studies Centre (SSC) concludes that the International Monetary Fund (IMF)’s programs in Jordan have not attained expected goals, nor do they entail “effective developmental, economic policies”.  The study recommends that the government revisits its commitment to the IMF’s program in the upcoming phases.  Alternatively, the government should explore other means to push for economic revitalization and reprioritize its legislative agendas.

The study, entitled “Analysis of IMF Programs in Jordan from 1989 to 2016”, noted that “the objectives of the fund’s programs implemented … have not been met in performance indicators”.  Such KPIs include “increasing economic growth rates, reducing inflation rates and addressing chronic structural imbalances in public finances”, the study underlined.  Meanwhile, it also “did not include long-term solutions and strategies.”  Instead of addressing structural problems, the IMF focused on rationing the increase of rigid budget items, which have hurdled fiscal reforms in the overall.  This “led to the continuation of structural problems in government spending”, as opposed to addressing them.  Many of the challenges facing the recovery of Jordan’s economy are related to the refugee crisis.  With the Donor Countries failing to fulfil their commitments, the crisis continues to strain Jordan’s resources and budget.  Notably, nearly a quarter of Jordan’s public budget goes to hosting Syrian refugees.  (AlGhad 09.10)

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►►Arabian Gulf

5.8  New UAE Federal Law to Regulate Veterinary Products

A new Federal Law No 9 of 2017 was issued to regulate the handling, trading, marketing and circulation of veterinary products in the UAE.  Under the law, the Ministry of Climate Change and Environment is mandated to facilitate the licensing and registration of companies and factories, as well as veterinary products, and review technical reports received from international organizations or bodies on veterinary products and companies.  The ministry is also mandated to monitor markets, receive reports from hospitals or veterinary clinics and publish lists of prohibited veterinary products.  The regulation introduces veterinary products by their ingredients, which can cure or alter physiological functions in animals.  It obligates the companies, factories and warehouses of veterinary products in the country to obtain the required license from the Ministry prior to commencing the practice of any activity.  The regulation also outlines best practices for the storage of valid products and the safe disposal of destroyed or expired products without contributing to environment pollution.  According to the law, “administrative penalties for violations include the warning, closure of company/plant/warehouse of veterinary products for a minimum of six months or, in some cases, even permanent closure.”

All local and foreign companies should be registered with the ministry prior to commencing any veterinary product related activity in the UAE.  Licenses should be renewed every five years and applicants must have a warehouse license for the wholesale trade of veterinary products.  In case of forgery or tampering of documents, companies will be closed permanently or their products prohibited in the market.

Existing veterinary companies, factories and warehouses should comply with the provisions of this law within six months from the date of its implementation.  They can gain an extension period of six months as per the Cabinet decision.  The Cabinet will soon issue a decision specifying the prescribed fees in accordance with the provisions of this law.  (Gulf News 16.10)

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5.9  Luxembourg & the UAE Cooperate on Exploration & Utilization of Space Resources

Considering their common interest in the exploration, use and application of space for peaceful purposes, Luxembourg and the United Arab Emirates (UAE) jointly agreed on the opportunity to cooperate on space activities.  The Government of the Grand Duchy of Luxembourg and the UAE signed on 10 October in Abu Dhabi a memorandum of understanding (MoU) to start bilateral cooperation on space activities with particular focus on the exploration and utilization of space resources.

Within its economic development initiative, Luxembourg offers commercial companies an attractive overall framework for space resource exploration and utilization related activities, including but not limited to a legal regime.  The Grand Duchy is the first European country to offer a legal and regulatory framework addressing the capability of ownership of space resources and laying down the regulations for the authorization and the supervision of such missions in space.

With particular focus on the exploration and utilization of space resources, the five-year cooperation agreement covers the exchange of information and expertise between Luxembourg and UAE space sectors in the areas of space science and technology, human capital development and space policy, law and regulation.  Both nations intend to regularly consult on questions of international governance of space to reach common positions in relevant international fora.  (LMoE 10.10)

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5.10  Saudi Arabia Purchase of Terminal High Altitude Area Defense & Related Support Approved

The State Department has made a determination approving a possible Foreign Military Sale to the Government of Saudi Arabia for Terminal High Altitude Area Defense (THAAD) and related support, equipment and services for an estimated cost of $15 billion.  The Defense Security Cooperation Agency delivered the required certification notifying Congress of this possible sale.

The Government of Saudi Arabia has requested a possible sale of forty-four (44) Terminal High Altitude Area Defense (THAAD) launchers, three hundred sixty (360) THAAD Interceptor Missiles, sixteen (16) THAAD Fire Control and Communications Mobile Tactical Station Group, seven (7) AN/TPY-2 THAAD radars.  Also included are THAAD Battery maintenance equipment, forty-three (43) prime movers (trucks), generators, electrical power units, trailers, communications equipment, tools, test and maintenance equipment, repair and return, system integration and checkout, spare/repair parts, publications and technical documentation, personnel training and training equipment, U.S. Government and contractor technical and logistics personnel support services, facilities construction, studies, and other related elements of logistics and program support.  The estimated cost is $15 billion.

The principal contractors for the THAAD system are Lockheed Martin Space Systems Corporation, Dallas, TX, Camden, AR, Troy, AL and Huntsville, AL; and Raytheon Corporation, Andover, MA.  There are no known offset agreements proposed in connection with this potential sale.  Implementation of this proposed sale will require one hundred eleven (111) contractor representatives and eighteen (18) U.S. Government personnel in country for an extended period of time.  (DoS 06.10)

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5.11  Riyadh to Sell Metro Stations’ Naming Rights

Riyadh Metro is to auction the naming rights for some of its stations, officials announced on 15 October.  The Supreme Authority for the Development of Riyadh, which is overseeing the $23 billion project, said the move is aimed at maximizing revenues from the project, which is expected to open in 2019.  The auction, which will offer naming and advertising rights for ten stations at key locations in the city, is open to both local and international companies who are licensed in the kingdom, officials said.  The potential revenue earned from the naming rights is expected to run into hundreds of millions of dollars.  When Dubai launched its naming rights for 13 Dubai Metro stations in 2008, it earned close to $250 million.

The director of Construction Development Projects and project director of the Riyadh Metro said the new city transportation system will carry one million passengers a day, and is capable of carrying 1.3 billion passengers per year.  The tender process will close on 17 December and the winning bids are expected to be announced on 25 January.  Construction began on the six line project in 2014.  The 176 kilometer network will include 85 stations across the city, served by electric, driverless trains.  (AB 14.10)

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►►North Africa

5.12  Egypt’s Annual Urban Consumer Inflation Rate Falls to 31.6% in September

Egypt’s annual urban consumer price inflation eased slightly in September to 31.6% from 31.9% in August, CAPMAS said on 10 October.  Inflation soared to a record high in July on the back of fuel and energy subsidy cuts by the government.  Import dependent Egypt abandoned its currency peg to the U.S. dollar last November and the currency has depreciated roughly by half since then.  (CAPMAS 10.10)

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5.13  IMF Sees Egypt’s GDP Growth Projected at 4.5% in FY2017/18

Egypt’s GDP growth is predicted to reach 4.5% in fiscal year 2017/18, according to the International Monetary Fund’s World Economic Outlook report for October, which was released on 10 October.  Egypt’s consumer price inflation for the fiscal year is projected at 21.3%, the report showed.  The unemployment rate is forecast to fall to 11.5% from 12.2%.

The IMF said in late September that Egypt has made a “good start” to its reform program.  The fund said Cairo should get its third loan instalment worth $2 billion after the year-end review.  In November 2016, the IMF agreed to loan Egypt $12 billion on a three-year loan program, which is dependent on major economic reforms including fuel and electricity subsidy cuts aimed to help ease the country’s gaping budget deficit.  (Ahram Online 10.10)

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5.14  World Bank Says Egypt’s Deficit to Drop to 8.8% in FY 2017/18:

Egypt’s budget deficit is expected to ease to 8.8% in the 2017/2018 fiscal year following a series of economic reforms introduced by the government, the World Bank said in a report published on 11 October.  According to President Abdel Fattah El-Sisi in September, Egypt’s budget deficit stood at 9.5% during the fourth quarter of the 2016-2017 fiscal year, which ended in June.  The World Bank said the country’s economy, fueled by “resilient private consumption,” is projected to grow by 4.5% in the coming fiscal year.  The financial institution said however that high inflation remains a challenge in the near term.  Annual urban consumer price inflation stood at 31.6% in September. Core inflation, which does not include items susceptible to volatile price changes (such as food), was recorded at 33.26%.  The total current account deficit is expected to narrow to 4.6% of GDP in FY 2017/18, the report also stated.

Recent policies could also help alleviate poverty rates, which may drop in part “through the strengthened social protection measures embedded in the approved budget for FY2017/18, including the increased allocations for food smartcards and for cash transfer programs.”  Egypt introduced a series of major economic reforms in order to close the gaping deficit in recent years, including cutting of fuel subsidies, introducing a new value-added tax (VAT), and floating the national currency last November to attract foreign inflows.  (World Bank 11.10)

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5.15  Egypt Aims to Raise Tobacco Tax Revenues by $397.5 Million in 2017-18

Egypt aims to raise its revenues from taxes imposed on tobacco by EGP 7 billion ($397.50 million) in the 2017-18 fiscal year which ends in July 2018.  The country is targeting around EGP 54.545 billion ($3.10 billion) in revenues from tobacco taxes, according to a document released by the Finance Ministry.  Egypt has been increasing taxes and cutting subsidies to narrow its budget deficit as part of economic reforms tied to a $12 billion International Monetary Fund program aimed at boosting the economy.  Egypt imposed a valued-added tax on non-essential goods last year in the months leading to its signing of the three-year IMF deal in November.  Some 20.2% of Egyptians above the age of 15 are smokers, according to 2016 statistics.  (Reuters 02.10)

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5.16  Egypt’s Finance Minister Said Tax Revenues Up by 31.8% for Fiscal Year 2016/17

 Egyptian Finance Minister Amr El-Garhy announced on 3 October that total tax revenues for fiscal year 2016/17 increased by 31.8% year-on-year to EGP 464.4 billion, compared to EGP 352.3 billion the year before.  The increase in tax collections was mainly driven by the value-added tax, which was set at 13% last fiscal year.  Collections exceeded the targeted revenues by 8% and non-tax revenues increased by 30.6% year-on-year to EGP 177.1 billion, compared to EGP 135.6 billion.  Investments registered EGP 109.1 billion in the last fiscal year, a 57.6% increase compared to EGP 69.2 billion in fiscal year 2015/6.  Total expenditures recorded EGP 1.32 trillion, compared to EGP 817.8 billion the year before, a 26.2% increase.  Total revenues recorded EGP 659 billion in fiscal year 2016/17, compared to EGP 491.5 billion last year, a 34.1% year-on-year increase.

The ministry collected 40% of its revenues electronically, and targets an increase to 80% next fiscal year, Deputy Minister of Finance Maait noted.  The budget’s primary deficit, which is the deficit without accounting for debt services, was the lowest in eight years in fiscal year 2016/17, recording EGP 63 billion, compared to EGP 95.9 billion the previous year, Deputy Minister of Finance Kouchouk said.  It represents 1.8% of GDP.

The total deficit increased to EGP 379.6 billion, up from EGP 339.5 billion the previous year.  The total deficit to GDP represented 10.9% of GDP in fiscal year 2016/17, down from 12.5% in 2015/16.  The government is funding the budget gap with the sale of treasury bonds and bills, as well as external grants and loans.  (Ahram 03.10)

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5.17  Agreement on Russian Industrial Zone in Port Said to be Finalized Soon

 Head of the Suez Canal Authority (SCA) Mamish said on Wednesday that negotiations between Egypt and Russia on $7 billion worth of Russian investment in an industrial zone in the East Port Said region have been successful, with a final agreement set be finalized within coming months.  Mamish said that the negotiations were held in the presence of Russia’s deputy minister of trade and industry Georgy Kalamanov, who is currently on a visit to Egypt.

The project is part of efforts to encourage foreign and domestic investments in the Suez Canal Economic Zone.  The Russian zone for logistics industries, which is set to cover five square kilometers, will employ 35,000 people both directly and indirectly, with a 90% Egyptian workforce.  Discussions with Russia on the details of the agreement started in 2014.

Over the past two years, Egypt has been seeking foreign investment for the Suez Canal Economic Zone, which is expected to include an international logistics hub and areas for light, medium and heavy industry, as well as commercial and residential developments.  The zone extends over 461 square kilometers across the three Suez Canal governorates of Suez, Port Said and Ismailia, and will include six maritime ports, to be completed by 2045.  The megaproject is part of a government plan to upgrade energy infrastructure, boost the economy and create jobs.  (Ahram Online 04.10)

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5.18  Germany to Provide Egypt with $250 Million in 2018 to Plug Budget Deficit

The German government allocated $250 million in 2018 to plug Egypt’s budget deficit, German ambassador to Cairo Lowe said in a press conference on 9 October.  The German loan is part of the external funding to help Egypt close the financing gap in its budget, which is stipulated by the 2016 $12 billion IMF Extended Fund Facility agreement.  Egypt’s overall budget deficit fell to 10.8% of GDP in FY2016/17, from 12.5% of GDP in FY2015/16.  The primary deficit decreased to 1.8% of GDP in FY2016/17, from 3.5% of GDP in FY2015/16.  On tourism, the ambassador said the number of German tourists who visited Egypt this year reached 720,000 tourists, an 85% increase compared to the same period last year.  (Ahram Online 09.10)

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5.19  Egypt’s Non-Oil Exports Increase 11% in First 8 Months of 2017

Egyptian Minister of Commerce & Industry Kabil said that the country’s non-petroleum industrial exports have made “remarkable progress” between January to August this year, increasing 11% from $13.5 billion to $15 billion.  Imports also decreased from $45.5 billion to $35.1 billion, a 23% drop, in the same period, resulting in a 37% decrease in the trade balance deficit from $32 billion to $ 20.1 billion.

The sectors showing the greatest increases in exports were chemicals and fertilizers with 44.3%, ready-to-wear clothing with 10.6%, construction materials with 8%, spinning and textiles with 6%, engineering industries with 5.8%, food industries with 5.4%, agricultural products with 3.8% and furniture upholstery with 1.6%.  The sectors showing the greatest reduction in imports were ready-to-wear clothing with a 55% drop, book industries with 49%, leather products with 39%, engineering products with 33%, furniture upholstery with 32%, food industries with 29%, furniture with 27%, chemicals and fertilizers with 12%, medical industries with 8% and handicrafts with 5.7%.

Egypt’s imports from the 10 biggest source countries saw a significant 18.3% decrease from January to August of this year, when compared to the same period of last year.  The largest decline in imports was from Turkey with 32%, Germany with 24%, China and India with 22%, France with 18%, Italy with 17%, the USA with 13% and Brazil with 9.4%.  (Ahram Online 13.10)

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5.20  Free Trade Agreement Between Egypt & Mercosur Comes Into Force

The Arab-Brazilian Chamber of Commerce announced the entry into force of the Free Trade Agreement (FTA), which was signed in 2010 between Egypt and the Mercosur countries.  The agreement aims to enhance the volume of trade exchange between Egypt and the countries of the grouping, which includes Brazil, Argentina, Uruguay, and Paraguay, covering 63% of their collective exports and enabling them to obtain exemption from import taxes.

The volume of trade exchange between Brazil and Egypt last year exceeded $1.8bn, where the proportion of products covered by the convention reached 78%, amid expectations of an increase in the trade exchange between Egypt and the Mercosur to 99% within the coming 10 years, as stipulated in the agreement.

The list of products exported from Brazil to Egypt, which directly benefit from this agreement, includes beef products, cereals, raw materials and inorganic chemical products, while the Egyptian exports covered by the agreement include organic and inorganic fertilizers, vegetables, cotton and textiles.  The value of Brazilian exports to Egypt was more than $1.35bn between the first to the third quarter of 2017, up by 13% from the same period in 2016.  According to data from the Ministry of Trade and Industry, the value of goods exported by Brazil has reached $119.3m in the same period of 2017, up by 138.5% from the period in 2016.  (ET 17.10)

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5.21  Lifting Sudan Sanctions to Yield Positive Effect

Sudan’s economy is headed towards gradual recovery, Finance Minister Mohamed Othman Rukabi said at a forum on 7 October, just one day after the US lifted its 20-year-old economic sanctions opening the way for critical economic reforms and badly needed investment.  The move will suspend a trade embargo, unfreeze assets and remove financial restrictions that have hobbled the Sudanese economy.

