Fortnightly, 4 April 2018

Fortnightly, 4 April 2018

April 3, 2018


4 April 2018
19 Nisan 5778
18 Rajab 1439




1.1  Israel Requests Exemption from New US Metal Import Tariffs
1.2  Israel to Invest $287 Million in Big Data Health Project


2.1  Elbit Systems to Buy Arizona’s Universal Avionics
2.2  Energean Takes Final Investment Decision on Karish & Tanin Gas Project
2.3  BIRD Energy Calls for Renewable Energy Proposals
2.4  Candex Raises $3.5 Million
2.5  US Congress Approves $706 Million for Israeli Missile Defense
2.6  Audioburst & Samsung Join to Change the Way Audio Content is Consumed
2.7  DENSO Brings Advanced Automotive Technology R&D to Israel
2.8  MassChallenge 2018 Program Chooses 55 Global Startups


3.1  Itron Expands Work in Jordan to Address Non-Revenue Water Issues
3.2  Flydubai Resumes Flights to Erbil Following Earlier Suspension
3.3  UAE’s Gulftainer Wins 50 Year Concession to Operate the Port of Wilmington, Delaware
3.4  Hackers Said to Cost Arabian Gulf Energy Industry Over $1 Billion in 2017
3.5  Kuwaiti Government Orders Teledyne ISCO’s Industry-Leading Flow Monitoring Solutions
3.6  ADNOC Awards $3.5 Billion in Deals to Boost Oil Refinery Output
3.7  JMA Group Invests $16 Million to Open Supermarket Chain in UAE
3.8  Guided Therapeutics Completes License Agreement with Turkish Partner
3.9  Fortegra Establishes European Subsidiary in Malta


4.1  Bank of Israel Says: Expand Plastic Bag Fee to Grocery Stores & Super-Pharm


5.1  Lebanon’s Average Inflation Rate Stands at 5.37% in February 2018
5.2  Tourist Arrivals to Lebanon Rise by an Annual 2.97% in February 2018
5.3  Lebanon’s Industrial Exports Rise by 1.5% to $219.6 Million in December 2017

♦♦Arabian Gulf

5.4  GCC Construction Deals Set to Rise to $148.7 Billion in 2018
5.5  Qatar Will Buy Turkish Drones, Ships & Armored Vehicles
5.6  UAE Healthcare Spending Forecast to Rise 9% by 2022
5.7  Abu Dhabi Crown Prince Hails Completion of First Nuclear Power Plant
5.8  Dubai’s Non-Oil Trade with South Korea Rises to $7.4 Billion
5.9  Oman Forecast to See Double Digit Growth in Tourists by 2021

♦♦North Africa

5.10  Egypt’s Net Foreign Reserves Rise to $42.611 Billion
5.11  Further Privatizations Announced In Egypt
5.12  Morocco Signs Agreement on African Continental Free Trade Area


6.1  Turkey’s Economy Grows by 7.4% in 2017
6.2  Turkey’s Exports Reach $160 Billion in Annual Terms
6.3  Turkey’s Unemployment Rate Stood at 10.9% in 2017
6.4  Construction of Turkey’s First Nuclear Plant Begins in Akkuyu
6.5  Euro Zone Bailout Fund Approves New Loans for Greece
6.6  Greek Army Set To Get €1 Billion Upgrade



7.1  Yom HaShoah – Holocaust Martyrs’ & Heroes’ Remembrance Day 2018
7.2  Israa Wal Miraj Holidays to Be Celebrated
7.3  Israel Commemorates Those Who Fell in Service to the Nation
7.4  Israel’s Independence Day – 70 Years After Sovereignty was Regained


7.5  IDC Herzliya Becoming Israel’s First Private University
7.6  Sisi Wins Second 4 Year Term as Egypt’s President
7.7  Greek Women Have Fewer Children than EU Average


8.1  Endospan Receives CE Mark for HORIZON EVAR System to Treat Abdominal Aortic Aneurysm
8.2  Kalytera to Develop a Novel Cannabinoid-Based Compound for Pain Treatment
8.3  Kanabo Research Partners with Jupiter Research
8.4  Human Xtensions Receives FDA Clearance for HandX – Smart Digital Handtop Solutions
8.5  Teva Announces the Launch of a Generic Version of ALOXI in the United States
8.6  Teva Announces the Launch of a Generic Version of Lialda in the United States
8.7  Lipogen’s Natural Formula Clinically Shown to Reduce PMS Symptoms
8.8  Vaica’s SimpleMed Digital Health Solution Registers 66% Improvement of Medication Adherence
8.9  Pythagoras Medical Receives CE-Mark for the ConfidenHT System
8.10  DarioHealth Receives FDA Clearance for iPhone 7, 8 & iPhone X Smart Glucose Meter


9.1  c2a Offers Royalty Free Solution to Solve Fundamental Car Security Vulnerability
9.2  Terahertz Computer Chip Now Within Reach
9.3  Innovative Cosmetics Company Develops World’s First Visual Fragrance Technology
9.4  International Food and Drink Company Goes Smart with Friendly Technologies
9.5  Magal Announces Orders for More Than 20 Sites for its Fiber Optic Based Sensor Solution
9.6  Ilyon’s Bubble Shooter: 50 Million Downloads and Counting
9.7  Hysolate Selected as Finalist for 2018 RSA Conference Innovation Sandbox Contest
9.8  On Track Innovations Completes New Cryptocurrency Payment Solution
9.9  Telrad Networks Fixed LTE Solution Selected by City of Euless, Texas
9.10  World’s First 2 Petaflop Deep Learning System Features Mellanox Solutions
9.11  Checkmarx Named Leader in the Gartner 2018 Magic Quadrant for Application Security Testing


10.1  Israeli Startups Raised Over $300 Million in March
10.2  Food Prices in Israel Drop by 5%, OECD Report Finds
10.3  Israel Triples Whisky Imports
10.4  Tourist Overnights in Israeli Hotels Keep Rising


11.1  JORDAN: Slowing Jordan’s Slide Into Debt
11.2  JORDAN: ‘B+/B’ Ratings Affirmed; Outlook Remains Stable
11.3  SUDAN: Sudan’s Big Business Lobbying US to Help Attract Foreign Dollars
11.4  TUNISIA: IMF Executive Board Completes Second Review under EFF Arrangement
11.5  MOROCCO: Fitch Affirms Morocco at ‘BBB-‘; Outlook Stable
11.6  MOROCCO: Morocco’s Difficult Path to ECOWAS Membership
11.7  CYPRUS: Staff Concluding Statement of the Second Post-Program Monitoring Mission


1.1  Israel Requests Exemption from New US Metal Import Tariffs

Economy and Industry Minister Cohen has asked U.S. Trade Representative Lighthize to exempt Israel from new trade tariffs on steel imports to the United States.  Cohen said that while Israeli metal exports to the U.S. are marginal, amounting to $25 million annually, tariffs on Israeli metals would have a significant impact on small and medium-sized Israeli manufacturers.  The Israeli Manufacturers Association has spoken with Jewish community leaders in the U.S. about the issue in an effort to reverse the “unilateral” step of imposing tariffs on Israel, which he said could harm trade between the two countries.

Earlier this month, U.S. President Donald Trump signed an order imposing a 25% tariff on steel and a 10% tariff on aluminum in a move aimed largely at protecting American industries from massive imports from China.  The tariffs are due to take effect in May.  Several U.S. allies have already been granted exemptions from the order, among them Canada, Mexico, Brazil, South Korea, Argentina, Australia and the European Union.  (IH 26.03)

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1.2  Israel to Invest $287 Million in Big Data Health Project

Israel will invest nearly NIS 1 billion ($287 million) in a project to make data about the state of the population’s health available to researchers and private companies, Prime Minister Netanyahu said on 25 March.  Almost all of Israel’s almost 9 million citizens belong to four health maintenance organizations – Maccabi, Clalit, Leumit and Meuhedet – who keep members’ records digitally, creating a huge medical database.  A statement from Netanyahu’s office said mechanisms would be put in place to keep information anonymous, protect privacy and security, and restrict access as part of the government project.  Patients will be able to refuse the use of their information for research.

Digital health records are valuable. Big data analytics – comparing information about large numbers of patients – give some of the world’s biggest drug makers indications of how medicines perform in the real world.  Netanyahu said world leaders and international firms have already shown interest in the project and that the potential revenue for Israel could be in the billions of dollars.  (IH 26.03)

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2.1  Elbit Systems to Buy Arizona’s Universal Avionics

On 22 March, Haifa’s Elbit Systems announced that it is in the process of completing the acquisition of the privately-owned Universal Avionics Systems Corporation of Tucson, Arizona, through an asset acquisition agreement.  The parties received the necessary government approvals for the transaction.

Elbit has received the necessary government approvals for the acquisition.  No financial or other details were disclosed.  Universal Avionics Systems manufactures innovative avionics systems for business jets, turboprop aircraft, transport aircraft, helicopters, regional and commercial airliners used by corporate, military and airline operators.  The company offers advanced avionics as a retrofit solution for the largest diversification of aircraft types in the industry.  (Elbit 22.03)

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2.2  Energean Takes Final Investment Decision on Karish & Tanin Gas Project

Energean Oil & Gas announced that its Board of Directors has approved the Final Investment Decision (FID) to proceed with the $1.6 billion Karish & Tanin Development Project, offshore Israel.  $405 million of the $460 million raised from the recent IPO of Energean will be used to fund the Company’s 70% share in the project, while the remaining 30% will be funded by Kerogen Capital, Energean’s partner in the project.  The project is also being financed through a Senior Credit Facility of $1.275 billion recently announced and underwritten by Morgan Stanley, Natixis, Bank HaPoalim and Societe Generale.

Energean has secured long-term gas agreements with some of the largest private power producers and industrial companies in Israel.  The Company has contracted for the purchase of a total of 61 BCM of gas over a period of 16 years, at an annual rate of approximately 4.2 BCM per year (on an ACQ basis).  Energean will develop the project through a new build, owned FPSO with gas treatment capacity of 800 MMscf/day (8 BCM/per annum) and liquids storage capacity of 800,000 bbls, which the Company believes provides a flexible infrastructure solution and potentially the scope to expand output for potential additional projects.  A 90km gas pipeline will link the FPSO to the Israeli coast and necessary onshore facilities to allow connection to the domestic sales gas grid operated by INGL, the national gas transmission company.  The entire project infrastructure has been contracted to be engineered, built and commissioned under a lump sum EPCIC Contract with Technip FMC, with a contracted delivery date of Q1/21.