Sudan’s economy has struggled since the south seceded in 2011, taking with it three-quarters of the country’s oil output, its main source of foreign currency and government income.  Price rises have been compounded by the government’s decision late last year to cut fuel and electricity subsidies in a bid to tighten its finances.  Petrol prices rose by about 30%, leading to broader inflation.

The United States lifted long-standing sanctions against Sudan on 6 October, saying Sudan had made progress fighting terrorism and easing humanitarian distress, and also secured Khartoum’s commitment not to pursue arms deals with North Korea.  Khartoum is hopeful that the move would help it regain access to global financial markets which could help draw in badly needed investment and raise prospects for a recovery.  (Reuters 08.10)

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5.22  IMF Says Morocco’s Economic Growth Resilient Amid MENA Tensions

The International Monetary Fund (IMF) has revised Morocco’s national economic growth for 2017 upwards from an initial 4.4% to 4.8%.  The IMF also lowered its projected GDP growth for Morocco for 2018 to 3%, against a forecasted 3.9% in its April report.  The IMF however expects growth to pick up steadily to reach 4% in 2019 and 4.5% in 2022.  With regard to the current account deficit, IMF projections forecast a decrease of 4 and 2.9% respectively in 2017 and 2018, against 2.6 and 2% forecasted in the April report.  The fund also maintained its projected growth in unemployment of 9.3 and 9.5% for 2017 and 2018.

In its country report published in February 2017, the IMF noted that Morocco’s medium-term outlook remains favorable, with a rebound in growth expected by 2021.  However, risks remain substantial, mainly related to growth in developed and emerging countries, geopolitical tensions in the region, global energy prices, and volatility in financial markets.  Stronger growth in the medium term depends on the sustained implementation of comprehensive reforms related in particular to the efficiency and participation of the labor market, access to finance, the promotion of quality education, the efficiency of public expenditure, and the constant improvement of the business climate.  (IMF 12.10)

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5.23  Morocco to Surpass Egypt as North Africa’s Largest Automotive Market

Morocco is expected to overtake Egypt as North Africa’s largest automotive market by the end of 2017, according to BMI Research in its latest industry trend analysis.  Due to its geopolitical position and expertise in the field, Morocco has established itself as a spearhead of the automotive industry on the continent, recording remarkable growth over the last ten years.  Morocco is rising up among the world’s largest car manufacturers, seducing internationally renowned investors to turn to the kingdom, a platform ideally located to flood the African and European markets.

BMI expects total new vehicle sales in Morocco to reach 169,298 units by the end of 2017, compared to 152,552 units in Egypt.  Furthermore, BMI forecast vehicle sales in Morocco to reach a total of 249,029 units by the end of our forecast period in 2021, compared to Egypt’s total of 170,864 units.  With a forecasted annual average growth rate of 8.9% over the 201-2021 period, sales of passenger cars is expected to be the leading sector with an annual growth rate of 9.1% over the same period, followed by sales of commercial cares with 5.9%, explain BMI.  For the BMI, this bullish outlook is supported by Morocco’s strong macroeconomic fundamentals and the development of the local auto industry.

As for private consumption, a key indicator of potential demand for new vehicles, BMI expects an annual growth rate of 3.6% over the aforementioned period.  For BMI, this growth will remain steady over the coming years, supported by strong economic growth and remittance inflows that boost household revenues.  Furthermore, Morocco’s elimination of import taxes of European models and the availability of cheaper models from domestic production will play a key role in supporting the growth of the local market.

For BMI, the difficult economic conjuncture in Egypt doomed the fate of its automotive industry, sparked by political and social tensions, the impact of high inflation, elevated interest rates and fuel subsidy removals constrained consumer spending.  This domino effect has in turn hindered sales of new vehicles, which according to BIM are expected to fall by 24.2% in 2017.  BMI expects an exodus of international automotive makers present in Egypt to Morocco, such as BMW, General Motors Co (GM) and Hyundai.  (BMI 14.10)

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5.24  King Mohammed VI Announces Creation of Ministry of African Affairs

During his speech to Moroccan parliament on 13 October, King Mohammed VI has announced that a new ministerial department in charge of African affairs will be created, affiliated to the Ministry of Foreign Affairs and International Cooperation.  The announcements reflects the growing importance Morocco and King Mohammed VI give to Africa.  In recent years the monarch toured the continent to boost Moroccan cooperation with other nations in Africa.  Scores of cooperation agreements in the fields of banking, fertilizer, telecommunication, agriculture and others have been signed between Morocco and a number of its traditional allies such as Senegal, Gabon and Ivory Coast.  Other agreements were concluded with countries which have not traditionally been among Morocco’s friends such as Nigeria, Rwanda and Zambia.  With Nigeria, Morocco reached an agreement to build an important gas-pipeline.  Both countries say that the mega-project will have a positive impact on the lives of local populations in the African countries the pipeline will cross to reach Morocco.

Morocco’s African policy made the kingdom a key player in the continental scene.  In January Morocco made a triumphant comeback to the African Union (AU) after 34 years of absence following the admission of the Polisario Front into the organization.  Morocco is also seeking membership of the Economic Community of Western Africa (ECOWAS). In June the regional bloc gave its approval in principle to Morocco’s membership request.  (MWN 13.10)

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5.25  IMF Reviews the Islamic Republic of Mauritania in 2017 Article IV Consultation

Mauritania continues to face a challenging external environment with low and volatile metal prices.  A steep decline in iron ore prices in 2014/5 took away half of exports, widened the fiscal deficit, put pressure on reserves and exposed bank vulnerabilities.  In response, the authorities adjusted the budget significantly in 2016 (by 3% of GDP), allowed the exchange rate to depreciate and mobilized foreign grants and loans.  These efforts were successful in reducing external imbalances and maintaining macroeconomic stability, but growth slowed considerably, external debt continued to rise (to 72% of GDP, with a high risk of debt distress) and financial stability risks heightened.  In parallel, the authorities are preparing a national strategy for accelerated and inclusive growth covering 2016 – 30, including structural reforms and large foreign-financed infrastructure investments to support growth and diversification.  (IMF 16.10)

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6.1  Fitch Raises 2017 Growth Forecast for Turkey to 5.5%

Fitch Ratings has revised up its 2017 Turkish economic growth forecast from 4.7% to 5.5% on 2 October.  The Turkish economy expanded 5.1% year-on-year in the second quarter of the year, official data showed on 11 September, showing a strong recovery in investments and exports, helped by the government’s fiscal stimulus measures after growth was hit last year by an attempted coup.  First quarter growth was also revised up to 5.2% from an initially reported 5%, while 2016 growth was revised up to 3.2% from an initial 2.9%.  In its Global Economic Outlook (GEO) report, Fitch also said Turkey would likely grow by more than 7% in the third quarter.  Global growth has been upgraded to 3.1% in 2017 from 2.9% in June, and 2018 growth has been upgraded to 3.2% from 3.1% by the rating agency.  (Fitch 03.10)

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6.2  IMF Doubles 2017 Economic Growth Forecast for Turkey

The International Monetary Fund (IMF) raised Turkey’s growth forecast for 2017 by 2.6% to 5.1%.  The IMF published the October 2017 edition of the World Economic Outlook (WEO) Report under the title “Seeking Sustainable Growth.”  Turkey’s growth expectancies for 2017 and 2018 were raised from 2.5% to 5.1% and from 3.3% to 3.5%, respectively.  The report revised the global growth expectation to 3.6% for this year and 3.7% for next year, highlighting the cyclical recovery in the global economy.

The IMF’s growth expectation for the emerging economies remained at 4.6% this year, while the forecast for the next year was raised from 4.8% to 4.9%.  Within this group, growth expectations for Turkey, Russia, Brazil and China were revised up, while projections for India and South Africa were downgraded.  (Daily Sabah 11.10)

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6.3  Turkish Statistical Institute (TUIK) Releases Inflation Figures for September 2017

Based on figures data circulated by TUIK, consumer price index (TÜFE) went up by 0.65% and domestic producer price index went up by 0.24% in September 2017.  Annual inflation became 11.2% in consumer prices and 16.28% in domestic producer prices.  In August, TUFE had increased by 0.52%, a rate above market expectations and annual inflation had risen again to 10.62% after a one-month break.  According to the Medium Term Program (OVP) announced last week, experts forecast TÜFE will be recorded at 9.5% by the end of the year.  (TUIK 03.10)

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6.4  Turkey’s Automotive Sales Rise in September

Turkey’s car and light commercial vehicle sales boosted almost 6% year-on-year in September, Automotive Distributors’ Association said on 3 October.  The number of automobiles and light commercial vehicles sold in the month stood at 71,352, up from 67,593 in the same month last year.  However, it said the market slightly shrank by 1.4% in the first nine months of the year, reaching 627,343.  The statement added that cars constituted the bulk of sales in the same period, with 476,621 automobiles that had been sold.  Last year, the overall Turkish auto sales market hit a record with nearly one million sales—983,720—with 32% from domestic vehicles.  (ADA 03.10)

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6.5  Turkey & US Suspend Visa Services in Reciprocal Moves

On 8 October, Turkey suspended non-immigrant visa services at all Turkish diplomatic facilities in the United States, in a retaliatory move amid escalating tensions between the NATO allies.  Just hours after the US mission to Turkey announced it was restricting visa services, saying that recent events had forced it to “reassess” Ankara’s commitment to the security of US facilities and staff, the Turkish embassy in Washington, DC, hit back with an almost identical statement.

A first version of the Turkish statement had said the measure would apply “to visas in passports”.  But a later version said the measure “will apply to sticker visas as well as e-Visas and border visas”, leaving open the question of whether US travelers who already have visas would be allowed to enter Turkey.  The earlier US statement, meanwhile, said it was suspending the processing of “non-immigrant” visas, a specific category that relates to tourism, medical treatment, business, temporary work or study.

The escalation in diplomatic tensions comes a few days after the arrest of a US consulate employee in Istanbul for alleged links to Fethullah Gulen, a US-based Muslim leader blamed by Ankara for a failed coup attempt last year.  Gulen denies involvement.  Turkey has pressed, so far in vain, for the US to extradite Gulen, while tensions have also risen over Washington’s military support for Kurdish YPG fighters in Syria.  The YPG group is considered by Ankara to be an extension of the banned PKK, which has waged an armed campaign for three decades in southeast Turkey.  (Various 09.10)

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6.6  Cyprus’ September Deflation Rate Seen at 0.4%

Cyprus’ consumer price index fell an annual 0.4% in September mainly on cheaper vegetables and cleaning products, which offset an increase in energy prices, Cystat announced.  In January to September, consumer prices rose 0.7%.  Compared to August, consumer prices rose 0.3%.  The prices of agricultural products fell 6.2% in September compared to the respective month of 2016 and those of industrial products fell 1.2%.  Fuel prices rose 4.6%, electricity prices went up 3.8%, and services became 0.5% less affordable.  Consumer prices dropped 0.2% last month compared to August 2016.  (Cystat 05.10)

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6.7  IMF Raises Greece’s Growth Forecast for 2018 to 2.6%

The Greek economy will grow by 2.6% next year, according to an International Monetary Fund report, exceeding the government’s forecast for a 2.4% expansion.  Yet despite the optimistic forecast in its World Economic Outlook report, the Washington-based Fund stresses its concern regarding the sustainability of the national debt through its projections for the period after the end of the bailout program.  The IMF sees growth in 2022 coming to just 1%. In previous reports it had explained its low growth forecasts by saying it didn’t expect reforms to be implemented.  In a special chapter of the report on “growth surprises for 2017,” the IMF points out that most of the world’s developed countries achieved have higher economic growth than expected, while Greece is the state ranked lowest.

If the IMF report retains its primary surplus forecast for Greece at 2.2% of GDP for next year, there may be a new discussion on additional fiscal measures of €2.3 billion so as to reach the target of 3.5% of GDP.  If the IMF insists on this position and the Europeans – especially the Germans – insist on the participation of the Fund in the Greek program, negotiations could stumble again, hampering the third bailout review.  (IMF 10.10)

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6.8  ELSTAT Says Greek Economy in Recession in 2016

Greece’s economy contracted by 0.2% last year, the head of statistics service ELSTAT said on 17 October, releasing its second estimate of full-year 2016 GDP.  ELSTAT’s estimate, based on seasonally unadjusted data, showed the economy performed worse than the country’s official creditors were expecting based on their forecasts, driven by lower than previously estimated household consumption.  The European Commission, in its winter forecast published in February, projected GDP growth of 0.3% in 2016 while the International Monetary Fund’s upwardly revised estimate saw GDP growth of 0.4%.  The government, which faces a third review to its international bailout this autumn, has cut this year’s economic growth projection to 1.8% from 2.7% in May.  (Reuters 17.10)

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7.1  Over 80% of Saudi Women Said to Apply for Driving Licenses

More than 80% of Saudi women are likely to try to get their driving license following last month’s decree to overturn the ban from June 2018, according to a new survey.  Research agency Kantar TNS said its poll also showed that key reasons for applying were to drive to work, ferrying children around and to shop more.  An overwhelming majority of would-be drivers (92%) are expected to reduce their reliance on taxis and services such as Uber as a result.  The study highlighted that the sentiment about the lifting of the ban is overall positive, with most males supporting the change.  The biggest emotions expressed by women were related to the feeling that society was progressing the right way (61%), a sense of empowerment (55%) and enhanced career opportunities (46%).  Saudi Arabia was the only country in the world to bar women from taking the wheel, a ban seen globally as a symbol of repression.  (AB 14.10)

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7.2  Saudi University to Open Women’s Driving School

Princess Noah University in Saudi Arabia has said it will open a driving school for women, in a first for the ultra-conservative country after a ban on women driving was lifted.  Princess Nourah University says it has more than 60,000 female students in Riyadh and other cities.  Lifting the driving ban is expected to push women into the workforce and boost car sales, especially in the coming months before a scheduled imposition of a government value-added tax in January 2018.  Car makers including Nissan, Chevrolet and Ford have rushed to congratulate Saudi women, as millions of women are expected to hit the road in the kingdom in coming years.  (Various 01.10)

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8.1  CartiHeal Performs the First 16 Cases in the Agili-C Implant IDE Multinational Pivotal Study

CartiHeal announced the initiation of Its IDE clinical study.  During the first week of the study in 3 leading European centers, 16 patients were enrolled and operated on.  Agili-C IDE study is set to include a minimum of 250 patients in US and OUS centers, aiming for a PMA submission.  The trial’s objective is to demonstrate superiority of the Agili-C implant over surgical standard of care (micro fracture and debridement) for the treatment of cartilage or osteochondral defects, in both osteoarthritic knees and knees without degenerative changes.

CartiHeal’s cell-free, off-the-shelf implant is CE marked for use in cartilage and osteochondral defects.  Agili-C was implanted in a series of trials conducted in leading centers in Europe and Israel, in over 300 patients with cartilage lesions in the knee, ankle and great toe.  In these trials, the implant was used to treat a broad spectrum of cartilage lesions, from single focal lesions to multiple and large defects in patients suffering from osteoarthritis.  In the United States, the Agili-C implant is not available for sale – it is an investigational device limited for use in the IDE study.

Kfar Saba’s CartiHeal, a privately-held medical device company with headquarters in Israel, develops proprietary implants for the treatment of cartilage and osteochondral defects in traumatic and osteoarthritic joints.  (CartiHeal 03.10)

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8.2  Cathworks Announces Completion of $15.8 Million Series B Financing

CathWorks announced the completion of a $15.8m Series B round of financing, led by Quark Venture and Triventures.  The syndicate also included Planven Investments, Pontifax, Corundum Open Innovation, and BioStar Ventures as well as a strategic investor. Cathworks’ lead product is a real time, digital platform for the determination of FFR in the catheterization laboratory during procedures in under 5 minutes using standard angiographic images. The company uses a proprietary series of algorithms to reconstruct the coronary tree in three dimensions from standard angiograms and to provide the clinician with a complete FFR analysis in all visible coronary arteries simultaneously.  Cathworks technology has the potential to both disrupt the existing FFR market and to provide clinicians the capacity to integrate coronary images with lesion physiology in real time.  The “functional angiography” developed by Cathworks provides clinicians, for the first time, the ability to correlate anatomy and physiology at the point of care for the purpose of performing guideline driven intervention.  The present funding will allow CathWorks to conduct a global pivotal trial to support 510K FDA approval. The company received a CE Mark on its lead product earlier this year.

Kfar Saba’s CathWorks is a privately-held company founded in 2013.  The company develops digital healthcare products for the cardiovascular market and is focused on improving the utilization of coronary angiography data to ratify measurement-based medicine in the cath lab.  CathWorks is backed by worldwide VCs as well a strategic partner and has completed two series of financing.  (CathWorks 02.10)

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8.3  Medial EarlySign’s Machine Learning Platform Identifies High Risk Patients for Colorectal Cancer

Medial EarlySign announced the results of new research in collaboration with a top integrated health care delivery system in the United States.  The study confirms the efficacy of Medial EarlySign’s ColonFlag tool in identifying individuals with 10 times higher risk of harboring undiagnosed colorectal cancer (CRC) while still at curable stages.  In many patients, ColonFlag was further able to identify risk for colorectal tumors up to 360 days earlier than its actual diagnosis using conventional practices.

The peer-reviewed study, Early Colorectal Cancer Detected by Machine Learning Model Using Gender, Age, and Complete Blood Count Data, published in Digestive Diseases and Sciences, sought to validate a machine learning risk stratification model for CRC, a lower GI malignancy, on a US-based adult population.  It follows successful studies conducted in Israel and the UK.  Further analysis revealed that ColonFlag performed best in detecting CRC tumors in the cecum and ascending colon.  The odds ratio for detecting CRC in the cecum was 93.4 at 99% specificity level.  The odds ratios for detection in the ascending colon were 40.3 at 95% specificity and 28.0 at 90% specificity.

Kfar Malal’s Medial EarlySign‘s advanced AI-based algorithm platform helps healthcare organizations accurately predict and stratify individuals at high risk for developing serious health conditions, by leveraging routine blood test results and EHR data.  The company creates actionable opportunities for early intervention to delay progression of illness, improve patient outcomes, focus financial resources and reduce overall costs.  Medial EarlySign is developing a number of clinically supported AlgoMarker risk predictors to identify patients with a high probability for harboring or developing specific illnesses, including cancers, diabetes and other life-threatening conditions.  (Medial EarlySign 02.10)

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8.4  Anlit Introduces Omega Bites Under the Meijer Children’s Brand

Anlit introduced Omega Bites under the Meijer supermarket’s children’s label.  Omega Bites are a high-DHA+EPA omega-3 supplement in a single, fish-shaped orange-chocolate flavored chewable for children.  The concentrated formula delivers a total of 150mg of highly concentrated DHA (60mg) and EPA (90mg) omega-3 fatty acids per single serving.  Children need high DHA+EPA. These lipids are critical components needed for rapidly developing brain and nerve tissue.  They also help support a healthy immune system. While the benefits of omega oils are outstanding, the taste often is not appealing.  In order to provide essential omega health benefits to children, Anlit focused on kids’ preferences in both taste and texture, and identified the parameters children care about in shape, texture and flavor.  The delicious chewy matrix, with a chocolate-like flavor and smooth texture, helps overcome children’s natural reluctance to taking nutritional supplements.

Granot’s Anlit, a subsidiary of Maabarot Products, – a public company traded on the TASE – is an innovative developer and manufacturer of a broad range of dietary supplements for children and adults.  Anlit products are gluten-free and nut-free. All products are GMP, FSSC, ISO 9001:2000 and HACCP compliant, as well as kosher and halal certified.  (Anlit 02.10)

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8.5  Kitov Announces Filing by FDA of New Drug Application for KIT-302

Kitov Pharmaceuticals Holdings announced that the U.S. FDA filed the Company’s New Drug Application (NDA) for KIT-302, its lead drug candidate, thereby accepting the NDA for a full review.  KIT-302 is a patented combination of celecoxib and amlodipine, and is intended to treat osteoarthritis pain and hypertension simultaneously.  In connection with its determination that Kitov’s application is sufficiently complete to permit a substantive review, the FDA, under the Prescription Drug User Fee Act (PDUFA), has set a target date of 31 May 2018 to complete its review.

Tel Aviv’s Kitov Pharmaceuticals (NASDAQ: KTOV, TASE: KTOV) is an innovative biopharmaceutical drug development company.  Leveraging deep regulatory and clinical-trial expertise, Kitov’s veteran team of healthcare professionals maintains a proven track record in streamlined end-to-end drug development and approval.  Kitov’s flagship combination drug, KIT-302, intended to treat osteoarthritis pain and hypertension simultaneously, achieved the primary efficacy endpoint for its Phase III clinical trial.  Kitov’s newest drug, NT219, which is developed by its majority-owned subsidiary, TyrNovo, is a small molecule that presents a new concept in cancer therapy, and in combination with various approved oncology drugs, demonstrated potent anti-tumor effects and increased survival in various cancer models.  By lowering development risk and cost through fast-track regulatory approval of novel therapeutics, Kitov plans to deliver rapid ROI and long-term potential to investors, while making a meaningful impact on people’s lives.  (Kitov 02.10)

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8.6  MATTER and Sheba Medical Center Partner to Advance Healthcare Innovation

MATTER, the Chicago-based healthcare incubator, innovation community, and corporate innovation accelerator, and Sheba Medical Center have signed a Memorandum of Understanding to foster collaboration between the Chicago and Israeli healthcare innovation communities.  The partnership is designed to accelerate the commercialization of new technologies that will benefit patients.  Through this partnership, MATTER startups will have opportunities to pilot their technologies with Sheba Medical Center. The medical center has a highly developed innovation capability, and is able to facilitate pilots for new solutions at a pace almost unheard of in U.S. health systems.

Sheba Medical Center also supports a number of Israel-based healthcare technology startups building digital health solutions.  MATTER will leverage its network of entrepreneurs, innovators, health systems, industry partners, and experts to help open the door to U.S. markets for Sheba Medical Center-affiliated startups.  The agreement was signed during a recent trip to Israel with Chicago Mayor Emanuel and World Business Chicago to promote investment and innovation in Chicago.

Sheba Medical Center is a university-affiliated tertiary referral hospital that serves as Israel’s national medical center in many fields.  Adjacent to Tel Aviv, it is the most comprehensive medical center in the Middle East, renowned for its compassionate care and leading-edge medicine.  It is also a major medical-scientific research powerhouse that collaborates internationally with the bio-tech and pharmaceutical industries to develop new drugs, treatments and technologies, and a foremost global center for medical education.  (MATTER 03.10)

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8.7  NRGene’s Genomic Analysis Project With Monsanto Advances

NRGene announced that the company has progressed in its multi-year agreement with Monsanto Company.  NRGene has integrated part of Monsanto’s genomic data into GenoMAGIC, a cloud-based big data analytics platform, thereby allowing Monsanto to evaluate the ability of the integrated platform to predict, compare and select the best genetic makeup for molecular breeding.  GenoMAGIC was developed by a unique mix of highly experienced algorithm designers, software engineers, plant breeders, and plant geneticists and is used by seed companies like Monsanto and major academic and research institutions around the world to support the fight against world hunger.  Genomes from NRGene include key global food crops like wheat, maize, sorghum, and sweet potatoes.

Ness Ziona’s NRGene is a genomic big data company developing cutting-edge software and algorithms to reveal the complexity and diversity of crop plants, animals, and aquatic organisms for supporting the most advanced and sophisticated breeding programs.  NRGene tools have already been employed by some of the leading seed companies worldwide as well as the most influential research teams in academia.  (NRGene 03.10)

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8.8  DarioHealth Launches into the German Diabetes Market

DarioHealth Corp. announced its successful launch into the German market, making its smart diabetes platform available for the first time in the EU’s largest market, both by population and GDP.  With this launch, DarioHealth is now commercially available in 9 countries around the world.  DarioHealth will operate its direct-to-consumer channel, leveraging its in-depth knowledge from other markets to provide new opportunities for more than 8 million Germans living with diabetes.  DarioHealth expects the launch into the German market to help the Company reach its Q4 revenue goals and FY/17 annual milestones.

Caesarea’s DarioHealth Corp. is a leading global digital health company serving tens of thousands of users with dynamic mobile health solutions.  They have developed a unique way for users to analyze and personalize their diabetes management.  With their smart diabetes solution, users have direct access to track and monitor all facets of diabetes, without having the disease slow them down.  The acclaimed Dario Blood Glucose Monitoring System all-in-one blood glucose meter and native smartphone app gives users an unrivaled method for self-diabetes management.  (DarioHealth 03.10)

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8.9  CIITECH Cannabis-Based Botanical Supplements Now on Sale in the UK

CIITECH, a UK-Israel cannabis biotech startup, announces the availability of Herbalica’s non-psychoactive, cannabis-derivative supplements based on Israeli science to UK consumers via  The products include CBD (Cannabidiol), a non-psychoactive ingredient or cannabinoid found in both hemp and regular cannabis strains.

Located in Israel, Herbalica’s parent company HerbalTune has developed and supplied a range of therapeutic, botanical products to their local market for the past three years.  In March 2016, they entered into a joint venture with Seach, one of Israel’s licensed medical cannabis cultivators, to create and supply cannabis-based products blended with synergistic plant extracts.  Seach administers Herbalica’s medical cannabis products to over 5000 patients, continually monitoring and analyzing patient data and feedback.

CIITECH is a cannabis biotech company that focuses on discovering, developing and commercializing therapeutic cannabis products.  By collaborating with leading research institutions in Israel and local suppliers in the UK & EU, CIITECH leverages the full potential of Israel’s cutting-edge cannabis innovation.  (CIITECH 03.10)

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8.10  Vibrant Shows Efficacy of World’s First Vibrating Capsule to Treat Chronic Constipation

GI innovator Vibrant has successfully completed two clinical studies in the US and Israel, to test the efficacy and safety of an innovative intraluminal vibrating capsule for treating chronic idiopathic constipation (CIC).  Vibrant’s capsule represents a major departure from existing treatments for constipation. By creating mechanical vibrations that stimulate the colon, the capsule safely and effectively induces motility without the aid of medication, thus improving quality of life for the patient.  The treatment dosage is between 2 to 5 capsules weekly under a physician’s supervision.

Yokneam’s Vibrant has developed a chemical-free, side-effect-free, orally administered vibrating capsule that treats chronic constipation by mechanically stimulating bowel movement.  This innovation may aid multiple types of constipation.  (GI innovator Vibrant 04.10)

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8.11  CorNeat Vision Unveils a Revolutionary Artificial Cornea

CorNeat Vision has completed the design and development stage of its revolutionary cornea implant (CorNeat KPro / Keratoprosthesis), an associated implantation tool and dedicated manufacturing process.  Following solution validation in NZW rabbits, the company is currently initiating formal biocompatibility and safety tests toward first implantation in Humans by mid-2018.

The CorNeat KPro implant is a patent-pending synthetic cornea that utilizes advanced cell technology to integrate artificial optics within resident ocular tissue.  The CorNeat KPro is produced using nanoscale chemical engineering that stimulates cellular growth.  Unlike previous devices, which attempted to integrate optics into the native cornea, the CorNeat KPro leverages a virtual space under the conjunctiva that is rich with fibroblast cells that heals quickly and provides robust long-term integration.  Combined with a novel and simple 30-minute surgical procedure, the CorNeat KPro provides an esthetic, efficient, scalable remedy for millions of people with cornea-related visual impairments and is far superior to any available biological and synthetic alternatives.

Ra’anana’s CorNeat Vision is an ophthalmic medical device company with an overarching mission to promote human health, sustainability and equality worldwide.  The objective of CorNeat Vision is to produce, test and market an innovative, safe and long-lasting scalable medical solution for corneal blindness, pathology and injury, a bio-artificial organ: The CorNeat KPro.  (CorNeat Vision 06.10)

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8.12  Therapix Development and Clinical Manufacturing Agreement with Catalent for THX-TS01

Therapix Biosciences has entered into an exclusive agreement with Catalent Pharma Solutions, the leading global provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products, for the formulation, development and clinical manufacturing of THX-TS01, a first-in-class, proprietary investigational drug candidate for the treatment of the symptoms of Tourette Syndrome.  Pursuant to the agreement, Catalent will develop THX-TS01 in softgel form in support of Therapix’s clinical development program and in accordance with current good manufacturing practice (cGMP). The formulation, development, analytical and cGMP manufacturing activities will be conducted at Catalent’s primary softgel development and manufacturing facility in St. Petersburg, Florida.

Givatayim’s Therapix Biosciences is a specialty clinical-stage pharmaceutical company led by an experienced team of senior executives and scientists.  Their focus is creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals.  With this focus, the company is currently engaged in two internal drug development programs based on repurposing an FDA approved synthetic cannabinoid (dronabinol): THX-TS01 targets the treatment of the symptoms of Tourette Syndrome; and THX-ULD01 targets the high-value and under-served market of mild cognitive impairments and Traumatic Brain Injury (TBI).  (Therapix Biosciences 06.10)

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8.13  Lonza Announces Formation of New R&D Collaborative Innovation Center in Israel

Basel, Switzerland’s Lonza today announced the establishment of the Lonza Collaborative Innovation Center (CIC) in the new Life Science Park in the outskirts of Haifa, Israel.  The CIC will begin operating in Q4/17 and span close to 1,000 square meters.  It is expected to hire 15-20 staff members in 2018 to leverage Israel’s scientific strengths in areas such as engineering, software and cell/molecular biology to provide Lonza opportunities to gain additional know-how and capabilities.  With the launch of the CIC, Lonza aims to accelerate leading Research & Development (R&D) projects from across Lonza’s Pharma & Biotech segment, as well as tap into potentially transformative biological and manufacturing capabilities.

The CIC will have a dedicated Lonza R&T team in Israel, who will work with local industry and academic experts through collaborations and sponsored research.  Lonza has already signed memorandums of understanding and conducted talent scouting at Tel Aviv University, Technion R&D Foundation and the Weizmann Institute of Science.  (Lonza 09.10)

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8.14  Azura Ophthalmics Receives $16 Million in Series B Funding to Treat Dry Eye Disease

Azura Ophthalmics has completed a $16 million Series B funding round led by a syndicate of OrbiMed, TPG Biotech and Brandon Capital’s Medical Research Commercialization Fund with participation from an existing investor Ganot Capital.  The investment comes at a key time of growth and will enable Azura to advance development of drug therapy for meibomian gland dysfunction (MGD) to the next stage of clinical research.  Meibomian glands reside in the upper and lower eyelids and are responsible for producing the oily layer that forms the outermost layer of the tear film.  This oil (lipid) layer, in conjunction with the watery layer of the tear film work together to maintain clear vision and ocular health.  An intact lipid layer ensures tears do not evaporate and keeps the eyes moisturized and nourished.  If this layer is disturbed, it leads to tears evaporating too quickly, drying out the ocular surface and resulting in damage to the front of the eye, discomfort, and a significant reduction in both quality of life and productivity.

MGD patients represent one of the largest and most underserved segments in ophthalmology.  If left untreated, MGD will alter the tear film, causing eye irritation, inflammation and severe Dry Eye Disease (DED).  Azura Ophthalmics’ therapy is preparing for a phase 2a trial, having shown efficacy in an initial clinical proof of concept study.