During 2019, three wells will be drilled into the Karish discovery, using the Stena Forth Drill Ship which is under contract from Energean. The Company has also secured options to drill five further wells in the licenses Energean holds in Israel.  (Energean 22.03)

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2.3  BIRD Energy Calls for Renewable Energy Proposals

BIRD Energy has announced its tenth funding cycle for US-Israel joint project proposals with a focus on Renewable Energy and Energy Efficiency.  To be considered, a project proposal must include R&D cooperation between two companies or cooperation between a company and a university/research institution (one from the US and one from Israel).  The proposal should have significant commercial potential and the project outcome should lead to commercialization.  Some examples of research and development topics within proposals could be Solar and Wind Power, Advanced Vehicle Technologies and Alternative Fuels, Smart Grid, Storage, Water-Energy Nexus, Advanced Manufacturing or any other Renewable Energy/Energy Efficiency technology.  The conditional grant per project is up to 50% of the R&D costs associated with the joint project, and up to a maximum of $1 million per project.  The US-Israel energy cooperation was strengthened significantly in 2014 when the US Congress passed a law promoting the strategic partnership between the two countries.

BIRD Energy was established following an agreement between the US Department of Energy/EERE and the Israel Ministry of Energy and Water Resources to promote and support joint research and collaborations in the field of Alternative Energy and Energy Efficiency. BIRD Energy is administered by the BIRD Foundation, which has been promoting cooperation between U.S. and Israeli companies in various technology sectors since 1977.  (BIRDF 22.03)

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2.4  Candex Raises $3.5 Million

Candex announced it has raised $3.5 million in a seed funding round from Edenred Capital Partners, Partech Ventures, Advisors.Fund, Camp One Ventures, NFX, Tekton Ventures, Big Sur Ventures and fintech angel Mark Goines.  The financing will help Candex expand its business with Fortune 500 and smaller companies.

Candex facilitates vendor payments for its corporate users that take advantage of gig economy services.  The rise of the gig economy means companies can access a wide array of vendors, but an increasing volume of suppliers can lead to complications in the accounts payable department, the company explained, adding that the average large enterprise sees 90% of service vendors accounting for just 5 % of overall spend.  This can lead to the administrative costs associated with vendor management exceeding the cost of the vendor’s services.  The company’s solution enables businesses to create private eMarketplaces that let employees work with approved vendors and communicate via a chat interface.  Candex supports procure-to-pay on the platform for transactions below $100,000 and manage documents and data associated with the transaction and vendor services.

With offices in Tel Aviv and San Francisco, Candex offers a simplified platform for companies to engage, track and pay small suppliers.  This makes it easier for companies to take advantage of the gig economy and use more vendors than ever to compete and maintainer a leaner organization.  (Candex 22.03)

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2.5  US Congress Approves $706 Million for Israeli Missile Defense

Just before its Easter recess, the US Senate and House of Representatives approved by a large majority a $706 million allocation for Israeli military procurement in the 2018 US budget.  The allocation will be divided into Israeli research and development programs and procurement of the Iron Dome and David’s Sling missile defense systems, produced by Rafael Advanced Defense Systems, and the Arrow 3 missile defense program, produced by Israel Aerospace Industries.  $375 million will be allocated to continued development of the Arrow missile, while most of the remaining $330 million will be allocated to procurement contracts from US industries.  The budget allocated was at the request of the US Missile Defense Agency (MDA), which initially asked for a much smaller allocation, but added $558 million to its request on the eve of the vote, thereby almost tripling the amount.  The original allocation for ballistic defense was $9.5 billion.  Congress increased it in order to pay for expenses in 2017 related to measures for dealing with the threat from North Korea.  (Globes 26.03)

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2.6  Audioburst & Samsung Join to Change the Way Audio Content is Consumed

Audioburst and the technology giant Samsung have come together to deliver an incredible new listening experience for consumers.  The Audioburst solution will now be incorporated into millions of Samsung products around the world, beginning with Smart TVs.  Audioburst changes the way people consume audio content by turning every connected device in the house into an engaging voice-activated source for news, sports, entertainment, traffic, weather and many other areas of interest.  Audioburst’s platform analyzes millions of minutes of live and pre-recorded audio content each day – podcasts, radio streams and other audio sources – tagging and indexing them and making them searchable by keyword, context and topic.

The new collaboration also sees Samsung Ventures join Audioburst’s Series A round of financing, extending it to $11.3 million.  Initially announced in June, 2017, other investors in the round include Advanced Media, the leading speech recognition technology company in Japan as well as Flint Capital, 2B-Angels and Mobileye investors consortium.

Tel Aviv’s Audioburst is a revolutionary AI-powered audio search platform connecting audio content and users.  With the mission of organizing the world’s audio content, every day, the Audioburst AI platform listens to, understands, segments and indexes millions of minutes of audio information from top radio stations and podcasts.  Powered by advanced Natural Language Processing (NLP) technology and a proprietary AI platform that indexes audio segments into searchable “bursts” in real-time, Audioburst is introducing an entirely new way for consumers and businesses to interact with live or recorded audio content across platforms and devices.  The Audioburst experience is already available on several interfaces such as Audioburst Search, a new web and mobile-optimized search engine for finding, discovering, consuming and sharing audio news.  Additionally, developers can access the Audioburst API to tap into the robust Audioburst Content Library and introduce a more dynamic and personalized listening experience for users across in-car infotainment systems, digital assistants, IoT gadgets, smartphones and more.  (Audioburst 28.03)

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2.7  DENSO Brings Advanced Automotive Technology R&D to Israel

Japan’s DENSO Corporation unveiled its newest innovative satellite R&D team in Israel, accelerating advanced technologies like automated driving, cybersecurity and AI.  Starting in April, DENSO’s R&D satellite will begin collaborating with local startups to pioneer new technologies.  This is the newest satellite in DENSO’s global R&D network located in key regions.  DENSO’s satellite R&D activities in Israel build on the country’s surge in innovative technologies in fields spanning cybersecurity, telecommunications, AI, sensing and software.  Israeli companies and tech startups have an established track record for successful collaboration with companies overseas, and are expected to play a major role in global innovation across a number of fields.

DENSO will tap into Israel’s technology strengths to quickly develop more competitive technologies, both internally and through collaborative research with local companies and universities.  The technologies and products developed in Israel will contribute to DENSO’s mission to deliver safe and sustainable mobility solutions that improve people’s lives and benefit the environment.  DENSO Corp., headquartered in Kariya, Aichi prefecture, Japan, is a leading global automotive supplier of advanced technology, systems and components in the areas of thermal, powertrain control, electronics and information and safety.  (DENSO 28.03)

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2.8  MassChallenge 2018 Program Chooses 55 Global Startups

MassChallenge announced that 55 of the world’s highest impact, highest potential early-stage startups will join its 2018 program in Israel.  The selected startups work across a range of industries – including future mobility, visual technology and medtech.  Some and 33% of the cohort comes from countries outside of Israel including India, US, Poland and Kenya.

More than 520 startups from 32 countries applied to join MassChallenge Israel’s 2018 class.  Startups were evaluated on their ability to demonstrate impact and potential – for ideas ranging from scientific breakthroughs to industry disruptions – by an expert judging panel that included more than 170 of the world’s top executives, entrepreneurs, and investors.  The 55 startups will participate in MassChallenge’s nearly four-month accelerator program, where they will receive world-class mentoring from industry experts, tailored programming, free co-working space, and unrivalled access to corporate partners. The accelerator will run from late April through early August 2018 and culminates with the MassChallenge Israel Awards, where the accelerator’s top startups will be invited to the MassChallenge Israel Trek, an all -expenses paid curated roadshow to the East Coast of the US. Select startups will share a portion of an equity-free cash prize of NIS 500,000.

As part of Prime Minister Netanyahu’s visit to India in January 2018, MassChallenge launched a partnership with the Deshpande Foundation and Nasscom to grant a $5,000 scholarship to up to 10 Indian teams accepted into the MassChallenge Israel accelerator.

MassChallenge is a global network of zero-equity startup accelerators.  Headquartered in the United States with locations in Boston, Israel, Mexico, Switzerland, Texas, and the UK, MassChallenge is committed to strengthening the global innovation ecosystem by supporting high-potential early stage startups across all industries, from anywhere in the world.  To date, more than 1,500 MassChallenge alumni have raised more than $3 billion in funding, generated over $2 billion in revenue, and created over 80,000 total jobs.  (MassChallenge 28.03)

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3.1  Itron Expands Work in Jordan to Address Non-Revenue Water Issues

Liberty Lake, Washington state’s Itron, a world-leading technology and services company dedicated to the resourceful use of energy and water, announced that the Jordan Water Company (Miyahuna) has signed a contract with Al Darb after an international bid to buy 76,000 ultrasonic meters and software as part of Miyahuna’s strategic Non-Revenue Water (NRW) reduction plan.  The utility will use an Itron system, including static metering technology, and take advantage of Itron’s analytic services for three years to reduce water losses.

Miyahuna provides water and wastewater services to more than 670,000 customers in the Kingdom of Jordan, serving the provinces of Amman, Zarqa and Madaba.  The region faces challenges with water scarcity.  Across the country, harsh conditions and discontinuous water supply disrupt metering data and delivery.  To address these issues, the utility will take advantage of Itron’s NRW expertise, including advanced analytics to optimize water loss reduction.  It will install Itron Intelis ultrasonic water meters that do not count air, which is key to address intermittent supply situations.  Designed for Middle Eastern conditions, the meter has no moving parts, which ensures stability and accuracy over the entire lifetime of the product. Additionally, it provides detailed meter data to analyze network conditions and water consumption, detecting temperatures, leaks or unusual usage patterns.  (Itron 22.03)

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3.2  Flydubai Resumes Flights to Erbil Following Earlier Suspension

Flydubai, which began its direct flights to Erbil in Kurdistan in July 2010, suspended flights last September at the request of the Baghdad authorities.  flydubai has resumed flights to Erbil, saying it will operate a daily service from 25 March, adding that the number of passengers travelling between Erbil and Dubai on flydubai has grown by more than 161% since the airline launched its flights in 2010.  Flydubai suspended flights at the request of the Baghdad authorities.  Iraqi Prime Minister Haider al-Abadi made the call in response to the regional government’ plan for an independence vote.  Flydubai operates 37 weekly flights to four destinations – Baghdad, Basra, Erbil and Najaf.  (AB 26.03)

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3.3  UAE’s Gulftainer Wins 50 Year Concession to Operate the Port of Wilmington, Delaware

Gulftainer, a privately-owned UAE-based port operator, has announced that its subsidiary GT USA has signed an agreement with the State of Delaware to operate and develop the Port of Wilmington for 50 years.  Terms of the agreement are to be formally approved by Diamond State Port Corporation Board and the Delaware General Assembly within the next month.

Over the next nine years, Gulftainer is planning to invest $580 million in the port, including approximately $410 million for a new 1.2 million TEU container facility at DuPont’s former Edgemoor site, which was acquired by the Diamond State Port Corporation in 2016.  During this period, the company will fully develop all the cargo terminals capabilities and enhance the overall productivity of the port.  GT USA’s concession includes the full management and development of the port’s existing container volumes of 350,000 TEUs per year, which is forecast to more than double in the years to come as a consequence of this deal.  The agreement follows over a year of negotiations.  Within the US, the company currently operates the Canaveral Cargo Terminal in Port Canaveral, Florida, after winning a 35-year concession in 2015.  (AB 31.03)

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3.4  Hackers Said to Cost Arabian Gulf Energy Industry Over $1 Billion in 2017

Analysis conducted by Bloomberg Intelligence has highlighted that cyberattacks pose a significant threat to oil and gas companies’ supply chains, and in turn, could impact oil-based economies such as the UAE and Saudi Arabia.  The Bloomberg Intelligence analysis states that according to a Siemens’ report, the financial impact of cyberattacks on the Gulf energy industry in 2017 is estimated at more than $1 billion.  The analysis also mentions that an executive survey by the World Economic Forum found that cyberattacks tops concerns for UAE businesses in 2018.

Recently cyber-attackers tried to trigger a deadly explosion at a petrochemical plant in Saudi Arabia in August and failed only because of a code glitch.  A bug in the attackers’ code accidentally shut down the system instead, according to the report.

The Bloomberg analysis says that the UAE leads the way in technology investment, with Dubai launching a cyber-security strategy last year, focused on areas including enhancing awareness in public and private sectors, research and development (R&D), data privacy and business continuity.  The UAE is also changing the way it invests to drive technology adoption by sponsoring and incubating start-ups through free trade zones.  It has invested in blockchain to manage oil and refined product movements within Fujairah Oil Industry Zone, providing security and audit trails through the use of smart contracts.

A report from Norton by Symantec in January said that a total of 3.72 million UAE consumers lost approximately AED3.86 billion ($1.05 billion) to cybercrime in the last year.  The report revealed that more than half (52%) of the UAE’s adult online population experienced cybercrime over the course of the year, which average losses of AED669 ($182) each.  (AB 26.03)

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3.5  Kuwaiti Government Orders Teledyne ISCO’s Industry-Leading Flow Monitoring Solutions

Teledyne Technologies) announced that its Teledyne ISCO business unit received the largest order in its history from the Kuwait Ministry of Public Works (MPW).  Under the terms of the agreement, ISCO will be providing Kuwait MPW with a flow monitoring solution that will help the Kuwaiti MPW manage the country’s wastewater reclamation system from a central control center.  The Teledyne ISCO solution was designed to meet the Kuwait government’s clear objectives of managing day to day operations, proactively planning maintenance activities, and conducting long term inflow/infiltration (I&I) and rain impact analysis.  In evaluating the system, Hydrotek Engineering Company, the contractor for Kuwait MPW, demonstrated that the Teledyne ISCO technology was superior to other commercial solutions in both the quality of data recorded and in ease of installation.

Teledyne ISCO will provide the Kuwaiti MPW with a system that includes nearly 280 of Teledyne ISCO’s industry-leading Signature® flow meters that deliver multiple measurement capabilities and the ability to record and transmit data via the LTE/3G modems at the site.  By removing the need for multiple telemetry lines for individual instruments, the flow meters result in significant site savings.

Lincoln, Nebraska’s Teledyne ISCO is a leading manufacturer of a wide range of innovative products designed to increase productivity while improving the quality of life on our planet.  Their standard and customized products are used across multiple sectors including: water and wastewater, pharmaceutical, academia, oil exploration and reactant feed.  California’s Teledyne Technologies is a leading provider of sophisticated instrumentation, digital imaging products and software, aerospace and defense electronics, and engineered systems.  (Teledyne Technologies 28.03)

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3.6  ADNOC Awards $3.5 Billion in Deals to Boost Oil Refinery Output

Abu Dhabi National Oil Company has awarded two contracts worth $3.5 billion to South Korea’s Samsung Engineering to boost output at the largest refinery in the United Arab Emirates.  ADNOC’s announcement came as South Korea’s President Moon Jae-in was visiting the oil-rich Gulf state.  The main contract, worth $3.1 billion, is for an engineering, procurement and construction (EPC) project at Ruwais refinery, the UAE’s largest with a capacity of over 800,000 bpd.  Slated for completion in 2022, the project will handle oil from the Upper Zakum field, freeing up more expensive Murban crude for export.  It will also raise production capacity by part of the refinery, Ruwais West.

The second contract worth $473 million is to build a new waste heat recovery facility to reduce the environmental impact of the refinery and generate electricity.  Several other South Korean companies are engaged in major energy projects in the UAE, including the construction of a $20-billion nuclear plant due to open later this year.  (AB 26.03)

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3.7  JMA Group Invests $16 Million to Open Supermarket Chain in UAE

The JMA Group has invested $16 million (AED60m) to open a chain of twenty supermarkets in Dubai by the end of 2018, creating an estimated 1,000 jobs in the country.  The firm will invest further to open around 100 convenience stores across the UAE, GCC and Asia by 2020.  The supermarkets will offer food, beverages, ready-meals, organic produce, electronics, fashion and lifestyle products, as well as farm fresh and self-branded products.  The stores will also have speedy self-checkout counters to reduce long queues, accepting multiple forms of payment.  In addition, they will provide e-shopping through a mobile application.  JMA opened their first stores in Dubai Marina, Dubai Investment Park, Al Karama, Arjan, Business Bay, Al Furjan, Al Warqa and Oud Metha.  (AB 26.03)

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3.8  Guided Therapeutics Completes License Agreement with Turkish Partner

Norcross, Georgia’s Guided Therapeutics, the maker of a rapid and painless testing platform based on its patented biophotonic technology, has signed a definitive, multiyear license agreement with its Turkish distribution partner ITEM for the manufacture of patented single-patient-use Cervical Guides in Turkey.  The production of Cervical Guides in Turkey exclusively for the Turkish market was recommended by the Turkish Ministry of Health to speed adoption of the technology in Turkey.  In return for the license and manufacturing rights for Cervical Guides in Turkey, the agreement calls for GTHP to receive fees totaling $1,100,000 in 2018.  In addition, according to the contract, ITEM will pay GTHP a royalty for each Cervical Guide made and sold exclusively in Turkey and ITEM will be obligated to purchase 540 LuViva Advanced Cervical Scans and produce 3,450,000 Cervical Guides for the Turkish market over the next twelve years.  The expected minimum revenues for Guided Therapeutics over the twelve-year length of the contract will be approximately $19.4 million, roughly half of which will be product sales and the other half royalty payments, according to the agreement.  (Guided Therapeutics 02.04)

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3.9  Fortegra Establishes European Subsidiary in Malta

Jacksonville, Florida’s Fortegra Financial Corporation, a leading international specialty insurer and subsidiary of Tiptree Inc., announced the creation of a wholly-owned European subsidiary – Fortegra Europe Insurance Company Limited (FEIC) – based in Malta.  Following regulatory authorization by the Malta Financial Services Authority (MFSA), FEIC is ready to write business immediately.  Initially, FEIC will utilize its access to the European Economic Area (EEA) to write business aligned with Fortegra’s position as a warranty and consumer products provider.  FEIC’s Maltese presence provides Fortegra with opportunities to continue to build relationships in the international insurance community.  Additionally, Fortegra’s A.M. Best A- (Excellent) financial strength rating for its group of U.S.-based companies will assist FEIC’s initial engagement with some of Europe’s premier business organizations.  (Fortegra 28.03)

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4.1  Bank of Israel Says: Expand Plastic Bag Fee to Grocery Stores & Super-Pharm

The Bank of Israel is advocating the extension of the NIS 0.10 fee for plastic bags to neighborhood grocery stores, small supermarket chains and Super-Pharm, in view of its success in reducing the use of plastic bags by 80% at the large supermarket chains.  In its current form, the fee does not apply to grocery stores and small supermarkets, which still distribute an estimated 860 million plastic bags a year.

The results of the fee show that wherever it is applied, the number of bags drops by 80%, regardless of the amount of the fee.  Before the fee was imposed, supermarkets in Israel distributed two billion plastic bags a year, amounting to 275 bags per capita, a figure higher than in other countries worldwide.  Plastic bags are made of material that does not decompose for hundreds of years, making the problem a very troublesome one for the environmental watchdogs.  The decision to impose a special fee on the bags follows the positive results achieved when such a fee was imposed in other countries.

The law, which became effective in Israel in January 2017, set a NIS 0.10 fee for each plastic bag sold at supermarkets belonging to the 21 largest chains.  Together with a steep fall in the proportion of people using disposable bag, there was an impressive rise in the proportion of using reusable bags from 28% to 70%.  A breakdown of the purchase of plastic bags by income shows that there is no difference between different income levels in the lower use of plastic bags, except for communities belonging to the lowest income deciles (2 and 3), where the drop in use of plastic bags was 60-70%.  As for the amount of the fee, the Bank of Israel cited a survey showing that 9% of consumers reported that they had stopped buying plastic bags because they were too expensive.  Two thirds said that they had stopped taking plastic bags because of the fee charged for them.  Some 50% said that environmental considerations had affected their decision to stop using plastic bags and 25% reported that they had been influenced by social pressure, which made the bags “no longer pleasant to take.”  (Globes 25.03)

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5.1  Lebanon’s Average Inflation Rate Stands at 5.37% in February 2018

According to the Central Administration of Statistics (CAS), consumer prices rose on average by an annual 5.37% in the first two months of 2018, as all 13 components of the Consumer Price Index (CPI) posted average yearly upturns.  The rise continues to be linked to the jump in average oil prices from $57.7/barrel by Feb. 2017 to $67.5/barrel over the same period this year. In addition, the VAT hike which came into effect as of 1 January 2018 continued to further inflate the prices of goods and services, thereby diminishing consumers’ purchasing power.

In details, the average costs of Housing and utilities (including: water, electricity, gas and other fuels), which composed 28.4% of the CPI, climbed by 5.38% year-on-year (y-o-y) in the first two months of 2018.  The breakdown of this component showed that owner-occupied rental costs composing 13.6% of Housing and utilities increased by 4.24% y-o-y, and the average prices of Water, electricity, gas, and other fuels, making up 11.8% of the same category, rose by an annual 6.57% over the same period.

In its turn, the average prices of Food and non-alcoholic beverages (20% of CPI) increased by 3.67% y-o-y by Feb. 2018. Moreover, with Transportation services (13.10% of the CPI) relying mainly on oil, their sub-index added a yearly 5.06% on average by Feb. 2018.  In addition, the average Health (7.7% of the CPI) and Education (6.6% of the CPI) sub-indices recorded respective upticks of 4.61% and 3.86% y-o-y by Feb. 2018.  As for the prices of Clothing and Footwear (5.2% of CPI), they substantially rose by an average of 19.6% over the same period.