Tel Aviv’s Azura Ophthalmics, a clinical-stage biotechnology company, is developing an innovative portfolio of compounds in combination with a novel drug delivery platform to advance a portfolio of treatments for Meibomian gland dysfunction (MGD), the leading cause of dry eye disease.  By targeting the root cause of MGD, Azura Ophthalmics brings the promise of improved health and well-being to millions of people worldwide who suffer from MGD and its associated ocular surface diseases for which there are currently no effective pharmaceutical treatments.  (Azura Ophthalmics 10.10)

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8.15  NRGene Delivers Major Breakthrough in Sunflower Genome

NRGene has created a previously unattainable version of the sunflower genome for a cooperative of scientists from Canada, the United States, France and Israel.  The NRGene-produced genome is more comprehensive than any existing version.  Researchers at the University of British Columbia will be using the data to identify and order the genetic changes responsible for the origin of species and enhance the ability to breed hardier varieties.  Collaboratively, academics are using genomics and bioinformatics to study the genetics of adaptation and domestication, identifying the genetic changes that underlie the formation of new varieties and the genotype-phenotype-environment interaction.  The scientists and NRGene will be continuing their collaboration as part of the sunflower pangenome project, which will enable further research in comparing multiple varieties to breed more efficient plants for oil, food, and other potential applications.

Ness Ziona’s NRGene is a genomic big data company developing cutting-edge software and algorithms to reveal the complexity and diversity of crop plants, animals and aquatic organisms for supporting the most advanced and sophisticated breeding programs.  NRGene tools have already been employed by some of the leading seed companies worldwide as well as the most influential research teams in academia.  (NRGene 13.10)

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8.16  Soft Suit Exoskeleton Technology Begins Next Phase of Testing in Pre-Clinical Study

ReWalk Robotics announced that the soft exosuit technology currently in development has entered the next phase of testing and verification in collaboration with researchers at Harvard University’s Wyss Institute for Biologically Inspired Engineering.  This phase of testing includes evaluating the ReWalk exosuit system that is based on Wyss Institute exosuit technology with individuals who have had a stroke, in preparation for upcoming clinical trials to be run at clinical sites in 2018.  This technology is designed for use by stroke survivors with lower limb disability.  Soft exoskeleton technology, also called a soft exosuit, is being designed to serve a number of patient populations, including individuals with Multiple Sclerosis, Parkinson’s Disease and other mobility challenges.

In 2016, ReWalk announced a collaboration with the Wyss Institute to support ongoing technology development and testing of lightweight exoskeleton system concepts and designs for lower limb disabilities and licensed intellectual property (IP) from Harvard University.  The soft suit design transmits power to key joints of the legs with cable technologies and fabric-based designs; the soft suit is powered with software and mechanics that are similar to the technologies used in the ReWalk exoskeleton system for individuals with spinal cord injury (SCI).

Yokneam Ilit’s ReWalk Robotics develops, manufactures and markets wearable robotic exoskeletons for individuals with spinal cord injury.  Their mission is to fundamentally change the quality of life for individuals with lower limb disability through the creation and development of market leading robotic technologies.  (ReWalk 16.10)

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8.17  BrainStorm Enrolls First Patients in Phase 3 Trial of NurOwn in ALS

BrainStorm Cell Therapeutics announced that the first patients have been enrolled in the Phase 3 clinical trial of NurOwn for the treatment of amyotrophic lateral sclerosis (ALS) at the Massachusetts General Hospital and UC Irvine Medical Center in California.  The trial is expected to enroll approximately 200 patients and will be conducted at six leading ALS clinical sites in the U.S.  The primary outcome measure will be the ALSFR-S score responder analysis.  The patient population will be optimized to include the pre-specified subgroups who demonstrated superior outcomes in the NurOwn Phase 2 ALS clinical trial.  Top-line data are expected in 2019.  This trial is supported by a $16 million non-dilutive grant from CIRM.  A milestone payment of $5.5 million, representing approximately 30% of the grant, has been received.

Petah Tikva’s BrainStorm Cell Therapeutics is a biotechnology company engaged in the development of first-of-its-kind adult stem cell therapies derived from autologous bone marrow cells for the treatment of neurodegenerative diseases.  The Company holds the rights to develop and commercialize its NurOwn technology through an exclusive, worldwide licensing agreement with Ramot, the technology transfer company of Tel Aviv University.  (BrainStorm 16.10)

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9.1  Reduxio Continues to Gain Momentum in Education Sector with New Customer Wins

Reduxio Systems announced continued customer growth across primary and secondary schools and school districts.  The company’s momentum in the education sector is fueled by the increased demand for Reduxio V3, the latest generation of Reduxio that provides a unified data storage, management and protection platform.  Over the past nine months, Reduxio has added 20 school districts, a state-of-the-art vocational and academic high school and an award-winning independent school to its growing academic customer base.

Petah Tikva’s Reduxio is redefining data management and protection with the world’s first unified primary and secondary storage platform.  Based on the patented TimeOS storage operating system, Reduxio provides breakthrough storage efficiency and performance, and the unique ability to recover data to any second, far exceeding anything available on the market today.  Reduxio’s unified storage platform is designed to deliver near-zero RPO and RTO as a feature of its storage system, while significantly simplifying the data protection process and providing built-in data replication for disaster recovery.  (Reduxio Systems 02.10)

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9.2  DBT-CEV Fast Charging Station Combines With Chakratec’s Kinetic Power Booster.

Chakratec, the Kinetic Energy Storage pioneer, and DBT Europe’s leading EV Technology partner for AC and fast charging announced their cooperation to offer and deliver DBT’s Fast and Ultra-Fast EV charging stations combined with Chakratec’s unlimited charge cycle and environmental friendly kinetic power booster.  Fast EV chargers have a great impact on the grid when charging with high power.  The newly developed system between DBT-CEV and Chakratec connects a multi standard fast charger and a kinetic storage to a low power grid and boosts it times three.  The objective is to avoid massive upgrade investments of the grid.  The system will store energy while no car is charging and flush it into the EV during the EV charging process.  The power booster is modular, starting at 100kWp and scalable to multiple MWp.  This cooperation will enable both companies to offer fast chargers everywhere, including in areas with weak grid without effecting the grid.

Lod’s Chakratec, established in 2013, brings to the energy storage market patented kinetic battery energy storage solution based on an innovative flywheel concept.  Chakratec’s kinetic battery, provides virtually limitless number of deep charge cycles over the full life time of 20 years.  Chakratec is accelerating its sales activities and is looking for partners and pilot projects in Europe.  (Chakratec 02.10)

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9.3  OTI Selected as One of 10 Fastest Growing IoT Companies of 2017″

On Track Innovations (OTI) announced it has been named one of the 10 Fastest Growing IoT Companies of 2017 by The Silicon Review Magazine.  The Silicon Review Magazine honors OTI with this award after reviewing OTI’s offerings for the cashless payment market and the Internet of Payment Things (IoPT).  Rosh Pinna’s href=””>On Track Innovations (OTI) is a global leader in the design, manufacture and sale of secure cashless payment solutions using contactless NFC technology with an extensive patent and IP portfolio.  OTI’s field-proven innovations have been deployed around the world to address cashless payment and management requirements for the Internet of Things (IoT), wearables, unattended retail and petroleum markets.  OTI distributes and supports its solutions through a global network of regional offices and alliances.  (OTI 02.10)

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9.4  Friendly Leverages Its Expertise in Approach for File-Based IP Phone Management

Friendly Technologies has incorporated a multi-tenant and multi-hierarchy approach into its device management solution, with an additional support for file-based IP Phones.  Multi-tenant configuration enables the management of several separate entities on one platform, while each entity maintains the ability to view and manage only the devices that belong to it.  The Admin console within this solution can manage the devices that belong to it, depending on its credentials.

File Based IP-phone management from within the TR-069 platform allows seamlessly management of all the corporations’ IP-Phones on one platform – both advanced phones that support active device management, and simpler phones that only support file-based (HTTP/HTTPS) management.  The main benefit of Friendly’s TR-069 Multi-Tenant & Multi-Hierarchy solution is that many entities can be managed on one platform, without the need to allocate a separate server for each entity and the ability to have central corporate wide rules and regulations while maintaining independent sub-entities.  This solution saves operational support and server maintenance costs.

Ramat Gan’s Friendly Technologies is a leading provider of carrier-class platforms for IoT, Smart Home, and TR-069 device management.  Friendly has been providing TR-069 device management solutions to carriers and service providers since 2007.  When IoT and the Smart Home first emerged, Friendly leveraged its experience and extended its offering to the IoT and Smart Home markets.  Today, Friendly provides a unified IoT platform for management of LWM2M, MQTT, OMA-DM, and TR-069 devices – and a full solution for the Smart Home.  Friendly’s platforms enable its customers to generate new revenue streams in the Smart Home and IoT markets, such as Utilities, Transportation, Smart cities, and more.  (Friendly Technologies 04.09)

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9.5  Xsight Systems Boosts Runway Safety & Operational Availability Efficiency at the IAF

RunWize, the leading Runway Management Solution by Xsight Systems, was selected by the Procurement and Production Directorate of the Israeli Ministry of Defense (MOD) to be installed on the Israeli Air Force runways.  The MOD chose RunWize after evaluating number of available technologies.  This is the major procurement by an Air Force of an automated runway management system with a FOD (Foreign Object Debris) detection capability.  The RunWize installation will help improve runway safety, availability and efficiency by accurately and truly revealing the runway’s situation.  The Xsight system is expected to be fully operational within a few months.

RunWize, based on FODetect, is an automated FOD solution collocated with runway edge lights and is the most powerful solution available today.  RunWize automatically and continuously scans operational areas or defined hotspots and uses sophisticated image and radar processing algorithms to monitor runway conditions.  Whether its day or night, the system learns the surface and by applying artificial intelligence the system helps watch out for FOD, wildlife and runway status, and even during inclement weather conditions.

Rosh HaAyin’s Xsight Systems is the provider of advanced runway sensor solutions, chosen by leading airports worldwide. For the first time in aviation history, Xsight Systems’ runway solutions presents a new paradigm in runway management and allows for constant command over airport runways and their surroundings. Xsight Systems enables airports to manage runways more efficiently and feel confident that runways are safe, secure and clear for operations.  (Xsight Systems 03.10)

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9.6  IAI Unmanned Helicopter Performs Proof-Of-Concept Demo

An unmanned helicopter by Israel Aerospace Industries has completed a proof-of-concept demonstration for the Israeli military.  IAI said the Air Hopper demonstration involved two scenarios: one simulated the carrying of a wounded soldier to an extraction point for medical treatment, with airborne monitoring of the soldiers’ vital signs, and the other was a simulated movement of logistic supplies to an isolated force on a battlefield.  The Air Hopper is based on a small, manned helicopter with a payload of 220 – 397 pounds, with a flight time of two hours and speed of as much as 74.5 miles per hour. The aircraft uses an internal combustion engine.  IAI said the Air Hopper’s open architecture makes it compatible with a range of platforms. Its control system enables Air Hopper to perform a range of tasks, including real-time planning and updating of routes.  (IAI 02.10)

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9.7  Reduxio Wins 2017 MarTech Stackie Award for Visionary Marketing Organization Stack

Reduxio Systems was honored as the overall winner of the 2017 Stackie Award: Org Edition at the MarTech Conference in Boston in October.  For the past three years, MarTech has been running The Stackies, inviting marketers to send in a single slide that visually illustrates their marketing tech stack.  In anticipation of the Boston event, MarTech® launched a new award— The Stackies: Org Edition. Global marketing teams were challenged to illustrate their respective marketing department’s “organizational stack” — a visualization of the roles and processes created to run marketing. The top 5 were honored at the opening night reception, and Reduxio was chosen as the overall winner.

Reduxio’s submission captured the essence of the marketing organization and the company’s multiple functions holistically, showcasing interdependencies within various marketing tasks and areas of focus.  The organization’s approach to marketing revolves around the marketplace – placing customers, prospects and the data storage and management community at the center.  Reduxio’s marketing mission sits within three interconnected constellations: product design, sales and growth marketing.  Each member of the Reduxio marketing team is mapped out within these areas, highlighting their myriad of functions.

Petah Tikva’s Reduxio is redefining data management and protection with the world’s first unified primary and secondary storage platform.  Based on the patented TimeOS storage operating system, Reduxio provides breakthrough storage efficiency and performance, and the unique ability to recover data to any second, far exceeding anything available on the market today.  Reduxio’s unified storage platform is designed to deliver near-zero RPO and RTO as a feature of its storage system, while significantly simplifying the data protection process and providing built-in data replication for disaster recovery.  (Reduxio 05.10)

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9.8  OTI Receives Second Batch Purchase Order of 2,000 Cashless Payment Systems from Japan

On Track Innovations (OTI) received the second batch purchase order of 2,000 cashless payment systems from Japan.  The systems include the Company’s new UNO Plus EMV and FeliCa contactless reader and the GoBox Multi-Service Telemetry Gateway.  The initial 3,000 system delivery that was announced earlier this year has been successfully installed and activated according to schedule by Billing Systems, OTI’s exclusive distributer in Japan.  This recent order of 2,000 and the initial order of 3,000 are both part of a previously announced Letter of Intent and three-year purchase order for an impending 10,000 secure cashless payment solutions systems in Japan.  OTI’s UNO Plus is the first contactless reader produced outside Japan to achieve dual EMV and FeliCa certification.

OTI’s GoBox is a powerful Machine-to-Machine (M2M) controller, payment gateway and multi-services enabler for unattended machines. It provides new revenue streams for machine operators, from accepting cashless payments through streaming paid Full-HD video via the GoBox’s HDMI output.

Rosh Pina’s On Track Innovations (OTI) is a global leader in the design, manufacture and sale of secure cashless payment solutions using contactless NFC technology with an extensive patent and IP portfolio.  OTI’s field-proven innovations have been deployed around the world to address cashless payment and management requirements for the Internet of Things (IoT), wearables, unattended retail and petroleum markets.  OTI distributes and supports its solutions through a global network of regional offices and alliances.  (OTI 04.10)

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9.9  ECI Expands Service Provider Offering With Mercury uCPE Solution

ECI announced the availability of its Mercury uCPE (universal customer premises equipment).  As part of expanding its ElastiNET service provider portfolio, Mercury uCPE delivers on-demand virtualized business services by streamlining multiple customer premises networking functions into a single software-configurable appliance.  Mercury uCPE is the first member of ECI’s vE-CPE family, which provides virtualization across CPE and the service provider’s PoP.

ECI’s Mercury uCPE uses network function virtualization (NFV) to consolidate collections of single-purpose hardware boxes (for the likes of security, routing, voice and SD-WAN services) into a single virtualized networking appliance.  Network functions can then be delivered virtually (VNFs) via centralized management and orchestration (MANO), and made accessible directly to users via a self-service portal. Self-installation and centralized management helps to further minimize operational complexities.

Petah Tikva’s ECI is a global provider of ELASTIC network solutions to CSPs, critical infrastructures as well as data center operators. Along with its long-standing, industry-proven packet-optical transport, ECI offers a variety of SDN/NFV applications, end-to-end network management, a comprehensive cybersecurity solution, and a range of professional services. ECI’s ELASTIC solutions ensure open, future-proof, and secure communications. With ECI, customers have the luxury of choosing a network that can be tailor-made to their needs today while being flexible enough to evolve with the changing needs of tomorrow.  (ECI 04.10)

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9.10  IAI’s TaxiBot Obtained FAA Certification for the Boeing 737 Family

Israel Aerospace Industries’ (IAI) TaxiBot has reached another key milestone.  The Boeing 737 family has recently been officially certified by the Federal Aviation Administration (FAA) for TaxiBot dispatch towing.  The Supplement Type Certificate (STC) was issued by the FAA and joins the existing certificates that were issued by the European Aviation Safety Agency (EASA) and the Civil Aviation Authority of Israel (CAAI).  The FAA certification for the Boeing 737 family covers the Boeing 737-300, 737-400, 737-500, 737-600, 737-700, 737-700C, 737-800, 737-900 and 737-900ER Series.  The FAA certification for the B737 family joins the certification of the A320 aircraft family by Airbus that has been granted by EASA and the FAA in May 2017.  The certification for both B737 and A320 families completes the overall certification package planned for the TaxiBot and covers more than 70% of the entire worldwide commercial airlines flights that could be provided with TaxiBot service.

TaxiBot, a semi-robotic pilot-controlled vehicle, is designed to transport commercial airline aircraft from terminal gates to the runway and back, without using the airplane’s own engines.  TaxiBot started dispatch-towing commercial Lufthansa Boeing 737 flights departing out of Frankfurt Airport in November 2014.  IAI, along with its industrial risk-sharing partner TLD, has been cooperating with Lufthansa LEOS in the development of the TaxiBot, with support of both OEMs Boeing and Airbus.  (IAI 09.10)

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9.11  NICE Machine Learning Capabilities Drive Next Evolution of Cognitive Process Automation

NICE announced the next evolution in its cognitive automation platform – an integration with technology partner Celaton to infuse NICE Robotic Automation with enhanced machine learning capabilities.  This integration creates a digital workforce that can manage, consume, and assimilate more complex unstructured data into fully automated business processes, decreasing manual effort by up to 85%.