On a monthly basis, the CPI inched up by 0.2% compared to the previous month. In details, the sub-indices of Transportation and Food and non-alcoholic beverages recorded the highest monthly upticks of 1.06% and 1.01%, respectively, in February 2018, compared to minimal upticks in the prices of most of the CPI components.  (CAS 22.03)

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5.2  Tourist Arrivals to Lebanon Rise by an Annual 2.97% in February 2018

According to the Lebanese Ministry of Tourism, the total number of tourist arrivals to Lebanon increased by an annual 2.97% to 221,695 tourists by February 2018.  While Arab tourists used to represent the largest number of tourists visiting Lebanon, they are now matched by European tourists.  The number of Arab tourists constituted 34.29% of total tourist arrivals to Lebanon by February 2018 while the number of European tourists accounted for 34.24%.  American tourists came in third place with a share of 13.83% in the total number of tourist arrivals.  The number of Arab tourists declined by an annual 6.75% to reach 76,014 tourists in the first two months of 2018.  The decline came on the back of a 12.97% annual drop in the number of Iraqi tourists to 32,407.  Saudi tourists also registered a 29% annual downturn to reach 6,009 by February 2018.  Meanwhile, the number of European tourists registered a double-digit growth of 12.88% to 75,908 by February 2018.  It is worth noting that most of the European countries detailed by the Ministry of Tourism show a decline in the number of visitors except for the number of Turkish tourists which saw their number rise by a yearly 0.85% to 4,859 by February 2018.   By February 2018, the number of American tourists also increased by a yearly 6.77% amounted to 30,655 by February 2018.  (MoT 23.03)

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5.3  Lebanon’s Industrial Exports Rise by 1.5% to $219.6 Million in December 2017

According to the Lebanese Ministry of Industry, the value of industrial exports rose by 1.5% year-on-year (y-o-y) from $216.3 million in December 2016 to $219.6 million in December 2017.  For 2017, the value of industrial exports declined by 2% to $2.47 billion, compared to $2.53 billion in 2016.  In December 2017, the main exported products were machinery and electrical equipment with a total value of $42.5 million down from $45.2 million in December 2016.

The main export market for machinery and electrical equipment was Libya, which accounted for $6 million of the total exports.  Exports of prepared foodstuffs and tobacco came in second position with a total value of $41.6 million in December 2017, down from $41.56 million in December 2016.  The largest export market for this category remained Saudi Arabia with exports worth $5.6 million in December 2017.  As for the exports of base metals and articles of base metal, they amounted to $35.7 million in December 2017, up from $28.9 million in December 2016, an increase that helped boost the overall value of industrial exports.  The biggest export market in this category was Turkey with an exports’ value of $12.1 million.  Other smaller categories of industrial exports were also responsible for the uptick in total industrial exports; the exports of plastics, rubber and articles thereof saw their value increase by $3.84 million from $11.02 million in December 2016 to $14.86 million in December 2017.  Moreover, the value of exports of Pearls, Precious or semi-precious stones, precious metals and articles thereof rose by $2.08 million to $12.18 million in December 2017.

With regards to imports of industrial machinery and equipment, they reached $23.2 million in December 2017 up from $17.9 million during the same month in 2016. Imports of machines for food industry ranked first with a value of $4.5 million in December 2017 mainly coming from Germany which accounted for $1.1 million of the total. Imports of machines used in packaging amounted to $3.4 million and mainly came from Italy which exported $2.5 million worth of packaging machines to Lebanon in December 2017.  (LMoI 22.03)

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►►Arabian Gulf

5.4  GCC Construction Deals Set to Rise to $148.7 Billion in 2018

Rising oil prices and increased government spending is fueling demand in the GCC’s construction sector, with contractor awards across the region’s markets expected to be worth $148.7 billion in 2018, according to a Ventures Onsite.  They reported that the UAE will remain as the undisputed leader in the GCC total construction contractor awards for the year.

In 2018, an estimated $79.1 billion worth of construction contractor awards will be attributed to buildings in the Gulf region, followed by energy projects ($44.9 billion) and infrastructure ($24.6 billion).  The total value of expected construction contractor awards in 2018 is slightly up on the 2017 figure ($147.8 billion), according to Ventures, as economic activity picks up across the region amid a revival in non-oil sector growth and broad fiscal reforms.  According to Ventures, the UAE will hold a 33% share ($50.4 billion) of the Gulf region’s total construction contractor awards in 2018, followed by Saudi Arabia, with a 27% share ($40 billion).  The buildings segment will register the most growth year-on-year, with the UAE leading the way here as well.  The expected $79.1 billion of building construction contractor awards across the GCC in 2018 is 10% up on the previous year, with the UAE comprising $37.3 billion of that figure.  (AB 31.03)

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5.5  Qatar Will Buy Turkish Drones, Ships & Armored Vehicles

Turkey secured $800 million in various defense from Qatar at the 2018 Doha International Maritime Defense Exhibition and Conference (DIMDEX), which was held in March.  Qatar signed onto procure three additional ARES 150 Hercules offshore and inshore patrol boats from the Turkish shipyard Ares Shipyard, adding to the two ARES 150 it originally ordered in 2014.  In addition, Qatar will add six 24 m ARES 80 SAT boats. The package is slated for delivery by 2020.  In addition, the Qatar Emiri Naval Forces (QENF) ordered two ‘cadet training ships’ (CTS) from Anadolu Shipyard, another Turkish shipyard.  The CTS ships will each have a displacement of 1,950 tons along with a helipad for a medium-sized helicopter and crew compliment of 72 (Daily Sabah).  Finally, the Turkish shipyard Yonca-Onuk also sold eight MRTP24/U high-speed patrol boats to Qatar.

In terms of drones, Qatar signed to become the launch export customer of the Bayraktar TB2 unmanned aerial vehicle (UAV), a medium-altitude long-endurance (MALE) drone that entered service in 2015 with the Turkish Armed Forces.  Bayraktar lauded Doha’s decision, stating that the TB2 was selected over UAV designs from the US, China and Europe.

Though the majority of Qatar’s defense consumption – in terms of monetary value-to-be-spent – is not running through Turkey, these sales are notable gains for the Turkish industry.  First, it strengthens Turkey’s position as an exporter of armored vehicles, especially in the Arab Gulf region where Otokar and FNSS have seen adoption in the United Arab Emirates and Oman, respectively.  Second, Turkey’s naval industry is seeing growing activity for its patrol boats. While a firmly inked contract for the big-ticket MILGEM or its variants currently remains elusive, traction by Ares Shipyard, Yonca-Onuk, Anadolu Shipyard and others give Ankara confidence to actively promote its solutions to the world market, generating attention and customers which could potentially translate into major sales in the future.

Emulating the activities of Saudi Arabia and the UAE, Qatar is also looking to build a measure of domestic defense industry activity.  To that end, the Qatari Ministry of Defense announced the formation of Barzan Holdings, a state-owned enterprise aimed to generate that activity in Qatar.  However, besides some calls for studies, it is unclear how – if at all – Qatar’s forthcoming big-ticket acquisitions will factor into Barzan Holdings.  That said, while it is unreasonable to expect Qatar to channel most of its procurement – even at the end-of-chain/output level (e.g. assembly) – domestically, niche or targeted focus in electronics or munitions could be a plausible avenue for building a portfolio benefitting the Qatar economy and boosting the domestic technology development and human capital base.  (Quwa 21.03)

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5.6  UAE Healthcare Spending Forecast to Rise 9% by 2022

Healthcare expenditure in the UAE may rise by as much as 9% in anticipation of a rapidly aging population and because of above average medical inflation rates and the implementation of mandatory health insurance, according to a new report from Alpen Capital.  In its GCC healthcare industry report, Alpen Capital noted that the GCC’s current healthcare expenditure (CHE) is expected to reach $104.6 billion in 2022, registering a compound annual growth rate (CAGR) of 6.6% from an estimated $76.1 billion in 2017.  According to Alpen Capital, the growth is being driven by expanding populations, a high prevalence of non-communicable diseases, rising treatment costs and the increasing penetration of health insurance.

Additionally, the report noted that the outpatient market size in the region is expected to grow at an average rate of 7.4% each year, to $32 billion between 2017 and 2022.  The inpatient market is forecast to increase at a CAGR of 6.9% to $45.4 billion.

On a country-by-country basis, the report predicts that CHE will expand at annual average rates of between 2.6% and 9.6%.  The UAE and Oman are both forecast to witness growth rates of above 9%, while Saudi Arabia – the region’s largest market – is expected to see 6.1% growth in CHE.  The report also notes that the region is expected to require 12,358 new hospital beds by 2022, which translates into an estimated annual growth of 2.2% from 2017 to reach a collective bed capacity across the GCC of 118,295.  The report noted that there are over 700 healthcare projects worth $60.9 billion in various stages of development across the GCC.  (AB 27.03)

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5.7  Abu Dhabi Crown Prince Hails Completion of First Nuclear Power Plant

Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and President Moon Jae-in of South Korea have announced the completion of the first nuclear plant at Barakah in Al Dhafra Region.  They visited the construction site and highlighted the importance of the milestone that sets the UAE as the first Arab country to deliver a commercial nuclear plant, as well as the first nuclear power newcomer since 1985.  Unit 1 has cleared the construction phase and the project now shifts its focus to completing operational readiness preparations required to obtain the approval of the operating license by the Federal Authority for Nuclear Regulation (FANR).  This completion is the result of the close collaboration between the Emirates Nuclear Energy Corporation and its prime contractor and joint venture partner, the Korea Electric Power Corporation (KEPCO).  ENEC and KEPCO completed Unit 1 construction in 69 months, in strict adherence to FANR regulations.

KEPCO was appointed by ENEC to lead the prime contract for the construction of the Barakah Nuclear Energy Plant in 2009.  The Barakah Nuclear Energy Plant is the largest nuclear energy new build project in the world, with four APR-1400 units under simultaneous construction.  Construction of Units 2, 3 and 4 are 92%, 81%, and 66% complete respectively.  The construction of the Barakah plant as a whole is now 86% complete.  Once the four reactors are online, the facility will deliver electricity to the UAE, providing around 25% of the country’s requirements and saving up to 21 million tonnes of carbon emissions annually.  (AB 26.03)

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5.8  Dubai’s Non-Oil Trade with South Korea Rises to $7.4 Billion

Dubai’s non-oil external trade with South Korea grew eight% in 2017 to reach AED27.43 billion ($7.4 billion), according to official figures.  Of the total, AED22.1 billion were in imports, AED 4.47 billion in exports and AED866 million in re-exports.  It said South Korea is Dubai’s eighth biggest trade partner in imports and ninth in exports.  The figures were released following the visit of South Korean President Moon Jae-in to the UAE to explore closer ties in sectors such as energy, healthcare, science, space and technology.  Trade with South Korea is gaining more and more weight and value especially after signing the AEO mutual recognition agreement.  (AB 26.03)

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5.9  Oman Forecast to See Double Digit Growth in Tourists by 2021

Tourism arrivals to Oman will increase at a compound annual growth rate (CAGR) of 13% between 2018 and 2021, according to a new report by Colliers International.  It predicts the rise will be fueled by visitors from across the GCC, who accounted for 48% of guests in 2017.  In addition, arrivals from India (10%), Germany (6%), the UK (5%) and the Philippines (3%) are also expected to contribute heavily to the growth, supported by new visa processes and improved flight connections, the report said.  Historically, the Middle East has been the largest source market for Oman, with arrivals from this group increasing at an annual rate of 20% between 2012 and 2017.

Accommodating the predicted influx, a number of major hotel chains have recently announced properties in Muscat, driving the 12% CAGR over the next three years – from 10,924 rooms in 2017 to 16,866 keys in 2021.  Supply in Muscat is dominated by five-star properties, accounting for 21%, and four-star, accounting for 24%.  Complementing its hotel pipeline, Oman has made significant investments in other tourism infrastructure, including airports, the report said, adding that expansions at Muscat and Salalah International Airports pushed passenger figures to 12 million and 1.2 million in 2016.

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►►North Africa

5.10  Egypt’s Net Foreign Reserves Rise to $42.611 Billion

Egypt’s foreign reserves reached $42.611 billion at the end of March, a rise of nearly $87 million from $42.524 billion at the end of February, the Central Bank of Egypt (CBE) said on 2 April.  The nation’s foreign reserves have been climbing since it secured a $12 billion three-year loan from the International Monetary Fund in 2016, as part of efforts to woo foreign investors and revive Egypt’s economy.  Reserves had dropped to about $19 billion before Egypt signed the three-year IMF deal, floating the currency and lifting capital controls to lure back investors.  In February, Egypt raised $4 billion in a dollar-denominated Eurobond sale to help plug its financing deficit and boost dollar holdings.  Egypt’s foreign debt rose to $80.8 billion in the first quarter of the fiscal year 2017-2018, the CBE said in February.  (Ahram Online 02.04)

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5.11  Further Privatizations Announced In Egypt

Egypt’s Finance Ministry announced on 25 March a list of 23 state-owned companies that will either sell their shares via an initial public offering (IPO) or increase the percentage of their free-floating shares on the local stock exchange.  Ten of the companies in the program are already listed, and most of the companies slated for privatization are profit-making and should see a stake of 15 to 30% of equity going into private hands.  The plan, to be implemented over 24 to 30 months, aims to yield some LE80 billion as the overall value of the companies offered is an estimated LE430 billion.  The list ranges from banking and petroleum to real estate and industry, with names like cigarette producer Eastern Tobacco and real estate gems Heliopolis Housing and Medinet Nasr Housing also included. Banque du Caire is also on the list.  The oil company ENPPI is expected to be the first to be privatized.

Egypt adopted a wide-ranging privatization program in 1991 when it picked 314 public companies to privatize.  Over 10 years, it divested parts or all of this number, including soft-drink bottlers, cement factories and steel complexes.  After the 25 January Revolution, court verdicts re-nationalized some of the privatized companies in cases accusing the government of selling them at prices lower than their fair value.  (Al-Ahram 25.03)

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5.12  Morocco Signs Agreement on African Continental Free Trade Area

Morocco has signed an agreement that will launch the African Continental Free Trade Area (AfCFTA) at the Extraordinary Summit of the African Union (AU) held in Kigali.  The agreement was signed by Head of Government Saad Eddine El Othmani, who lead the Moroccan delegation to the AU Summit.  The signing of this agreement represents a major step forward and another milestone for African integration and unity.  The Free Trade Area will result in the establishment of a market of over 1.2 billion people, with a combined gross product of over $3 trillion.  It will also boost intra-African trade by 52% by 2022, paving the way for the establishment of a customs union within four years and an African economic community in 2028.  The AfCFTA is a flagship project of Agenda 2063, the African Union’s long-term vision for an integrated, prosperous, and peaceful Africa.  (MWN 21.03)

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6.1  Turkey’s Economy Grows by 7.4% in 2017

Turkey’s economy grew 7.4% in 2017, compared with the previous year, the Turkish Statistical Institute (TurkStat) announced on 29 March.  GDP at current prices climbed to over 3.1 trillion Turkish liras (nearly $850.7 billion) last year, up 19% from 2016.  The total value added of services and industry rose by 10.7% and 9.2%, respectively, while the construction sector boasted an 8.9% rise.  The agricultural sector enjoyed a 4.7% hike in 2017, compared to 2016.  TurkStat also revealed that Turkish economic growth in the last quarter of 2017 reached 7.3%, compared with the same quarter of previous year.  Gross domestic product increased by 19% and reached 889.2 billion liras ($234 billion) at current prices.  The growth expectation on 22 March – as a result of a survey conducted by a group of 17 experts – was 7.3% for 2017 and 7.1% for the final quarter.  (TurkStat 29.03)

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6.2  Turkey’s Exports Reach $160 Billion in Annual Terms

Turkey’s exports reached $160 billion in the last 12 months with a 10.5% increase, state-run Anadolu Agency reported on 1 April.  This March’s export figures hit an all-time high with an 11.5% year-on-year increase, reaching $15.106 billion.  It added that exports increased 10.4% to $40.727 billion in the first three months of this year compared with the same period of 2017.  The largest volume of exports in March was made by the automotive industry with almost $3.1 billion, followed by the ready-made clothing sector with $1.7 billion and the chemical materials and products sector with $1.6 billion.

Turkey’s exports to Germany, the U.K., Italy, and Spain increased by 13.6, 19.1, 18.1 and 23.8% year-on-year, respectively while shipments to Russia jumped 58.2% in the month.  Exports to the U.S were down 1.5% from a year ago.  The country’s exports to the EU showed a 17.7% rise and the bloc captured a 52.1% share in Turkey’s total exports in March.  (AA 03.04)

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6.3  Turkey’s Unemployment Rate Stood at 10.9% in 2017

Turkey’s annual unemployment rate has remained unchanged compared with the previous year, at 10.9% in 2017, the Turkish Statistical Institute (TUIK) announced.  It said the number of unemployed people aged 15 years and over – 3.45 million last year – increased by 124,000, year-on-year.  The unemployment rate was 9.4% with a decrease of 0.2% for men and 14.1% with an increase of 0.4% for women.  Official data showed the non-agricultural unemployment rate also remained the same, at 13% last year.

While the youth unemployment rate, including the 15-24 age group was 20.8% with a 1.2%age point increase, the unemployment rate for the 15-64 age group occurred as 11.1% without any change.  The number of people employed rose by nearly one million in 2017, reaching 28.2 million people and moving the employment rate to 47.1% with a 0.8%age point annual increase.

Some 19.4% were employed in the agricultural sector, 19.1% in industry, 7.4% in construction and 54.1% in service, TUIK noted.  Furthermore, it said the labor force participation rate was 52.8% with a 0.8%age point annual increase – marking 31.6 million people in labor force.  The participation rate was realized as 72.5% with a 0.5% increase for men and 33.6% for women with a 1.1% increase.

Last year, the lowest unemployment rate was seen in May and June with 10.2%.  Over the past five years, the highest unemployment rate was 13% in January 2017, while the lowest was seen in June 2013 with 8.1%.  As noted in Turkey’s medium-term economic program, the targeted annual unemployment rate at the end of 2017 was 10.8%, 10.5% for this year, 9.9% for next year and 9.6% in 2020.  (AA 23.03)

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6.4  Construction of Turkey’s First Nuclear Plant Begins in Akkuyu

The construction of Turkey’s first nuclear power plant, which will generate 35 million megawatt-hours of power per year, began on 3 April with a groundbreaking ceremony with the participation of the Turkish and Russian presidents.  The Akkuyu Nuclear Power Plant, which will have four reactors with a capacity of 4,800 megawatts, is an NPP-2006 serial project based on Russia’s Novovoronezh Nuclear Power Plant-2 plant in Voronezh.

In a bid to expand the share of domestic resources and decrease dependency on imported energy resources, Turkey embarked on a nuclear program with power plant projects in 2010, when the country signed an agreement for the first nuclear power plant in Akkuyu, in the southern province of Mersin.  Contracted to Russia’s State Atomic Energy Corporation, Rosatom, with Turkish partners holding a 49% stake in the project.

Akkuyu NPP will create jobs for 10,000 people during construction.  When it starts operating, around 3,500 people are estimated to work at the plant.  The Turkish firms that will partake in the project are expected to create an added value of $6 billion to $8 billion for the Turkish economy.  With an estimated cost of $20 billion, the Akkuyu NPP has the highest investment a single project has ever received in Turkey.  The Akkuyu Power Plant will have a service life of 60 years.  Once operational, the power plant is estimated to meet around 10% of Turkey’s electricity demand, which equals to the power consumption of Istanbul, Turkey’s largest metropolis.  (Daily Sabah 03.04)

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6.5  Euro Zone Bailout Fund Approves New Loans for Greece

On 27 March, the Eurozone’s bailout fund approved the disbursement of €6.7 billion ($8.3 billion) in new loans to Greece as part of its current bailout program.  The decision confirms a political deal reached by the Eurozone’s finance ministers earlier in March.  A first tranche of €5.7 billion is due to be paid on Wednesday, while the remainder will be disbursed after 1 May, the European Stability Mechanism said.  (Reuters 27.03)

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6.6  Greek Army Set To Get €1 Billion Upgrade

The fast-tracking of procedures to implement a €1 billion defense program was agreed on 2 April during a meeting of the Greek Parliament’s Arms Committee.  The decision was taken after a confidential briefing of the committee regarding the immediate needs of the country’s land, naval and air forces.  Among the significant priorities for Greece’s air force is the upgrade by the US of 85 of its F-16 fighter jets.  The government is scrambling to finalize the deal by 30 April so the cost will not exceed the €1.1 billion ceiling set by the government.  Another top priority for the air force is the maintenance of its fleet of French-made Mirage 200 jets.  The navy’s priorities include, among others, the immediate upgrade of its fleet of MEKO frigates.

The move to upgrade the country’s armed forces comes amid renewed tension with Turkey which flared recently after leading politicians in the neighboring country again challenged Greece’s sovereignty in the Aegean, where air space violations have spiked in recent months.  Meanwhile, deteriorating Greek-Turkish relations and the hardening of Athens’s stance is expected to dominate Tuesday’s cabinet meeting chaired by Greek Prime Minister Tsipras.  (eKathimerini 03.04)

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7.1  Yom HaShoah – Holocaust Martyrs’ & Heroes’ Remembrance Day 2018

Israel will mark Holocaust Martyrs’ & Heroes’ Remembrance Day (Yom HaZikaron HaShoah ve-laGvura in Hebrew) beginning on Wednesday evening, 11 April and Thursday, 12 April.  Holocaust Remembrance Day (Yom HaShoah) is a national day of commemorating the six million Jews murdered in the Holocaust.  It is a solemn day, usually beginning at sunset on Hebrew date of 26 Nisan and ending the following evening.  The internationally recognized date comes from the Hebrew calendar and corresponds to the 27th day of Nisan on that calendar.  It marks the anniversary of the 1943 Warsaw ghetto uprising.  This year, the observance begins one day later to prevent the desecration of the Sabbath in preparation for the memorial services.