Petah Tikva’s NICE is the worldwide leading provider of both cloud and on-premises enterprise software solutions that empower organizations to make smarter decisions based on advanced analytics of structured and unstructured data.  NICE helps organizations of all sizes deliver better customer service, ensure compliance, combat fraud and safeguard citizens.  Over 25,000 organizations in more than 150 countries, including over 85 of the Fortune 100 companies, are using NICE solutions.  (NICE 10.10)

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9.12  Cronus Cyber Technologies Named 2017 Cyber Defense Magazine Cyber Security Leader

Cronus Cyber Technologies announced that Cyber Defense Magazine has named Cronus Cyber Technologies “Cyber Security Leader of 2017”.  Cronus Cyber Technologies was awarded for its innovative approach which combines both automated pen testing with vulnerability management to provide actionable insights on threats to critical assets and business processes.  Instead of blind patching thousands of vulnerabilities, CyBot will highlight less than 5% of your vulnerabilities that are a part of a validated attack path that may threaten your business continuity.  All in real time on a global scale on your production environments.  This greatly reduces IT operation costs, improves security and ensures business continuity.

Haifa’s Cronus Cyber Technologies, founded in 2014, is a global provider of machine-based penetration testing and predictive Attack Path Scenario (APS) solution called CyBot.  Their patented technology imitates human ethical hackers operating practices to discover, predict, analyze, and mitigate the risk of sophisticated global cyber attacks – all in real time.  With CyBot you will accurately invest in the best cyber security strategy to protect your key assets and business process.  (Cronus Cyber Technologies 10.10)

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9.13  DOTVOX Selects AudioCodes for Hosted Communications Service

AudioCodes announced that DOTVOX, a premier hosted unified communications (UC) provider based in Phoenix, AZ, has selected AudioCodes’ IP phones and analog telephony adaptors to be deployed at its business customers’ premises.  By selecting AudioCodes as its supplier of customer premises voice equipment, DOTVOX enables its customers to enjoy seamless connectivity with its VoIP services regardless of their size, industry or budgetary requirements.  AudioCodes 400HD series consists of a range of high definition IP phones that offer high voice quality coupled with user-friendly, ergonomic design and full interoperability with DOTVOX’s service infrastructure, which is based on BroadSoft Business hosted UC platforms.  The 400HD series ranges from simple entry-level devices up to high-end executive phones, giving DOTVOX’s customers the ability to select the desktop devices that best meet the needs of their employees in a cost-effective manner.

Lod’s AudioCodes designs, develops and sells advanced Voice-over-IP (VoIP) and converged VoIP and Data networking products and applications to Service Providers and Enterprises.  AudioCodes is a VoIP technology market leader, focused on converged VoIP and data communications, and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable.  (AudioCodes 10.10)

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9.14  IAI to Provide the TopGun Course Correction Fuze to the IDF

Israel Aerospace Industries (IAI) has won Israel Defense Forces’ (IDF) tender for development, production and supply of ‘TopGun’, a course correction fuze for artillery shells.  The tender, which was issued by the Israel’s Ministry of Defense’s Directorate of Defense Research and Development (DDR&D), is meant to provide the IDF with a global, first-of-its-kind development of this Fuze.  TopGun is an add-on fuze mounted on 155mm shells used by the IDF.  It allows guiding the shell to its target (a pre-defined coordinate) after it has been fired.  The aerodynamic guidance is performed with small wings controlled by miniaturized avionics embedded into the Fuze.  TopGun is capable of accurately calculating its location in space and plan the optimal course required for the shell to engage with the predefined target.  TopGun essentially converts standard artillery ammunition into a precision guided weapon, which is highly relevant for future warfare arenas, both in Israel and globally. It allows expanding the task range allocated to artillery and faster, more efficient performance of artillery assignments.  (IAI 09.10)

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9.15  Qmarkets Announces Set of Updates to Supercharge End-user Engagement Across All their Platforms

Qmarkets announced the rollout of “Qmarkets 10.0”; a new product release which will help the hundreds of leading companies that use their software to innovate more effectively.  The update comes at the heels of years of feedback from clients and business partners, and months of experimentation and analysis.  As the largest and the most important update since the launch of Qmarkets ten years ago, this crucial release has some incredibly compelling features including not only a revolutionary responsive design interface, but also a set of intuitive and visually engaging features which combine to offer a completely new idea and innovation management experience.

Specifically, the newly released software enhances the Qmarkets offerings by adding a “how it works” function to help newcomers understand the process, a notifications tab that updates users with any required action, and a comprehensive sidebar to simplify navigation.  Qmarkets 10.0 also includes a brand-new page where end-users can track their own activity in the system, and an upgraded profile page with a brand-new badge & points system.  Most importantly of all, these updates have been created with Qmarkets’ reputation for flexibility in mind, which means that they can be built to suit the specific needs of every customer, both in regard to visual design and technical configuration.

Rosh HaAyin’s Qmarkets is the leading provider of collective intelligence solutions for enterprises in a wide range of business sectors and geographies.  Inspired by the philosophy of “The wisdom of the crowds,” Qmarkets generates value for organizations by enabling them to receive innovative ideas from their employees, partners and customers.  Qmarkets helps corporations achieve their business goals, from process improvement, to innovation, to NPD.  Qmarkets’ unmatched configuration capabilities and flexibility allows them to fulfill each of their customers’ exact requirements.  In addition to idea management software, Qmarkets offers solutions for external crowdsourcing, tech-scouting, live innovation workshops, a prediction markets module and more.  (Qmarkets 13.10)

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9.16  Illusive Networks’ Addresses Missing Link to Secure Against Sophisticated Cyber Attacks

Illusive Networks introduced Mainframe Guard which enables the inclusion of mainframe systems into an integrated deception solution architecture to protect critical business services from Advanced Persistent Threats (APTs) and other high-impact attacks.  Leveraging Illusive’s Deceptions Everywhere approach, Mainframe Guard works by detecting malicious movement toward the mainframe, providing a non-intrusive method of protecting the systems themselves, the data they host and the services they support from advanced attacks.

Illusive Network’s Mainframe Guard is the latest addition to its award-winning, agentless, distributed deception platform that blankets a company’s entire network with information that deceives attackers.  Deceptions are placed on every endpoint and server to mimic application, data, network and system components that an attacker would use to further attack efforts.  Automatically generated and AI-driven, Illusive Networks’ deceptions are tailor-made for the customer’s environment to appear realistic and authentic to attackers.  As soon as attackers attempt to use the deceptive data, Illusive detects and alerts enterprise security teams, providing real-time, contextual forensic data from the source host that enable informed, targeted and timely incident response operations.

Tel Aviv’s Illusive Networks is pioneering deception-based cybersecurity with its patented Deceptions Everywhere technology that focuses on neutralizing targeted attacks and Advanced Persistent Threats (APT) by creating a deceptive layer across the entire network.  By providing an endless source of false information, Illusive Networks can disrupt and detect breaches with real-time forensics and without disruption to business.  (Illusive Networks 16.10)

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9.17  BT Selects AudioCodes for Business Voice Services

AudioCodes announced that BT, one of the world’s leading providers of communications services and solutions, has selected AudioCodes Mediant session border controllers (SBCs) to provide connectivity between BT’s business customers and its SIP trunk service in the UK.  AudioCodes’ SBCs will be deployed at BT’s business customers’ premises enabling existing on-site communications platforms to connect simply and rapidly to BT’s network.  BT’s SIP trunk service’s infrastructure is powered by BroadSoft’s BroadWorks hosted telephony platform.  AudioCodes’ SBCs are certified by BroadSoft ensuring seamless interoperability with BT’s infrastructure.  Furthermore, the SBCs offer hybrid functionality, supporting both traditional telephony interfaces (including BRI and PRI) and comprehensive SIP interoperability on the same device.  As a result, BT can deploy the same SBC model at virtually any location regardless of the customer’s existing on-site equipment, simplifying training and support processes.

Lod’s AudioCodes designs, develops and sells advanced Voice-over-IP (VoIP) and converged VoIP and Data networking products and applications to Service Providers and Enterprises.  AudioCodes is a VoIP technology market leader, focused on converged VoIP and data communications, and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable.  The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Routers, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers, Value Added Applications and Professional Services.  (AudioCodes 16.10)

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9.18  Friendly Technologies’ One-IoT Platform & LwM2M Client Selected by OriginGPS

Friendly Technologies announced that its One-IoT Platform and LwM2M client was chosen by OriginGPS to facilitate IoT services for its OriginIoT demo.  Friendly’s LwM2M client was embedded in OriginGPS’ OriginIoT, to help develop an IoT-connected baseball displaying quality of pitch data on a dashboard.  OriginGPS develops integrated, miniaturized GNSS and IoT solutions with the smallest footprint on the market for verticals such as wearables, drones, asset tracking, smart cities, automotive, and IoT.

Friendly’s Lightweight M2M (OMA-LwM2M) embedded client is designed for management of constrained IoT devices and sensors. Friendly’s LwM2M client has a notably small CPU and memory footprint designed specifically with the IoT concept in mind.  Friendly’s One-IoT platform enables service providers to manage the data and configuration of millions of devices on a single platform, accelerating deployment and streamlining IoT service management while cutting operational costs.

Airport City’s OriginGPS develops fully-integrated, miniaturized GPS/GNSS, and integrated IoT solutions for developers.  For over a decade, their experts have been developing ultra-sensitive, reliable, high performance modules with the smallest footprint on the market.  OriginGPS introduces unparalleled sensitivity and noise immunity by incorporating its proprietary Noise Free Zone technology for faster position fix and navigation stability even under challenging satellite signal conditions.

Ramat Gan’s Friendly Technologies is a leading provider of carrier-class platforms for IoT, Smart Home, and TR-069 device management.  Friendly has been providing TR-069 device management solutions to carriers and service providers since 2007.  When IoT and the Smart Home first emerged, Friendly leveraged its experience and extended its offering to the IoT and Smart Home markets.  Today, Friendly provides a unified IoT platform for management of LWM2M, MQTT, OMA-DM, and TR-069 devices – and a full solution for the Smart Home.  Friendly’s platforms enable its customers to generate new revenue streams in the Smart Home and IoT markets, such as Utilities, Transportation, Smart cities, and more.  (Friendly Technologies 16.10)

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10.1  Israel’s CPI Rises by Only 0.1% in September

The Central Bureau of Statistics announced that Israel’s Consumer Price Index (CPI) rose by 0.1% in September.  The reading is higher than market expectations, which had forecast a fall in prices.  According to the data, price inflation for the twelve months to the end of September is 0.1%, well below the government target range of 1% – 3%.  There were notable rises in September in prices of fresh vegetables (7.9%), furniture and household equipment (0.5%), housing costs and education (0.4% each).  There were notable falls in prices of entertainment and culture (1.5%) and clothing and footwear (0.7%).  The housing price index for July-August rose 0.2% in comparison with June-July.  The housing price index is published separately from the CPI, and covers transactions in the preceding two months.  In the twelve months to the end of August, housing prices rose 4.2%.  (CBS 15.10)

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10.2  IMF Raises Growth Forecast for Israel’s Economy

The International Monetary Fund (IMF) has raised the growth forecast for Israel’s economy in its latest report about the world economy issued before its annual conference in Washington DC.  The IMF sees 3.1% GDP growth in 2017 and 3.4% GDP growth in 2018. In its April report, the IMF predicted 3% GDP growth in both 2017 and 2018.  In its latest report, the IMF economists predict 0.2% inflation in Israel this year and 0.5% in 2018, thus ending three consecutive years of negative inflation between 2014 and 2016.

The IMF also revised upwards its forecast for global GDP growth to 3.6% this year and 3.8% in 2018 – both figures are 0.1% higher than previous estimates.  The IMF sees 2.2% growth in the US in 2017 and 2.3% in 2018, and 2.1% growth in the euro zone in 2017 and 1.9% next year.  Emerging economies will grow 4.6% in 2017 and 4.9% in 2018.  (Various 11.10)

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10.3  Israel Stands Well in Global Bribery-Risk Ranking

In the latest edition of the Bribery Risk Matrix published by Maryland’s TRACE International, an anti-bribery business organization, Israel is ranked in 32nd place out of 200 countries, one place higher than its ranking in the previous edition (the higher the ranking, the lower the risk of bribery in the country concerned).

Israel’s Overall Risk Score was 27, giving it a low (admirable) ranking.  This score is a composite of the risk scores in 4 domains: (1) Business Interactions with Government, (2) Anti-Bribery Laws and Enforcement, (3) Government and Civil Service Transparency and (4) Capacity for Civil Society Oversight.  The four domain scores are weighted and combined and a risk penalty is added for individual domain scores that exceed the overall country risk score.  Each country is given a score from 1 to 100 for each domain, and for the total bribery risk.  A higher score indicates a higher risk of business bribery.  Israel’s standings were as follows:

1) Business Interactions with Government: Israel receives a low score of 39 in this domain, based on a low degree of government interaction, low expectation of bribes, and a low regulatory burden.

2) Anti-Bribery Laws and Enforcement: Israel receives a low score of 30 in this domain, based on a high quality of anti-bribery laws and a high quality of anti-bribery enforcement.

3) Government and Civil Services Transparency: Israel receives a very low score of 14 in this domain, based on very good governmental transparency and very good transparency of financial interests.

4) Capacity for Civil Society Oversight: Israel receives a very low score of 17 in this domain, based on a high degree of media freedom/quality and a very high degree of social development.

The US rose from 20th place last year to 16th in the current rankings.  The rankings were led by Sweden, New Zealand and Norway, while Turkmenistan, Venezuela and Somalia were at the lowest three places.

TRACE is a globally recognized anti-bribery business organization and leading provider of cost-effective third party risk management solutions. Members and clients include hundreds of multinational companies headquartered worldwide.  (TRACE 12.10)

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10.4  Israel’s Record Tax Revenues Push Budget Deficit Below 2%

Israel’s tax revenues rose to a record NIS 29.5 billion in September.  The tax collection surplus pushed the budget deficit for the past 12 months down to just 1.9% of GDP, the Ministry of Finance announced.  Expenditure by the government’s civilian ministries has risen by 8.6% since the start of the year, compared with a planned rise of 8.9% and defense expenditure rose by 6.4%.

The NIS 4.2 billion of the taxes collected in September are described as exceptional by the Israel Tax Authority and their source is taxation on wallet companies.  Under an administrative order that expired at the end of September, controlling shareholders of personal service corporations (wallet companies) were able to withdraw dividends from their companies at a reduced 25% tax rate, compared with the regular 33% rate (including 3% surtax).  According to the Israel Tax Authority’s latest forecasts, NIS 10.5 billion will be collected this year from, the dividend tax on such personal service corporations compared with NIS 3 billion in an average year.

In addition, NIS 4.1 billion was collected last month as capital gains tax from Mobileye shareholders who sold stakes to Intel. Some NIS 15 billion in taxes will be collected this year above and beyond Ministry of Finance forecasts.  This amount will reduce the budget deficit unless a way can be found to transfer a sum to next year’s budget.  Government expenditure is limited by law so that it is not possible to increase expenditure by more than an excess of NIS 3.5 billion that was approved for the 2018 budget.  To increase expenditure beyond that, the government would have to go through the full legislative process – a step that the Ministry of Finance would be reluctant to take due to the fragility of the government coalition.  (Globes 04.10)

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10.5  Israel’s Foreign Currency Reserves Achieve New Record Level

Israel’s foreign exchange reserves stood at a record $111.051 billion, at the end of September 2017, an increase of $31 million from their level at the end of August, the Bank of Israel announced.  The reserves represent 33.3% of GDP.  The Bank of Israel purchased $200 million in foreign currency in September as part of the purchase program intended to offset the effects of natural gas production on the exchange rate.  The increase was also the result of private sector transfers of about $13 million and a revaluation that increased the reserves by about $156 million.  The increase was offset by government transfers from abroad totaling about $338 million.  Israel’s foreign currency reserves have risen from $97.963 billion to $111.051 billion over the past 12 months.  (Globes 03.10)

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10.6  Mastercard Ranks Tel Aviv 62nd for Tourist Spending

Dubai was the city on which visitors spent the most money in 2016 – $28.5 billion – and the amount is projected to increase by 10% in 2017, according to a study of 132 cities by Mastercard.  In second place by a considerable margin behind Dubai was New York, with $17 billion spent in 2016.  Visitors spent $16.1 billion in London and $12 billion in Paris in 2016.  Tourist spending includes, among other things, the overnight stay, shopping, food and beverages, and public transportation, but not airplane tickets.

Tel Aviv was rated in 62nd place, where tourists spent $1.47 billion in 2016, the same amount as in 2015.  Tel Aviv was in 10th place in number of visitors on the index of Middle East destinations, and in 86th place in the world, with 992,000 visitors, compared with 950,000 in 2015.  Tel Aviv has yet to reach the one million visitors it had in 2013, but the number of visitors was 20% higher than in 2009.  Tourist spending in Tel Aviv was lower than the $1.6 billion spent in 2014, but 40% more than in 2009.  (Globes 02.10)

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11.1  ISRAEL:  Israel Expects to Export $1 Billion Worth of Medical Cannabis Annually

NoCamels reported that earlier this year, the Israeli Ministry of Agriculture officially classified the growing of medical cannabis as a ‘farming sector’, paving the way for marijuana growers to receive government aid, grants, training and water quotas, just like any other eligible farmer.  The Ministries of Health and Finance also recommended legalizing the export of medical cannabis; with Israeli farmers potentially exporting $1 billion worth of medical cannabis annually.  Currently, companies are only allowed to export medical technology for cannabis, but not the plant itself.

Israel is considered a pioneer in marijuana research mainly thanks to Prof. Raphael Mechoulam of the Hebrew University, who is known as the father of medical cannabis.  Beginning his research in Israel in the 1960s, he was the first scientist in the world to identify various compounds of cannabis, including THC, the chemical known for causing a “high.”

Since then, Israeli researchers have continued to push the boundaries, from using cannabis to kill cancer cells, to applying micro-dosing techniques to heal brain damage.  The government is encouraging this research; Israel is one of the few countries where medical cannabis is allowed to be tested in clinical trials on humans.

It also invests resources in the industry.  Earlier this year, the Israeli government announced that it would invest $2.13 million in 13 research projects on cannabis, making Israel one of three countries with a government-sponsored cannabis program.  In 2016, foreign investors poured $100 million into Israeli cannabis startups, according to Saul Kaye, founder and CEO of cannabis tech startup accelerator iCAN.

The Epicenter of Marijuana Research

Both within and outside of Israel, there is optimism about the country’s potential in the cannabis sector.  “There is significant demand for Israeli cannabis,” Clifton Flack, CEO and co-founder of Israeli cannabinoid company CIITECH, said at the recent Cann10 conference held in Israel.  “We’ve been talking about this country as the epicenter of research for a number of years.”  The country’s expertise in high-tech is also a contributing factor. “Israel has very good experience at enabling new ecosystems,” attorney Yoav Etzyon, a partner at law firm APM & Co., said at Cann10.

Given Israel’s success in the areas of AgTech, food tech and medical devices – which are all adjacent areas to the nascent cannabis industry – it is no surprise that eyes are turning towards the Startup Nation as the field of medical cannabis continues to grow.

The legal export and use of medical and recreational cannabis is becoming more common around the world.  Some 30 US states have legalized cannabis for medical use and eight others allow recreational use of the drug.  Countries such as Canada and Australia are already exporting the cannabis plant for medical use.

There is an advantage to being one of the first movers in this industry.  As research continues to progress, it is likely that we will see the gradual dismantling of regulations against medical cannabis around the globe.  This will create more demand in an industry that is already suffering from supply shortages.  “It is a race,” said Mark Chess, managing director at Infinity Venture Partners, at the Cann10 Conference. “Israel has a lead, but we need the continued support and execution of the entire ecosystem to maintain our edge.”

Legalizing the export of medical cannabis may be a necessity if Israel wants its domestic industry to continue to grow.  The Israeli market for medical cannabis is small, making it difficult for companies to scale up and discouraging startups that are aiming for international growth.  Removing this ceiling will entice more companies to enter the market, fueling further research and international investment.

According to government officials, over 500 Israeli companies have already submitted applications for licenses to grow, manufacture, and export cannabis products.

The new entities entering the market will join a range of Israeli companies that are already flourishing.  Dr. Tamir Gedo, CEO of Israeli medical cannabis startup BOL Pharma, estimates that in 2016, there were approximately 70 Israeli companies working in the field of cannabis.

For example, startup Syqe Medical has developed a 3D-printed, hand-held cannabis inhaler that vaporizes tiny granules of medical cannabis in small doses.  In 2016, cigarette manufacturer Phillip Morris invested $20 million in the startup.

Pharmaceutical company Therapix Biosciences has developed cannabinoid-based drugs, creating a unique formulation of a tablet for sublingual administration.  The tablet is currently undergoing trials, and has the potential to treat impairments in cognitive functioning, such as Alzheimer’s and Tourette’s syndrome.

In addition, Tikun Olam, the largest supplier of medical cannabis in Israel, is already cooperating with companies in Canada, the US, Australia and Spain.  It has one of the largest cannabis treatment databases in the world, and also developed a variety of marijuana strains.

If Israel allows its farmers to export medical cannabis, the economic benefit could be immense.  Says Israeli parliament member Tamar Zandberg: “This is an export Israel can be very proud of, because we stand at the forefront of technological, medical and cultural developments.”  (No Camels 10.10)

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11.2  UAE:  Parents Call the Shots in UAE School Market

With 283 international schools, Dubai has retained its position as the city with the most such schools in the world.  Abu Dhabi comes in third place globally, with 154 such schools.  Indeed, some 43% of UAE parents are actively looking at options for moving their child to another school.  The power of choice comes amid fierce competition between schools, fueled by a record rate of new schools opening up, experts told the International and Private School Education Forum Middle East 2017 (IPSEF).

The figure was revealed by James Mullan, co-founder of, which had asked 600 parents in the UAE if they were considering changing schools.  Such a high response would have been unthinkable in the past, when parents struggled with long school admission waiting lists and paid whatever fees schools demanded.  But tighter regulation and closer competition have empowered parents to become selective in scouting schools.

In Dubai, around 10 new private schools opened this year, following a record 15 new schools last year.  According to new data shared at IPSEF, Dubai has retained its position as the city with the most international schools in the world, with 283 such schools, says The International Schools Consultancy (ISC).  Abu Dhabi comes in third place globally, with 154 schools, according to ISC.  In Abu Dhabi, seven new schools opened this year.  Overall, the UAE has 601 international schools — second only to China, which has 638.

Last month, Gulf News reported that 22 private schools, out of the eligible 159 in Dubai, chose not to increase fees this academic year.  Schools also introduced a raft of fee discounts to attract and retain parents’ loyalty.  Annual private school fees vary greatly in Dubai, from under Dh5,000 to over Dh100,000. In the UAE, the average international school fee per year is around Dh28,200 ($7,747), according to ISC Research 2017.

Almost 605,000 students attend 601 international schools in UAE — the highest number of international enrolment in any country; the second highest concentration of international schools in the world (ISC Research 2017).  Ten new private schools opened this year in Dubai, following a record 15 new ones last year (KHDA data).  (GN 04.10)

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11.3  OMAN: Fitch Says Oman Still Faces Fiscal Risks Despite Spending Reduction

Oman’s budget outturns for the first seven months of 2017 highlight persistent risks to the sovereign’s fiscal consolidation plans as government spending cuts fall short of targets, Fitch Ratings said on 3 October.  Fiscal deterioration was a key driver of our revision of the Outlook on Oman’s ‘BBB’ rating to Negative in June.

Recent data show a 6% decline in total government spending in the first seven months of 2017 compared with a year earlier, with a y-o-y decline of 26% in July alone.  The government has budgeted a reduction of 9% for the full year.  Current spending, including subsidies, fell 2%, against a planned cut of 7%.  Capital spending fell by 4%, against a planned reduction of 9%.

The relative resilience of current spending is largely due to defense spending.  This may be difficult to cut much due to regional security challenges, although completion of equipment purchases in the first half of the year could result in lower spending in H2.  Civil current spending, including subsidies, has fallen 6%, but lower civil investment spending was offset by higher spending on oil and gas exploration, which is key to expanding hydrocarbon revenues.

Overspending on investment and defense in 2016, coupled with a 17% fall in revenues, pushed Oman’s budget deficit to 20.2% of GDP – the highest of any Fitch-rated sovereign.  The 7M/17 numbers show a desire to address this, but volatile monthly expenditure, and the concentration of spending late in the year (characteristic of some cash accounting systems) means the uncertainties surrounding 2017 budget execution remain high.  Headline spending in 7M/17 includes a very sharp (27%) y-o-y decline in “expenditures under settlement”.  These accounted for 12% of the total last year, and will be allocated in December.

Revenues increased 26% y-o-y in 7M/17, reflecting some recovery in oil prices, and revenues will be further supported in 2017-2019 by the recent start of production from the Khazzan gas field.  A review of corporate tax exemptions and an increase of tax rates will begin to have an impact in 2018, while new excise taxes could be introduced later this year and VAT in late 2018.

We have maintained our 2017 deficit forecast at 11.9% of GDP, considering the recent outturns.  But we have increased our 2018 deficit forecast by 1.3pp to 10.9%, taking into account the lower oil price assumptions in our latest “Global Economic Outlook” ($52.5/bbl in 2018, and $55/bbl in 2019).  We expect the 2019 fiscal deficit to narrow to 9.8% of GDP.

Continuing deficits mean we forecast debt to rise to 48.2% of GDP in 2019.  This would be around four times the 2012-2016 average and higher than the ‘BBB’ category median.  We estimate Oman’s fiscal breakeven oil price at $75-85/bbl even with planned spending cuts and non-oil revenue measures.

Oman has financed its deficits mostly through foreign debt issuance, accompanied by drawdowns from the State General Reserve Fund of Oman (SGRF).  SGRF foreign assets were $18 billion at end-2016, underpinning Oman’s sovereign net foreign asset position and supporting its market access and exchange rate peg.  In a hypothetical scenario where Oman did not issue debt and maintained fiscal deficits at forecast 2017 levels, SGRF assets would be depleted by the end of 2018.  But they could last considerably longer if accompanied by debt issuance, fiscal consolidation, and favorable asset returns.  The government is also hoping to privatize some of its domestic infrastructure assets.

The main factor that could lead to a sovereign downgrade would be continued rapid erosion of the fiscal or external positions, for example as a result of a failure to implement fiscal reforms or due to a renewed fall in oil prices.  By contrast, a reduction of the budget deficit allowing stabilization of the government debt/GDP ratio could lead to a revision of the Outlook to Stable.  (Fitch Ratings 03.10)

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11.4  SAUDI ARABIA:  Future of the Saudi Arabia Defense Industry to 2022

The “Future of the Saudi Arabia Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022” report has been added to Research and Markets’ offering.  Saudi Arabia is one of the largest defense spenders in the world, behind the US, China and Russia, with a military budget valued at $50.9 billion in 2017.  The country is the largest market in the Middle East due to its robust economic and financial position backed by its oil exports.  The rising tension with Iran, aggressive procurement strategies, and modernization programs, along with the need to strengthen its indigenous defense industry, are the main factors boosting the country’s military expenditure.  Saudi Arabian defense expenditure is expected to increase from a projected $60.5 billion in 2018 to reach $80.8 billion by 2022 at a CAGR of 7.54%.

Saudi Arabia is making rapid strides in the military sector by becoming the fifth largest defense spender in the world.  In 2015, the country briefly managed to displace Russia and emerge as the third largest defense spender, next only to that of the US and China.  Saudi Arabia plans to source as much as 50% of its defense equipment from domestic defense companies in future and in May 2017, the Saudi Arabian Public Investment Fund (PIF), decided to create a national defense industry company – Saudi Arabian Military Industries (SAMI).

The country’s capital expenditure increased from $20.4 billion in 2013 to $22.4 billion in 2017, at a CAGR of 2.35%, attributed primarily to the drastic decline in global oil & gas prices worldwide.  With Saudi Arabia deriving as much as 86% of its revenues from the export of Brent crude shipments, the continued low oil prices have impacted revenue inflows and caused the country’s economy to contract for two consecutive years in 2015 and 2016.

Homeland security is an area that has gained prominence in Saudi Arabia over the last decade, with expenditure expected to increase from $25.8 billion in 2017 to $33.3 billion in 2022 at a CAGR of 5.26%.  With the “Arab Spring” in the Middle Eastern and the North African (MENA) region and minor protests in Riyadh, the country is expected witness growing expenditure to enhance security measures.

The US was the leading supplier of arms to Saudi Arabia, occupying a share of 46% with major contracts including the modernization of the Saudi M1A2 Tank fleet and E-3 AWACS, and supply of UH-60 helicopters among others.  However, to enhance its domestic defense capabilities, the government introduced an Economic Offset Program, a tool to encourage foreign companies to establish joint ventures (JVs) with Saudi Arabia’s domestic organizations.  (Research and Markets 03.10)

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11.5  EGYPT:  University’s New Dress Code Makes Waves in Egypt

Menna A. Farouk wrote in Al-Monitor on 4 October 2017 that Alexandria University has instituted a campus dress code forbidding ripped and close-fitting clothing as well as religious wear, to mixed reactions.  A recent ban on inappropriate dress at Alexandria University has triggered a row among Egypt’s university students as well as education experts.

On 29 September, Dean of the Agriculture Faculty at Alexandria University Tarek Serour banned university students from wearing inappropriate attire on campus, including ripped jeans, close-fitting clothing for girls and religious clothes for boys, like the gallabiyah.  Serour told the local press that the decision aims to preserve respect for the students themselves and preserve the prestige of the university.

Government officials say the decision is also intended to reduce sexual harassment on campus, claiming that revealing clothes worn by female students may draw unwanted attention from their male counterparts and increase harassment rates.  To them, the ban seeks to uphold respect for the university environment and reverence for social and religious traditions.

According to a 2013 UN Women study, 99.3% of Egyptian women have experienced sexual harassment and 91.5% have suffered unwelcome physical contact.  Interestingly, the study also found, “Harassment and assault occur irrespective of a woman’s appearance, conduct or manner of dress.”

For several years, conservative clothing dominated Egyptian universities, where the majority of Muslim women wore veils and loose clothes.  However, recent years have seen remarkable change, and young male and female students have started to wear ripped jeans and other revealing clothing.

Egypt criminalized sexual harassment in June 2014, a few days before the inauguration of President Abdel Fattah al-Sisi.  The president also vowed to crack down on the phenomenon and reduce it across the country.

The dress code decision has triggered mixed reactions on campuses, where some feel it is a matter of personal freedom while others backed the move.

May Salama, a student at the Faculty of Arts of Ain Shams University, told Al-Monitor that ripped jeans and other items have become commonplace.  Salama, 21, strongly backed the decision, saying that she hopes it will be implemented in her college as well.  She feels that the recent campus styles inappropriately reveal the bodies of students in a way that violates the university’s traditions.  “It is a place for learning and education and students should respect that.  The university campus should be as respected as mosques, churches and synagogues.  People do not go to those places of worship in revealing clothes, and they should not do so when they go to university,” Salama said.

However, Toqa Adel, a student at the Faculty of Engineering of Helwan University, opposes the decision.  Students are not children, he insisted, and can distinguish between what is right and what is wrong. “We are old enough to recognize what to wear and what not to wear,” Adel told Al-Monitor, urging Alexandria University to back down on its decision.

Tarek Nour el-Deen, a former assistant to Egypt’s education minister, expressed support for the decision, saying that it will protect the sanctity of university campuses and limit the moral depravity that has been increasing there.  Nour el-Deen also called for extending the dress code to other campuses, noting that such a decision would narrow the social class gap among students and foster feelings of fraternity and equality among them.  “Unifying the dress code on campus can also reduce violence rates because usually violence emerges from feelings of hatred and grudges.  When the dress code is unified, everyone is equal and no one is better than the other in terms of social classes,” he told Al-Monitor.