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

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7.2  Israa Wal Mi’raj Holidays to Be Celebrated

Isra and Mi’raj for 2018 will be observed on sundown 12 April until sundown Friday, 13 April.  The holidays are observed on the 27th day of Rajab on the Islamic calendar.

Known as the Prophet’s Ascension or the Night Journey, Israa wal Miraj are the two parts of Prophet Mohammed’s journey from Mecca to the farthest mosque during a single night.  He is said to have travelled on a winged horse before ascending to heaven to speak to God, who gave him instructions to take back to Muslims regarding the details of prayer.  The fruit of this gift is the five daily prayers.  According to tradition, God initially commanded the Prophet to tell his followers to pray 50 times every day.  But on his way back to Earth, the Prophet met Moses, who advised him to ask God for a reduction in the number of prayers to make worship more realistic for Muslims.  Many Muslims will observe the event with prayers at mosques or at home late into the night, while some will fast.

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7.3  Israel Commemorates Those Who Fell in Service to the Nation

Israel’s Memorial Day for Fallen Soldiers and Victims of Terrorism, which will begin at sundown on Tuesday, 17 April, honors the soldiers who have fallen in the line of duty since 1860 (when modern-day Jews first lived outside of Jerusalem’s Old City walls).  The Memorial Day begins with a minute-long siren sounded at 20:00h, followed immediately by official events.  On the following day, a two-minute siren will be sounded at 11:00 as part of Memorial Day ceremonies across the country.  For the duration of the sounding of both sirens, work is halted, people walking in the streets stop, cars pull off to the side of the road and everybody stands at silent attention in reverence to the fallen soldiers and victims of terrorism.

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

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7.4  Israel’s Independence Day – 70 Years After Sovereignty was Regained

Celebrations for the 70th anniversary of Israel’s regaining its independence will begin on Wednesday evening, 18 April throughout the country, continuing throughout Thursday, 19 April.  The official observance starts when the state flag is raised to full mast at a national ceremony on Mount Herzl in Jerusalem.  Israel Independence Day is celebrated annually on 5 Iyar, which corresponded to 14 May 1948, the date the British mandate ended over the Land of Israel.  A religious and national holiday, Yom HaAtzmaut – Independence Day is a celebration of the renewal of the Jewish state in the Land of Israel, the birthplace of the Jewish people.  In this land, the Jewish people developed its distinctive religion and way of life.  In the Land of Israel, the Jews preserved an unbroken physical presence, for centuries as a sovereign state, at other times under foreign domination.  Throughout their long history, the yearning to return to the Land has been the focus of Jewish life.  With the rebirth of the State of Israel, in 1948, Jewish independence, lost 1,878 years earlier, was restored.

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7.5  IDC Herzliya Becoming Israel’s First Private University

The Israeli Council for Higher Education granted IDC Herzliya permission to apply to confer doctorate degrees, beginning with law.  This is the first step to IDC Herzliya becoming Israel’s very first private university.  The Interdisciplinary Center will be the first college in Israel to obtain such authorization, which will eliminate the distinction between it and the universities.  Minister of Education Bennett supported the decision and made strenuous efforts on its behalf, despite opposition from the universities, which are afraid of competition and disrespect for doctorates.

A Council for Higher Education subcommittee approved authorization for the Interdisciplinary Center in Early march and the 22 March meeting was designated for approving this decision.  The institution will now be assessed by an international committee, which will check whether it meets various criteria, and what must be improved.  The vote constitutes final approval of the subcommittee’s decision and referral of the process for approval by an international committee to assess the Interdisciplinary Center according to the criteria expected of institutions that award doctorates, such as the number of professors at the institution.

The state does not fund the Interdisciplinary Center through the higher education planning and budgeting committee and it will not receive funds even if it is a private university.  At the same time, the Council for Higher Education supervises it at the academic level.  (IDC 22.03)

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7.6  Sisi Wins Second 4 Year Term as Egypt’s President

Egypt’s National Elections Authority (NEA) has declared Abdel-Fattah El-Sisi the winner of the nation’s 2018 presidential elections, securing a second four year term after winning 21,835,378 votes or 97% of valid votes.  The NEA said that 24,254,152 citizens voted in the elections at home and abroad, out of near 59 million eligible voters, representing a turnout of 41.5%.  Ghad Party chief Moussa Mostafa Moussa, El-Sisi’s sole opponent in the elections, won 656,534 votes or 2.92% of total votes.  Voting in Egypt took place between 26 and 28 March, with Egyptians abroad voting from 16 to 18 March, at Egyptian embassies and consulates in more than 120 countries.

This is the second presidential term for Abdel-Fattah El-Sisi, now aged 64, who has held office since winning elections in 2014.  He became the sixth president of the republic in May of that year after winning 23.78 million votes (96.91%) against his Nasserist opponent Hamdeen Sabahi.  Egypt’s 2014 constitution limits presidents to two four-year terms.  El-Sisi is due to be sworn in at the House of Representatives in Cairo in June, as per constitutional guidelines.  (Ahram Online 02.04)

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7.7  Greek Women Have Fewer Children than EU Average

Greek women have fewer children than the EU average and at an older age, according to 2016 figures released by Eurostat.  With an average of 1.38 children each, and at an average age of 30.3 years old, Greek women are below the EU average fertility rate of 1.6 children at age 29.  It is not, however, the lowest birth rate in the EU, as women in Spain and Italy record lower fertility rates (1.34 births per woman), Portugal (1.36 births per woman), Cyprus and Malta (1.37 births per woman).  The highest fertility rates in the EU are recorded in France (1.92), Sweden (1.85) and Ireland (1.81) while the youngest mothers are in Bulgaria, Romania and Latvia.  Greece ranks lower than the EU average for the percentage of women that become mothers before age 20 (3.7% against 5% for the EU average) but above average for women that have children when over 40 (5.3% against 3.2% in the EU).  (Eurostat 29.03)

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8.1  Endospan Receives CE Mark for HORIZON EVAR System to Treat Abdominal Aortic Aneurysm

Endospan announced it has received CE marking for its HORIZON Stent Graft System to treat Abdominal Aortic Aneurysm (AAA).  HORIZON is a unique platform that can be used in a 14Fr single-sided approach, generally shortening and simplifying EVAR procedures.  HORIZON is supported by a strong cohort of pivotal trial data with over three years of follow-up to support the commercialization effort.

Herzliya’s Endospan is a pioneer in the endovascular repair of Aortic Arch Disease including aneurysms and dissections.  Endospan has initiated the CE-marking regulatory process to market in Europe the NEXUS Stent Graft System, the first endovascular off-the-shelf system to treat Aortic Arch Disease: a greatly underserved group of patients diagnosed with a dilative lesion in, or near, the aortic arch.  While minimally invasive endovascular repair has been the standard of care for Abdominal Aortic Aneurysm (AAA), Aortic Arch Disease patients with aneurysms or dissections have not been as fortunate and have had little choice but to undergo open-chest surgery with its invasiveness and risks, lengthy hospitalization periods, and prolonged recuperation.  (Endospan 21.03)

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8.2  Kalytera to Develop a Novel Cannabinoid-Based Compound for Pain Treatment

Kalytera Therapeutics has begun development of a novel cannabinoid-based compound for the treatment of acute and chronic pain.  Patents for this compound have been filed in the U.S. and other jurisdictions, and Kalytera has obtained an exclusive, worldwide license for this compound from Beetlebung Pharma, an Israeli-based pharmaceutical discovery company focused on cannabinoid-based therapeutics for the treatment of human disease (BPL).

Kalytera’s compound consists of a cannabinoid conjugated with naproxen, a generic, non-steroidal, anti-inflammatory drug that is already approved for treatment of pain.  This cannabinoid/naproxen conjugate has potential to become a next generation pain medication, and, based on the potentially complementary methods of action of the cannabinoid and naproxen, there is reason to believe these molecules may have a synergistic effect in treatment of pain, as well as a superior safety profile compared with opioid analgesics.

The objective of Kalytera’s new program is to develop a potent, non-psychotropic, oral analgesic for intractable pain that will be safe and well tolerated.  The cannabinoid component will act as a cannabinoid receptor agonist, targeting the alpha3 glycine pain receptor in the spinal cord, and the naproxen component will block the synthesis of the pain-inducing molecule PGE2.  Although the initial route of administration will be oral, Kalytera will also seek to develop an intravenous formulation.

Katzrin’s Kalytera Therapeutics is pioneering the development of a next generation of cannabinoid therapeutics.  Through its proven leadership, drug development expertise, and intellectual property portfolio, Kalytera seeks to establish a leading position in the development of novel cannabinoid medicines for a range of important unmet medical needs, with an initial focus on graft versus host disease and the treatment of acute and chronic pain.  (Kalytera Therapeutics 20.03)

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8.3  Kanabo Research Partners with Jupiter Research

Kanabo Research, a Tel Aviv-based medical cannabis R&D company, signed a partnership agreement with Phoenix-based Jupiter Research, an innovative manufacturer of high-performance inhalation hardware and technology for plant based extracts.  The partnership agreement was signed during the CannTech conference held recently in Tel Aviv.  As part of the strategic partnership, Kanabo licensed Jupiter’s L9 vaporizer platform under the VapePod brand. Kanabo and Jupiter collaborated to fine tune the vaporizer for medical use, and then Kanabo worked to have VapePod approved as a medical device by the Israeli Ministry of Health.  Kanabo Research has the exclusive rights to distribute the certified VapePod in Israel, Europe, South Africa, Australia and New Zealand.

Jupiter Research has developed three vaporizer platforms that utilize CCELL ceramic core technology for unparalleled vapor performance. Jupiter’s vaporizers are sold in the U.S. and globally.  Moving forward, Kanabo and Jupiter will work together to research and develop the next generation of “smart” vaporizers for the global medical cannabis market.  The Israeli Ministry of Health has granted initial approval as a medical device to Kanabo’s VapePod vaporizer.  This action makes Israel the first county in the world to grant medical device approval to a vaporizer for the use of medical cannabis extracts and formulations.  (Jupiter Research 22.03)

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8.4  Human Xtensions Receives FDA Clearance for HandX – Smart Digital Handtop Solutions

Human Xtensions received FDA 510 (k) clearance for HandX™.  The smart, electromechanically-simplified surgical systems by Human Xtensions integrate all the components required for a modular platform, of which HandX is the first to be launched and be FDA cleared.  HandX is designed as a light-weight, hand-held device that translates the surgeon’s natural hand motions into complex movements inside the patient.  During MIS, Human Xtensions smart 5mm surgical tools pass through trocars, making much more possible in each MIS procedure, both in terms of access and natural freedom of movement.  This also opens vast new horizons for converting open surgery into MIS, which expedites patient recovery and drastically improves outcomes.  Moreover, the HandX is suited for any skill level, and offers hospitals of all sizes an affordable cost-effective alternative to the heavyweight robotic systems that are operated remotely.