Nour el-Deen also said that all universities around the world should impose certain dress code rules on students. “That is why I am backing any decision that prevents inappropriate attitudes and clothing on campus, because the university is a holy place and should be respected,” he added.

Menna A. Farouk is an Egyptian journalist who has been writing about social, political and cultural issues in Egypt since 2013. She is an editor at The Egyptian Gazette newspaper.  Farouk has covered stories about the unrest that followed the January 2011 revolution, press freedom, immigration and religious reforms.  (Al-Monitor 04.10)

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11.6  ALGERIA:  Future of the Algeria Defense Industry to 2022

The “Future of the Algeria Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2022” report has been added to Research and Markets’ offering.  Increased threat of terrorism from the Islamic group, Al-Qaeda in the Islamic Maghreb (AQIM) operating in North Africa, an arms race with neighboring countries such as Morocco and Tunisia, and the ongoing modernization of the armed forces are key factors that have compelled Algeria to bolster its defenses and develop a robust defense posture.

With a defense budget of $10.3 billion in 2017, Algeria is currently the largest military spender in the African region and the world’s tenth largest defense importer of military goods.  Military expenditure is strongly supported by the presence of the oil and natural gas industry, where the revenues are directed towards strengthening defense and security.

The country’s capital expenditure is expected to grow at a robust CAGR of 9.48% during the forecast period 2017 to 2022.  The Algerian Government is expected to procure replacement air refueling tankers, transport aircraft, multi role fighters, armored vehicles, corvettes and frigates, among others.  Additionally, opportunities in security systems and platforms such as unmanned aerial vehicles (UAV), thermal imaging sensors, motion sensors, alarms and radar systems are expected to arise as a result of the country’s focus on strengthening border security.

Algeria’s sudden rise as a major military force in Africa can be attributed to its burgeoning economy and a desire to establish its military superiority in the region.  Algeria’s domestic defense manufacturing capabilities are still underdeveloped, due to which the country mainly relies on foreign imports.  Historically, Algeria has primarily imported weapons and related systems from Russia, occupying a 60.4% share; however, this trend is gradually changing as it opens its market to other countries and reduces its dependency on one particular nation.

The country is increasing efforts to reduce its military dependency on foreign suppliers and, therefore, is largely concentrating on the joint development of defense systems as to strengthen its domestic defense manufacturing capabilities.  Furthermore, Algeria has witnessed a number of JVs with Algerian, Russian, French and Serbian companies in areas such as armored vehicles, unmanned aircraft, military healthcare, and counter-terrorism equipment.  (Research and Markets 04.10)

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11.7  ALGERIA:  Algeria’s Entwined Economic and Political Policy

Riccardo Fabiani posted in Sada that Prime Minister Ahmed Ouyahia’s “helicopter money” policy is a short-term fix not only to Algeria’s economic problems, but also to its precarious political equilibrium.

Algerian Prime Minister Ahmed Ouyahia’s first major policy announcement on 17 September sparked one of the largest economic debates that Algeria has witnessed in the past few years.  His proposal to let the central bank finance the fiscal deficit riled most economists, who saw this measure as a return to the past.  The prime minister justified this move by arguing that, without printing money and injecting it into the government’s coffers, the state would run out of cash by November and would be unable to pay public sector employees’ salaries.  The implicit subtext was that this debt monetization process is the only tool the authorities have to avoid a destabilizing wave of political and social unrest.

In the short term, injecting extra liquidity in a closed, commodity-dependent economy with a very small non-hydrocarbon sector, little competition and tight import restrictions will inevitably result in fast-rising inflation and a depreciating exchange rate.  Contrary to Ouyahia’s claims that this measure can be compared to quantitative easing policies in the United States and Europe, Algeria’s isolation, oil and gas dependence, and limited manufacturing base mean that this additional liquidity will only partially boost business activity and will instead overheat the economy.  However, inflation and depreciation will depend on how much liquidity the central bank will provide: the government has so far refrained from setting a specific target or ceiling for this “helicopter money,” leaving everyone in the dark as to the exact impact of this policy.

Debt monetization will allow Algeria to finance its deficit automatically and to stop worrying about borrowing money for the next few years.  This policy puts a temporary end to the almost endless debate around the country’s economic adjustment, in which the authorities have scrambled to find a policy response to the deterioration of fiscal and external accounts over the past few years.  Since 2014, when Algeria first recorded significant fiscal and current account deficits due to the sharp decline in oil prices, the government has struggled to identify financing sources to plug these twin deficits – particularly as the regime has consistently refused to raise funds on the international markets or turn to the International Monetary Fund (IMF).

This taboo on foreign debt is puzzling given the strikingly different policies that other oil producers in the region have recently pursued.  While Saudi Arabia and Qatar have issued sovereign bonds to diversify their sources of financing and fund their economic restructuring programs, Algeria initially chose to tap into its quasi-sovereign wealth fund (Fonds de Régulation des Recettes, FRR) to postpone any politically sensitive austerity measures.  Once the resources set aside in this fund were almost entirely depleted, the authorities turned to tapping domestic savings to plug the fiscal deficit.

That said, low levels of financial penetration and the size of the informal sector mean that a significant portion of private savings are kept outside of the formal banking sector.  Despite multiple attempts to get people to invest in government bonds that the state could then use to finance its debt, this liquidity has remained out of the government’s reach.  Algerian savers have consistently shunned government bonds and other programs, thus highlighting the very low level of trust that citizens have in the country’s institutions.  As a result, the formal business sector (mainly state-owned banks and politically affiliated companies) has borne the brunt of government borrowing, which has in turn decreased its liquidity and increased the cost of credit for the private sectors, effectively crowding them out.

Needless to say, this strategy has had a negative impact on business activity.  In addition to exacerbating liquidity shortages that have raised credit costs for businesses, government capital spending cuts have also led to payment delays and cash-flow problems for Algerian companies.  Most of Algeria’s small non-hydrocarbon economy is dependent on government contracts and public spending more generally.  Inevitably, over the past few years the combination of investment spending cuts and difficult access to credit have pushed many companies to the brink of bankruptcy, for example in the construction sector, in which 60 percent of companies are reportedly at risk of bankruptcy.

It is in this increasingly difficult context that former Prime Minister Abdelmadjid Tebboune’s failed policy experiment can be understood.  In his three months at the head of the government, Tebboune tried to address the crisis in two ways: by tightening import restrictions and quotas to reduce the current account deficit and by targeting Algerian oligarchs and their alleged political interference to gain support for the government’s austerity policies.  While it is unclear what Tebboune’s long-term strategy was (and chances are good there was none), his policy agenda reflected a clear disapproval of the chaotic system of smuggling and patronage that has characterized the country’s economic liberalization since the 1980s.  In his view, it was the importers and the business class that needed to pay the price for the country’s painful economic adjustment.

These measures backfired very quickly, as his strategy only succeeded in uniting a powerful coalition of interest groups – composed of the import lobby, the oligarchs and large sections of the regime – against his policies. Tebboune tried to strong-arm Algeria’s formal and informal private bourgeoisie into submission, regulate their activities, and inject newfound legitimacy in the state institutions.  Yet eventually it was him, a representative of the state bourgeoisie, who was evicted and replaced with the politically savvy Ouyahia.

Against this backdrop, Ouyahia’s “helicopter money” policy is a short-term fix not only to Algeria’s economic problems, but also to its precarious political equilibrium.  Direct debt monetization allows the government to repay its overdue debts to the business class, reduce its reliance on domestic credit, and increase capital and spending that will benefit Algerian companies and households.  This will offer some respite to the business class while postponing any painful cuts either to public sector wages, which could alienate the support of civil servants and teachers, or to welfare spending, which could upset the general public.  Prime Minister Ouyahia is treading even more carefully on imports, trying to reconcile the interests of the shadowy but influential import lobby with the need to reduce purchases of foreign goods.  So far, Ouyahia has canceled Tebboune’s trade restrictions, but also announced on 8 October that it plans to implement stricter conditions on financing imports through domestic banks.

More importantly, though, this new course is meant to avoid overlap between the country’s twin political and economic transitions.  In this race against the clock, the authorities are trying secure the support of the key pro-regime constituencies – public sector employees, formal economy workers, oligarchs and importers – ahead of the presidential succession, which continues to be shrouded in a thick layer of uncertainty.  Whether President Abdelaziz Bouteflika will run for a fifth term in the 2019 presidential ballot or be replaced by a hand-picked successor, the authorities cannot afford to deal with the political and social consequences of austerity measures in the meantime.

Riccardo Fabiani is a Senior North Africa Analyst at Eurasia Group.  (Sada 13.10)

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11.8  MOROCCO:  Morocco’s ‘BBB-/A-3’ Ratings Affirmed; Outlook Remains Stable

On 6 October, S&P Global Ratings affirmed its ‘BBB-/A-3’ long- and short-term foreign and local currency ratings on the Kingdom of Morocco.  The outlook remains stable.


The outlook is stable, balancing our expectation of further fiscal consolidation and declining external pressures, over the next two years, against risks to economic growth performance emanating from domestic structural shortcomings.

We could raise the rating if the expected transition toward a more flexible exchange-rate and inflation-targeting regime significantly bolsters Morocco’s external competitiveness and ability to withstand macroeconomic external shocks; and if the ongoing economic diversification strategy results in less volatile and more inclusive economic growth and improves GDP per capita significantly above our current expectations.

Conversely, negative rating pressure could build if the government deviates from the current fiscal consolidation plan, resulting in a substantial increase in government debt levels compared to our forecast; or if real GDP growth rates significantly undershoot our expectations.


The ratings on Morocco are supported by ongoing external and fiscal consolidation and moderate government debt levels amid relatively stable policymaking.  The ratings remain constrained by a lower level of GDP per capita compared to similarly-rated sovereigns, significant economic reliance on agriculture, and high social needs.

Institutional and Economic Profile: Despite economic reforms, structural weaknesses will weigh on growth:

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

-We forecast real GDP growth will average 4% in 2017-2020, assuming the current set of reforms will continue, while the business environment remains broadly supportive of growth momentum.

-However, economic growth remains vulnerable to the volatility of agricultural output and excludes some parts of the Moroccan population.

We now expect real GDP growth will accelerate to 4.5% in 2017 (our April 2017 forecast was for 3.5%). Growth rates reached 3.8% and 4.2% year-on-year in the first and second quarters of 2017 on the back of a significant increase in agricultural output from the low base of 2016.  We expect this trend to continue for the rest of the year.  In addition, nonagricultural output will continue to expand moderately, in line with 2016, mainly helped by an expansion of the automotive and tourism sectors.  We forecast real GDP growth will average 4% in 2017-2020, assuming the resilience of the agricultural sector keeps improving, while the business environment and external demand will remain broadly supportive of a gradual pick-up in nonagricultural output.

Economic growth has proved volatile in the past given a high reliance on the agricultural sector. It still accounted for 13% of GDP and 40% of total employment as of 2016.  The authorities have nonetheless managed to bolster the resilience of the agricultural sector to adverse weather patterns over the past years, following the modernization and agricultural diversification promoted in the Green Morocco Plan.

We expect that Morocco will continue to improve economic diversification with the development of the automotive, aeronautics, electronics, and renewable energy sectors.  Morocco has successfully attracted French car manufacturers – such as Renault in 2007 and PSA Peugeot in June 2015 – to develop its emerging automotive industry.  Boeing announced its intention to establish a new industrial hub in the country in September 2016 and the Chinese group HAITE invested $1 billion in a new industrial city in March 2017.  We expect the industrialization plan, which enjoys broad political support, will continue to attract foreign direct investment (FDI), and enhance economic diversification and the resilience of economic growth as a result.

In our view, Morocco has demonstrated political and social stability, especially in the regional context of the Arab Spring.  This has been largely due to constitutional reforms, a rise in current spending by the government, and the continued popularity of King Mohammed VI.  The king chairs the Council of Ministers, which deliberates on strategic laws and state policy orientations.

Moreover, ethnic, tribal, religious, and regional divisions are less pronounced in Morocco than in much of the Middle East and North Africa.

Ongoing social tensions in the Rif region show the growing demand from some parts of the population for more inclusive economic growth, and stem from Morocco’s currently high youth unemployment and income and regional disparities.  The government has expressed its willingness to accelerate the implementation of a regional development program (Al Hoceima Manarat Al Moutawassit) worth approximately $700 million.

Flexibility and Performance Profile: Twin deficits will narrow slightly and debt levels will stabilize:

-We expect fiscal consolidation will continue, leading to a stabilization in government debt-to-GDP levels.

-We project the current account deficit will lessen on the back of stronger export performance; the external liabilities position will remain large, however.

-We believe that the authorities will gradually move toward a more flexible exchange rate regime over the medium term.

We expect the government will pursue its budgetary consolidation path over 2017-2020 and reach its budget deficit target of 3.5% of GDP in 2017.  Revenue growth has proved stronger than expected, while capital spending decelerated on the back of the delayed execution of the 2017 budget.  We forecast budgetary consolidation will now be slower than we previously expected, with deficits close to 3% by 2020.  The authorities have implemented a set of deficit reducing reforms, having cut subsidies substantially, reforming the pension system and containing the growth in current spending.  The reforms have eased long-term pressures on public finances, and we estimate the change in general government debt will narrow to about 3.7% in 2017, more than halving since 2012.  Lower GCC grants will continue to weigh on revenues while further spending cuts will be constrained by socially sensitive subsidies on basic goods (flour, sugar, and butane gas) and an expected increase in capital spending given large investment projects.

The projected fiscal consolidation will continue to help government debt-to-GDP ratios to stabilize over the medium term according to our forecast.  We expect net general government debt to average 52% of GDP in 2017-2020 (net general government debt excludes from gross debt the government’s liquid assets and the holdings of central government debt by other branches of state, such as public pension funds).  The general government debt stock has risen quickly in recent years (it amounted to 32% at year-end 2010, before the Arab Spring) to fund wide deficits.  External financing has increased as a result, and the government successfully tapped the international dollar and euro markets in 2013 and 2014.

The Moroccan dirham is currently pegged to a currency basket comprising 60% euros and 40% dollars.  The current foreign exchange regime limits monetary policy flexibility, in our view. We understand that the Moroccan authorities and the central bank, Bank Al Maghrib (BAM), have postponed the announcement of the implementation of a more flexible exchange rate regime, initially expected to take place at the end of June 2017.  A significant decline in international reserves, which shrank by more than 15% in the two months ahead of the implementation of the reform, prompted Moroccan authorities to postpone the reform implementation to a later (unannounced) date.  The decline has resulted from, among others, pressures from domestic market participants on the back of a growing demand for hedging instruments.  Meanwhile, a sizable portion of these reserves was transferred onto domestic banks’ balance sheets, leading to a substantial increase in foreign-currency assets.  As a result, the reserve coverage declined to around five months of current account payments, from close to seven months at year-end 2016.  We expect international reserves to gradually recover as a result of the postponement of the reform and the unwinding of hedging positions, albeit not in full this year.  A stronger accumulation will be constrained by growing energy bills on the back of rising oil prices and the steady FDI outflows as part of the expansion of the domestic banking sector toward regional markets.

We understand that Moroccan authorities intend to move only gradually to a flexible exchange rate regime (this could take up to 15 years according to authorities) to prevent any potential detrimental exchange-rate volatility.  The reform would imply a gradual widening of the fluctuation bands (that would start by a move to +/- 2.5% from the current +/- 0.3%) and the anchoring of monetary policy decisions on an inflation targeting framework.  We could view such developments positively for our overall monetary assessment for Morocco if the reform is successfully implemented, and if it bolsters Morocco’s external competitiveness and ability to withstand macroeconomic external shocks.

Such a transition is still likely in the short to medium term, in our opinion.  While moving toward a more flexible exchange rate regime, we believe that the Moroccan authorities will maintain in the near term, or only gradually ease, restrictions on capital accounts to avoid any potential large scale capital outflows.