Netanya’s Human Xtensions is a medical device company, focusing on reinventing minimal invasive surgery (MIS) with disruptive handtop technology.  Founded in 2012 with the vision of making MIS a smart art, Human Xtensions is led by a multidisciplinary team of professionals that bring the best of all worlds, from medicine to technology, and from ergonomics to design.  Human Xtensions catalyzes an entirely new medical reality called Artefficient Surgery, with personalized digital platforms that combine the power of surgical robotics with the ease and affordability of hand-held solutions.  (Human Xtensions 22.03)

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8.5  Teva Announces the Launch of a Generic Version of ALOXI in the United States

Teva Pharmaceutical Industries announced the launch of a generic version of ALOXI (palonosetron HCI) injection, 0.25 mg/5 mL, in the United States.  Palonosetron hydrochloride injection – in a class of medications called 5-HT3 receptor antagonists – is used in adults to prevent nausea and vomiting that may occur as a result of receiving cancer chemotherapy with a moderate or high risk of causing nausea and vomiting. It is also given to prevent nausea and vomiting up to 24 hours after surgery.

Teva has been committed to strengthening the generic injectable business globally with continued investment in newer, higher-value generic injectable products.  With nearly 600 generic medicines available, Teva has the largest portfolio of FDA-approved generic products on the market and holds the leading position in first-to-file opportunities, with over 100 pending first-to-files in the U.S.  Currently, one in seven generic prescriptions dispensed in the U.S. is filled with a Teva generic product.

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by millions of patients every day.  Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area.  In specialty medicines, Teva has a world-leading position in innovative treatments for disorders of the central nervous system, including pain, as well as a strong portfolio of respiratory products.  (Teva 23.03)

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8.6  Teva Announces the Launch of a Generic Version of Lialda in the United States

Teva Pharmaceutical Industries announced the launch of a generic version of Lialda®1 (mesalamine) delayed-release tablets, 1.2 g, in the U.S.  Mesalamine delayed-release tablets are indicated for the induction of remission in adults with active, mild to moderate ulcerative colitis and for the maintenance of remission of ulcerative colitis.  Mesalamine further enhances Teva’s already-comprehensive anti-inflammatory portfolio.  With nearly 600 generic medicines available, Teva has the largest portfolio of FDA-approved generic products on the market and holds the leading position in first-to-file opportunities, with over 100 pending first-to-files in the U.S.  Currently, one in seven generic prescriptions dispensed in the U.S. is filled with a Teva generic product.

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by millions of patients every day.  Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area.  (Teva 26.03)

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8.7  Lipogen’s Natural Formula Clinically Shown to Reduce PMS Symptoms

A new clinical study has confirmed the positive effects of Lipogen PMS, a natural phospholipid formulation, in treating and relieving premenstrual syndrome (PMS) symptoms.  PMS defines physical and/or emotional symptoms that occur one to two weeks before a woman’s period.  A randomized, double-blind, placebo-controlled clinical study evaluated 40 women aged 18-45 who were diagnosed with PMS by their physicians.  The Lipogen PMS treatment group experienced an on-going reduction in premenstrual syndrome symptoms, while the placebo group returned to initial PMS-symptom levels.

Lipogen PMS, patented in the US, Europe and Japan, is all-natural and has earned both US FDA GRAS status and EU EFSA Novel Food approval.  Lipogen is considering further developing the product as a botanical drug.

Haifa’s Lipogen, founded in 1991, is a premier nutritional supplement provider whose portfolio of products promotes brain health, including cognitive function, memory, stress reduction and PMS-symptom improvement. The company serves supplement and functional food producers in over 30 countries worldwide.  (Lipogen 27.03)

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8.8  Vaica’s SimpleMed Digital Health Solution Registers 66% Improvement of Medication Adherence

A clinical trial led by a team at the Research Institute of the McGill University Health Centre (RI-MUHC) in Montreal showed that teen and young adult kidney transplant recipients who used Vaica Medical’s SimpleMed, a digital health, medication management and adherence solution, in combination with coaching, had 66% higher adherence to anti-rejection medicine.  The goal of the TAKE-IT study was to find out if a program of regular coaching, review of electronically-monitored adherence, and the medication management and reminder system provided by Vaica’s SimpleMed would help young people to take their life-saving medications better.

Vaica has also been chosen to design the customized, medication management and adherence solution in a follow-up study called Teen Adherence in Kidney Transplant Improving Tracking to Optimize Outcomes (TAKE IT TOO).  In TAKE-IT TOO study investigators will collaborate with Vaica, and with patients, parents and healthcare professionals to design a medication monitoring and adherence support system specifically for young people, adapt the TAKE-IT intervention for use in clinical practice, and test the new device and intervention in a pilot trial.  TAKE-IT TOO is being funded by the National Institute of Health.

Tel Aviv’s Vaica Medical is helping to solve the hundreds of billion dollar, global medication nonadherence problem with digital, medication management and adherence solutions for pharma and specialty pharmacies.  Vaica’s distinctive solution includes a software/hardware combination that ensures accessibility to both patient and caregiver, the possibility to customize a product to the requirements of any therapeutic area as well as a particular patient’s needs and real-time notifications sent to select caregivers if a dose is missed in order to empower a relevant, proactive intervention.  Vaica’s solutions are commercially available worldwide.  (Vaica Medical 27.03)

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8.9  Pythagoras Medical Receives CE-Mark for the ConfidenHT System

Pythagoras Medical, a cutting edge medical device company established by Rainbow Medical, Israel’s premier medical device investment group, announced that its ConfidenHT System has received a European CE Mark.  ConfidenHT is a novel system for patients with resistant hypertension, which improves the efficacy of renal denervation (RDN) procedures.  ConfidenHT provides real-time guidance to physicians by identifying ablation “hot spots”, verifying ablation effectiveness and identifying non-responder patients.

About 31% of adults worldwide have hypertension.  Resistant hypertension, estimated to appear in 9-18% of hypertensive patients, significantly increases the risk of heart disease, stroke, and kidney disease. One of the mechanisms that controls blood pressure is a neurological signal sent from the kidneys to the brain. Eliminating this neurological link by ablating or “denervating” of the nerve through an RDN procedure can restore normal blood pressure in many patients.  ConfidenHT is unique in its ability to identify hot-spots for denervation and to verify the effectiveness of the procedure. This is achieved by a mapping catheter that stimulates different areas of the renal artery and an algorithm that uses the physiological response of this stimulation to create a map of hot-spots for ablation.  This technology also reduces the risk factor associated with unnecessary ablation, which is an inherent part of the “blind” approach of current ablation technologies.

The ConfidenHT Catheter is a multi-electrode, over-the-wire catheter compatible with an 8F guiding catheter and 0.014″ guide wire.  The ConfidenHT mapping console features multi-channel stimulation capabilities, and its proprietary algorithm uses multi-factorial physiological marker analysis.  In addition, the console provides visualization of the artery’s mapping results and hot-spot locations on a 15″ touchscreen display.

Herzliya’s Pythagoras Medical was founded in 2014 by Rainbow Medical, Israel’s premier medical device innovation and investment group.  The company is developing a platform for intra-arterial nerve mapping using an electrical stimulation approach that can be integrated with various procedures for multiple indications.  (Pythagoras Medical 26.03)

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8.10  DarioHealth Receives FDA Clearance for iPhone 7, 8 & iPhone X Smart Glucose Meter

DarioHealth Corp. announced that the US FDA has granted Pre-market Notification (510(k)) clearance for the Company’s Lightning®-enabled version of the acclaimed Dario™ Blood Glucose Monitoring System which enables the use of the Dario app on iPhone 7, 8 and X smart mobile devices (SMD).  Consumers in the U.S. market will be able to receive the same quality user experience with DarioHealth on the latest Apple devices, including the iPhone X.  The launch of Apple’s smartphones with only a Lightning connector posed a unique challenge to the entire mobile ecosystem. With today’s announcement, DarioHealth can now successfully offer to U.S. consumers its proprietary meter with either a 3.5mm headphone jack or Lightning connector.

This news opens a significant U.S. market opportunity for DarioHealth, as it enables DarioHealth to provide its diabetes management platform and expand the sales of the Dario Blood Glucose Monitoring System to iPhone 7, 8 and X SMDs.

Caesarea’s DarioHealth Corp. is a leading global digital health company serving its users with dynamic mobile health solutions. In today’s day and age, knowledge of health and treatment is being democratized, and we believe people deserve to know everything about their own health and have the best tools to manage their condition.  DarioHealth employs a revolutionary approach whereby harnessing big data, we have developed a novel method for chronic disease data management, empowering people to analyze and personalize self-diabetes management in a totally new way without having the disease slow them down.  (DarioHealth 26.03)

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9.1  c2a Offers Royalty Free Solution to Solve Fundamental Car Security Vulnerability

Cyber 2 Automotive Security (c2a) announced that its patented Stamper technology, which protects the connected car from cyber threats, is now being made available to auto manufacturers and suppliers worldwide on a royalty free license basis.  Cyber-attacks have dominated the headlines and devastated a slew of companies over the past few years, compromising millions of people’s personal information and costing billions of dollars in losses to those businesses.  Recently the world has seen the devastating effects of chip level attacks such as Spectre and Meltdown affecting processors worldwide.  c2a has developed a revolutionary safety and security layer for the next generation of connected vehicles to protect all of the hundreds of semiconductor chips and processors in the car.  This revolutionary solution includes bringing its Stamper firewall type functionality into the car network, as well as multi-network anomaly detection, microprocessor protection, and diagnostics over IP infrastructure.

Jerusalem’s c2a Security has developed a revolutionary safety and security layer for the next generation vehicle starting from the chip level, with a unique, easy to implement and low-cost solution to protect connected cars from malicious attacks.  These solutions include patent-pending firewall type functionality into the car network, multi-network anomaly detection, microprocessor protection, and diagnostics over IP infrastructure.  c2a is endorsed by the Israel Innovation Authority as a cybersecurity company.  (c2a 12.03)

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9.2  Terahertz Computer Chip Now Within Reach

Following three years of extensive research, a Hebrew University of Jerusalem (HU) team has created technology that will enable computers and all optic communication devices to run 100 times faster through terahertz microchips.  Until now, two major challenges stood in the way of creating the terahertz microchip: overheating and scalability.  However, in a paper published recently in Laser & Photonics Reviews, the head of HU’s Nano-Opto Group have shown proof of concept for an optic technology that integrates the speed of optic (light) communications with the reliability—and manufacturing scalability—of electronics.