We expect Morocco’s current account deficit to narrow modestly to 3.8% over 2017-2020, consolidating improvements achieved over 2012-2016 (when it averaged 5.8% of GDP).  This continues to reflect our projection for rising exports from newly-developed and higher value-added industries such as the automotive sector.  Cars have become the country’s leading export product, accounting for around 5% of GDP in 2016, and exceeding the share of phosphate and derivatives in exports (4%).  We also anticipate that increased phosphate production, coupled with a mild boost in tourism receipts, should support exports.  These elements, coupled with a growing but relatively low energy bill and strong remittances, will more than offset the impact of the increase in capital goods as part of Morocco’s strategy for industrialization.

The external liabilities position will remain large in the next three years and we forecast narrow net external debt as a proportion of current account receipts (CARs) to average 38% in 2017-2020, from an estimated 34% in 2016.  We also forecast external financing requirements will remain covered by its CARs and usable reserves over this period.  (S&P 06.10)

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11.9  TURKEY:  Turks Brace for Tax Hikes as Ankara Scrambles to Bridge Budget Gaps

Mustafa Sonmez posted in Al-Monitor on 3 October that a balanced budget or “fiscal discipline” used to be the shiniest side of Turkey’s economic showcase to foreign investors.  Over the past two years, however, the showcase has gotten dusty and scratched.  The budget deficit has reached 2% of gross domestic product (GDP), double what it used to be, and it could climb further to 3% of GDP if measures are not taken.  For Turkey, the budget deficit comes atop a chronic current account deficit.  The simultaneous increase of the two — known as a “twin deficit” — is seen as a sign of growing risks that deter foreign investors, who are of crucial importance for Turkey.

The Turkish economy relies heavily on short-term portfolio investments, or “hot money.”  The road map the US Federal Reserve laid out on 20 September makes emerging economies like Turkey less attractive to short-term investors, and the Turkish currency has already weakened.  The dollar, which was worth about 3.4 Turkish liras at the end of August, traded for more than 3.55 Turkish liras at the end of September.

Political tensions over the 25 September independence vote in neighboring Iraqi Kurdistan has added to Turkey’s regional risks, sharpening the dollar’s upward trend.

All those factors call for economic adjustments at home, and the budget deficit is not something that the ruling Justice and Development Party (AKP) can ignore.

On 27 September, the government unveiled its medium-term economic program for the 2018-2020 period, which projects 5.5% growth each year as well as some ambitious targets in terms of public finance.  Accordingly, the budget deficit at the end of this year is projected at 2% of GDP, which is above the average 1.7% in the euro zone, though still below the 3% in the European Union’s Maastricht criteria.  But coupled with the current account deficit, a budget deficit of such a size remains risky.  The AKP government aims to reduce the figure back to 1% by significantly hiking taxes and increasing the treasury’s borrowing limit.

Both measures have stirred popular discontent and opposition in parliament.  The planned tax hikes, laid out in a draft omnibus law, will affect the prices of a string of consumer goods and services from cars to games of chance as of next year.  In addition, the government is planning to levy a special consumption tax on a number of new goods and services. The additional revenue the measures will generate is estimated at about 28 billion Turkish liras ($7.8 billion).

Under the plan, the motor vehicles tax, for example, would increase 40% in 2018, while the tax on games of chance would double to 20%.  The special consumption tax would extend to cigarette paper and energy drinks. In the finance sector, the 20% corporate tax would go up to 22%, in addition to other levies affecting companies and real estate.

In an apparent bid to cushion popular anger, Finance Minister Naci Agbal argued that boosting the country’s military power was a prime objective, given rising geopolitical and security risks in the region.  The Defense Industry Fund, he said, would receive an additional 8 billion liras ($2.2 billion) from tax revenues next year.

As a second measure, the government plans on additional borrowing.  The budget deficit was projected at 47.5 billion liras ($13.3 billion) in the 2017 budget.  But the treasury, which is tasked with borrowing to bridge the gap and entitled to raise the amount by 10% to 52.2 billion liras ($14.6 billion), went over the limits at the end of August.  The draft law adds 37 billion liras ($10.4 billion) to the net borrowing amount, meaning that the budget deficit this year would expand to 89.2 billion liras ($25 billion), almost double the original projection.

The government’s use of an omnibus law for extra borrowing is also under fire.  Critics say the move requires a supplementary budget, arguing that the law, in which various issues are jumbled together, is an attempt to evade transparency.

Another question is whether the new resources will go only to the Defense Industry Fund, which the finance minister was eager to highlight, or to other funds as well.

Article 76 of the draft law makes a broader definition of potential recipients, citing “equity companies and/or funds financing projects.”  This move seems to pave the way for the treasury to transfer money to Ankara’s already controversial sovereign wealth fund.  Created last year as a commercial entity exempt from public audit, the fund has been a closed book, with little public information on what it is doing and spending.

The budget deficit’s jump to 2% of GDP stemmed mostly from measures enacted to fend off a full-blown crisis after the Turkish economy shrunk by nearly 1% in the third quarter of 2016.  The measures included tax reductions, tax postponements, a lavish loan expansion and a series of populist measures designed to secure the April referendum on a shift to a presidential system.  Coupled with fresh “hot money” inflows since February, the measures contributed to renewed economic growth, but at the expense of a gaping budget deficit.  The government’s plan to raise taxes and the borrowing limit aims to stop the deficit from widening further, but that’s not the only gap.

The budget will take an additional blow from the revenue guarantees that the treasury has provided to private companies involved in so-called “megaprojects,” such as bridges and roads.  Some of the completed projects are already underperforming, which means the government will need budget funds to pay revenue differences to private operators.

A second blow is likely to come via the Credit Guarantee Fund, which has sponsored bank loans totaling nearly 220 billion liras ($62 billion) to about 344,000 companies as part of the government’s anti-crisis measures.  The prospect of bad loans raises the risk of a fresh burden on the budget. According to the fund’s September report, the credit score of about 110,000 companies — roughly one-third of the total — is below a B.

In sum, the government needs extra funds to deal with new bottlenecks looming down the road, atop the downward trend in the flow of “hot money” following the Fed’s 20 September decisions.  The voters’ response to higher taxes and belt-tightening will come in clear view in municipal elections next year and presidential and parliamentary polls in 2019.

Mustafa Sonmez is a Turkish economist and writer. He has worked as an economic commentator and editor for more than 30 years and authored some 30 books on the Turkish economy, media and the Kurdish question.  (Al-Monitor 03.10)

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11.10  CYPRUS: Staff Concluding Statement of the 2017 Article IV Mission

The IMF announced that the Cypriot economy has achieved an impressive turnaround since the 2012-13 banking crisis.  GDP growth has accelerated for three consecutive years; unemployment is on a declining trend; the underlying current account deficit has narrowed sharply alongside improved external price competitiveness; the fiscal balance has swung from a large deficit to a small surplus; emergency bank liquidity has been fully repaid and bank deposits are rising; and property prices have begun to edge up following a large correction.  These results were underpinned by generally prudent macroeconomic and financial policies and progress on structural reforms that enabled the sovereign to access capital markets on increasingly favorable terms, accompanied by a series of upgrades to the credit rating, which now stands close to investment grade.

While much has been achieved, important legacies from the earlier boom-bust cycle have yet to be erased.  Private sector debt remains extremely high, with banks’ nonperforming loans (NPLs) relative to total loans or GDP among the highest in the world.  Although several years of robust GDP growth has improved the repayment capacity of many borrowers, progress on reducing NPLs remains slow.  Public sector debt also remains elevated.  High debt and NPLs renders the economy more vulnerable to adverse shocks, including a tightening of global financial conditions.

Recent developments, outlook & risks

The economic recovery gathered speed on robust external demand.  GDP grew by 3.6% (year-on-year) in H1/17, accelerating from 2.8% in 2016.  This lifted output to 5% below its pre-crisis peak and narrowed the output gap to about 2% below its potential.  Strong foreign demand propelled tourism, construction and professional services, while the ongoing contraction in domestic financial intermediation – reflecting deleveraging by banks – was a drag.  On the expenditure side, rising disposable incomes and employment, together with tourism and (albeit undesirable) non-servicing of debt by a large fraction of borrowers, is fueling consumption growth.  While still well-below pre-crisis levels, fixed investment is growing by more than 14% (with housing construction rising by 23%) since mid-2016, supported by a range of tax and other incentives, and directly contributed one half of GDP growth.

The current dynamic growth momentum is expected to persist for the next few years, before gradually easing.  This forecast is underpinned by two forces: the existing pipeline of large, mainly foreign-financed, construction projects that will take several years to complete, and continued weak payment discipline that is assumed to keep private consumption growing broadly in line with income.  As a result, growth is expected to average around 3¾% during 2017-18, and to gradually moderate thereafter as investment projects are completed.  The high import intensity of investment will cause some re-widening of the current account deficit despite sustained tourism demand.  New construction will alleviate capacity constraints in tourism, helping to lift longer-term growth to 2½%.  Nonetheless, output is expected to overshoot potential within the next few years, exerting some upward pressure on prices and productivity-adjusted wages.  Despite the projected pickup in incomes, NPL recovery is likely to remain subdued in the absence of improved payment discipline.

Further moderate upside surprises to growth are possible, but downside risks could be sizable.  Growth could remain elevated for longer if the current momentum in foreign-financed construction is sustained.  However, this could make the economy more prone to a new boom-bust cycle if external financing was to slow suddenly – possibly in response to risk-off sentiment triggered by faster-than-expected policy tightening by major central banks – or if the supply of new properties was to significantly outstrip final demand.  Continued slow resolution of NPLs could keep financial sector vulnerabilities elevated. If fiscal discipline is eroded, higher external financing costs could weaken growth.  Cyprus’s role as a business and financial hub could be adversely affected if new international initiatives are agreed on corporate taxation, as well as retrenchment of cross border financial intermediation by foreign correspondent banks.  On the other hand, growth prospects could be significantly boosted if development of offshore hydrocarbon deposits proves financially viable.

Key policy priorities

The economic achievements of recent years should be consolidated and extended by: significantly reducing, in a non-disruptive manner, excessive private indebtedness and banks’ NPLs; ensuring that economic growth remains broad-based and avoids undue dependence on external financing; avoiding pro-cyclicality in public spending; speeding up the legal process for enforcement of commercial claims; and enhancing competition and governance.

Achieving sustainable deleveraging and NPL reduction

Eliminating the private sector debt overhang and banks’ excessive NPLs is essential to support balanced and sustainable growth.  Nonbank sources of liquidity – including nonpayment of debt service obligations and foreign equity financing – are supporting growth, although these may be finite or unreliable.  Moreover, given the high private indebtedness and NPLs, opportunities for prudent new lending by banks are limited, affecting banks’ profit potential and concentrating investment and growth into a relatively few sectors that are self-funded or appeal to foreign investors.

The current period of strong growth provides a good opportunity to reduce private sector debt and banks’ NPLs.  Cleaning up banks’ portfolios while leaving borrowers saddled with high debt would not be sustainable for banks or the economy.  Relying mainly on rising incomes to grow out of debt and NPLs would unlikely be successful in the presence of weak payment discipline.  Moreover, attempting to sustain very rapid GDP growth while remaining highly leveraged could be subject to adverse shocks.

Comprehensive and ambitious strategies are needed to deliver a sizable deleveraging.  Banks should remain adequately provisioned and capitalized, and borrowers should be incentivized to engage with banks by strengthening legal and other restructuring measures.  Simultaneously adopting a combination of tools – debt-asset (D-A) swaps, borrowers’ repayments using their own funds, use of banks’ provisions, as well as lower spending by borrowers – could deliver a sizable reduction in debt and NPLs with limited dampening of GDP growth, especially given the cushion from current strong external demand.

Improved payment discipline is critical for a properly functioning economy and sustainable deleveraging.  Despite recent reforms to the legal framework, strategic default is enabled by still-lengthy and inefficient procedures for commercial claims enforcement and foreclosure and a perceived blanket protection of primary residences.  Strategic default imposes a heavy cost on society by limiting banks’ ability to extend healthy credit and perpetuating financial sector vulnerabilities.  Tools to change borrowers’ incentives are therefore needed.  To better serve as a deterrent to strategic default, the foreclosure framework should be further strengthened.  The use of the new debt restructuring tools for corporates and individuals should also be promoted.  Transfer of property titles to eligible trapped buyers should continue.  The planned adoption of a credit scoring system by the Credit Registry is welcome.

More generally, prudent standards in lending and loan classification should be maintained.  To prevent erosion of underwriting standards in the face of competitive pressures, supervision of banks’ risk management practices should be stepped up.  Targeted inspections of loan restructuring practices should focus on classification accuracy, frequency of re-restructurings and adequacy of provision coverage.

Avoiding a pro-cyclical fiscal policy

The headline fiscal position is expected to continue to strengthen during 2017-19 on strong revenue collection.  As a result, gross public debt relative to GDP would begin declining in 2017 and then fall significantly thereafter, while a sizable cash buffer would still be maintained to help pre-fund scheduled debt repayments.  This forecast incorporates the planned net-neutral fiscal impact of the new National Health Service (NHS) that was recently voted into law and is scheduled to be rolled out in mid-2019.  Adjusting for the economy’s cyclical position and one-offs, the structural fiscal balance would remain largely unchanged during the next few years.

Growing spending pressure and the risk that temporary or cyclical revenue is perceived as permanent suggests that fiscal spending should be capped by medium-term GDP growth.  Recent buoyant tax revenue may point to faster GDP growth and an output gap that is closing rapidly.  Setting an annual ceiling for nominal spending that increases in line with medium-term GDP growth (with downward adjustment to compensate for any future cuts to tax rates or narrowing of tax bases) would avoid pro-cyclical policies, help prevent a structural fiscal loosening and secure a downward path for debt.  To underpin this spending cap, while making some room for growth-enhancing spending, a more durable mechanism to keep the public-sector wage bill in check, accompanied by broader civil service reforms, should be instituted.  Close monitoring of the cost (including establishing an arrears monitoring system) of the NHS should be undertaken to ensure that public finances are not put at risk.  Better financial oversight of municipal and local governments, semi-government organizations and state-owned enterprises, and reforming their governance structures, is advised.  Further strengthening revenue administration is needed by legislating the Tax Procedure Code.

Balanced and Sustainable Growth

Real estate:  Policy adjustments may be needed to avoid a potentially unsustainable increase in construction activity.  Several investment incentives, including the citizenship-by-investment (CbI) scheme, provided welcome support to construction and the economy more broadly in the aftermath of the crisis and construction of luxury residential and tourist properties – financed mainly by foreign equity – has been brisk.  However, this support has now achieved its goal and could turn pro-cyclical.  Further decoupling the scheme’s eligibility requirements from real estate would help avoid excessive concentration of economic activity, and reduce the risk of over-supply of luxury properties.  Procedures for issuing and transferring title deeds for new properties should be streamlined, with timely transfer of titles to buyers.  If signs emerge that construction in the luxury market is becoming reliant on domestic credit or activity is spilling over to other segments, tightening bank lending standards and raising macro-prudential capital requirements would be appropriate.  Reinstating the recently rescinded immovable property tax and raising transfer duty on immovable property would provide additional countercyclical tools.

Enforcement of commercial claims:  Strengthening the effectiveness of commercial claims enforcement and increasing the efficiency of the courts are priorities to improve the investment climate and support NPL reduction.  Delays in court processes weaken the attractiveness of the country as a business destination.  To rectify these issues, the civil procedure law should be reviewed and updated; rules for appeals and interim injunctions should be modernized to limit undue delays; and consideration should be given to introducing a streamlined procedure for enforcement of small claims.  The establishment of a commercial court and introducing specialization of judges in the lower courts would allow more expeditious case handling.

Competition and governance:  Improving the investment climate across a wide range of sectors requires efficiency-enhancing reforms.  Attracting capital into innovative sectors would help expand investment beyond Cyprus’s traditional sectors and create employment for its highly-skilled labor force.  The proposal to introduce expedited procedures for investment is therefore welcome.  Restarting the privatization agenda and allowing firms to enter protected sectors would increase competition and help raise productivity.  Strengthening governance and operational efficiency in key public and private sectors, including through the adoption of pending reforms to state-owned enterprises and restarting privatization, would help modernize the economy and allow firms to absorb the 6-percentage point increase in the tax wedge on employment for funding the new NHS.  (IMF 06.10)


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