By using a Metal-Oxide-Nitride-Oxide-Silicon (MONOS) structure, Levy and his team have come up with a new integrated circuit that uses flash memory technology—the kind used in flash drives and discs-on-key—in microchips.  If successful, this technology will enable standard 8-16 gigahertz computers to run 100 times faster and will bring all optic devices closer to the holy grail of communications: the terahertz chip.  (HU 26.03)

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9.3  Innovative Cosmetics Company Develops World’s First Visual Fragrance Technology

Amkiri announced the launch of the world’s first ever ‘visual fragrance’ technology.  The Amkiri team has developed and successfully patented a technology comprised of scented ‘ink’ which is applied to the skin via specifically developed applicators, allowing the user to apply and create body art infused with fragrance.  Bridging the worlds of scent and color, Amkiri has created a product for the beauty industry which enables consumers the complete freedom of multisensory self-expression.

The product range comprises a first-of-its-kind liquid, similar in its form to crème-like ink, which combines both color and quality fragrance.  The long-lasting formula is applied to the skin via Amkiri’s proprietarily developed beauty applicators, including a Brush Wand, FreeHand Wand, stencils and stamps.  The innovative and patented technology of Amkiri allows fragrance to be carried in liquid ‘ink’ and worn visually on the skin, while ensuring the scent remains true to itself and lasts for up to 12 hours.  In addition, the unique Amkiri ‘ink’ adapts to the natural elasticity and movement of the skin, enabling any visual designs created by the user to dry smoothly and remain long lasting.  This new patented technology has been developed to carry any fragrance and color.

Amkiri, is due to make a selection of products available to consumers in May 2018, with a wider launch later in the year. The company is building significant partnerships with several global brands in the beauty, fine fragrance and retail sectors and will announce the nature of those relationships in due course.

Founded in 2014, Tel Aviv’s Amkiri is a beauty innovation company with offices in Israel and New York.  Amkiri has scientifically developed a sophisticated Visual Fragrance™ patented technology and product range which embodies cosmetics, color, fine fragrance, body art and tattooing, for the first time ever in the beauty industry.  Devised to encourage women and men to tap into their own creativity and ‘multi-sense self-expression’ Amkiri keeps the consumer at heart, providing them the ultimate freedom of self-expression.  (Amkiri 22.03)

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9.4  International Food and Drink Company Goes Smart with Friendly Technologies

Friendly Technologies has announced that its One-IoT management platform is being adopted by one of the leading international food and drink companies for remote management of its smart vending machines.  Friendly’s One-IoT Management Platform enables efficient management of vending machines, improved security and monitoring of critical parameters.  Friendly’s One-IoT Platform enables remote management of vending machines and kiosks via standard protocols, such as: LwM2M, OMA-DM, MQTT, TR-069 and other proprietary protocols.  The platform enhances standard vending machines and kiosks and turns them into Internet-enabled and manageable devices that improve customer experience and reduce operational costs.  Smart machines transmit supply and demand data, sales, troubleshooting information and service data via LwM2M protocol to Friendly’s cloud-based One-IoT Management server and are managed via cellular IoT gateways, enabling predictive maintenance of the machines, customer usage metrics, and a quarterly remote update of software and display information.

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 23.03)

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9.5  Magal Announces Orders for More Than 20 Sites for its Fiber Optic Based Sensor Solution

Magal Security Systems announced that since the beginning of the year it has received a record number of orders for more than 20 sites for its fiber optic based sensor product, FiberPatrol.  Customer applications include fence mounted and buried protection of critical infrastructure such as chemical plants in Western Europe and North America, public utility sites, transportation depots and a military base in Southeast Asia.

New technology added to the FiberPatrol product line includes artificial intelligence (AI) techniques enabling the buried sensor to classify and differentiate between humans and animals, vehicles, excavation and even tunneling – whether manually or by machine.  The buried sensor is capable of detecting manual digging up to 100 feet away, moving vehicles up to 50 feet away and footsteps up to 30 feet away.  Over a typical 25 mile range, it has a typical location accuracy of less than 30 feet when buried and 12 feet for the fence mounted sensor.

Yehud’s Magal is a leading international provider of solutions and products for physical and video security solutions, as well as site management.  Magal offers comprehensive integrated solutions for critical sites, managed by Fortis4G – our 4th generation, cutting-edge physical security information management system (PSIM).  The solutions leverage their broad portfolio of home-grown PIDS (Perimeter Intrusion Detection Systems), Symphony – our advanced VMS (Video Management Software) with native IVA (Intelligent Video Analytics) security solutions.  (Magal 22.03)

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9.6  Ilyon’s Bubble Shooter: 50 Million Downloads and Counting

Ilyon, Israel’s fastest growing mobile gaming company, announced today that its flagship Bubble Shooter game has now passed 50 million downloads.  Free to download, Bubble Shooter is a thrilling casual app with thousands of challenging puzzles to master.  Deriving from the popular 90’s arcade video game, the popularity of Bubble Shooter skyrocketed when it was released as a PC game in 2002 by Absolutist and distributed on hundreds of flash websites, giving people the opportunity to play the game wherever and whenever they like.

Ilyon acquired the IP (Intellectual Property) and trademark of Bubble Shooter from Absolutist and developed the mobile version for iOS and Android with new and improved gameplay, features and graphic design.  The mobile version of the game remained simple to play – featuring a classic shooter, with players needing to match at least 3 bubbles of the same color to pop the combination.

Since launching the mobile version, Bubble Shooter has become one of the most popular casual games on Google Play and on the Apple App Store, and has been played billions of times.  Ilyon’s Bubble Shooter includes more than 2,000 levels, with more added all the time, and great features such as colorblind mode, brand new effects and sounds, awesome daily rewards and prizes.  Later this year, Ilyon is planning to re-launch the brand on the web with a new version.

Rosh HaAyin’s Ilyon is one of the fastest growing mobile gaming companies in Israel with more than 300M downloads and a line of successful free-to-play casual titles.  The company was founded in 2013 by four tech entrepreneurs with a clear focus and a winning formula to take playtime to a whole new level.  (Ilyon 27.03)

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9.7  Hysolate Selected as Finalist for 2018 RSA Conference Innovation Sandbox Contest

Hysolate has been named one of 10 finalists for the 2018 RSA® Conference Innovation Sandbox Contest for its work to create a comprehensive endpoint solution for security and productivity. On 16 April Hysolate will present its information security technology to a panel of industry veteran judges and a live audience in a three-minute quick-pitch, competing for the coveted title of “Most Innovative Start Up” at RSA Conference 2018 in San Francisco.

Hysolate has rebuilt the endpoint from the ground up, transforming it into the secure and productive environment it was meant to be.  Hysolate introduces a new platform, layered below the OS, that delivers high-grade security to the enterprise and simultaneously facilitates increased productivity.  Hysolate makes it easy for enterprises to instantly convert legacy endpoints of any hardware model into fully virtualized Software-Defined Endpoints (SDE).  The architecture protects the organization from compromise by keeping attack vectors separated from valuable assets.  Everything the user interacts with – including all applications and the operating systems – is virtualized, running in one of the virtual machines.  These VMs are completely segregated and isolated from each other with Hysolate’s virtual air-gap.  The system reinforces productivity by eliminating the numerous policies restricting employee access to external resources.

Tel Aviv’s Hysolate‘s mission is to create a future-ready endpoint platform that provides the highest levels of both security and productivity.  The team includes cyber-security and IT experts with a founding team of veterans from VMware, CyberArk and Unit 8200 (Israel’s NSA).  Customers include leading financial and technology enterprises worldwide.  Hysolate was launched by Team8, a cybersecurity company creation platform and is led by veterans of elite technology units in the Israeli Defense Forces and enterprise software experts.  (Hysolate 26.03)

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9.8  On Track Innovations Completes New Cryptocurrency Payment Solution

On Track Innovations has launched its cryptocurrency (CC) payment solution for the micropayment market and automated machines.  To OTI’s knowledge, this is the first and only CC payment solution on the market today for automated machines and the micropayment market.  The innovative OTI system, which was developed following extensive research into the market, allows the use of (CC) standard mobile wallets.  The company’s solution is simple, easy to use, fully secure method for micropayments, and tackles the significant challenges of CC in automated machines and micro-payments.  This ground-breaking payment solution provides high-speed, low-fee transactions, while also solving global currency exchange issues that may arise from using CC as a form of payment.

Rosh Pina’s On Track Innovations (OTI) is a global leader in the design, manufacture, and sale of secure cashless payment solutions using contactless NFC technology.  OTI’s field-proven innovations have been deployed around the world to address cashless payment, automated retail, and petroleum markets.  OTI distributes and supports its solutions through a global network of regional offices and alliances.  OTI is the proud recipient of the 2017 AI Award for Best Cashless Payment Solutions Provider – Israel.  (OTI 26.03)

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9.9  Telrad Networks Fixed LTE Solution Selected by City of Euless, Texas

Telrad Networks announced that the City of Euless, Texas, has selected Telrad’s fixed LTE solution for their city-wide municipal applications, allowing for remote control and automation.  Euless, located just northeast of Dallas, decided to deploy a wireless network to improve work force efficiency and flexibility in order to be more productive and better manage municipal assets.  Euless selected Telrad’s fixed LTE solution, including its flagship BreezeCOMPACT 1000 base station.  The LTE deployment has enabled the city to automate traffic lights, school zone flashers, the aggregated collection of water meter data and more.  Following the success of the LTE solution, new applications have been introduced to further improve city productivity and automation.  As a result of these successes, Euless is now looking into expanding the network with the addition of a number of base stations.

Telrad solutions, operating in the sub-6 GHz bands, offer reliable fixed wireless broadband connectivity, cost-optimized configurations, lower total cost of ownership, and NLOS capability.  With maximum coverage and capacity, operators maintain more efficient, cost-effective networks that deliver an optimal user experience.

Lod’s Telrad Networks is a global provider of innovative LTE broadband solutions, boasting over 300 4G deployments in 100 countries.  Telrad stands at the forefront of the technology evolution of next-generation TD-LTE solutions in the sub-6 GHz market.  Since 1951, the company has been a recognized pioneer in the telecom industry, facilitating the connectivity needs of millions of end-users through operators, ISPs and enterprises around the world.  (Telrad Networks 28.03)

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9.10  World’s First 2 Petaflop Deep Learning System Features Mellanox Solutions

Mellanox Technologies announced that the company’s InfiniBand and Ethernet solutions have been chosen to accelerate the new NVIDIA DGX-2 artificial intelligence (AI) system.  DGX-2 is the first 2 Petaflop system that combines sixteen GPUs and eight Mellanox ConnectX adapters, supporting both EDR InfiniBand and 100 gigabit Ethernet connectivity.  The technological advantages of the Mellanox adapters with smart acceleration engines enable the highest performance for AI and Deep Learning applications.  The embedded Mellanox network adapters provide overall 1600 gigabit per second bi-directional data throughout, which enables scaling up AI capabilities for building the largest Deep Learning compute systems.  The DGX-2 platform, together with the DGX-1 platform that is also based on Mellanox network adapters, provide a rich set of options for AI companies, users and developers to build the next generation of AI products and services.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand smart interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability.  Mellanox offers a choice of fast interconnect products: adapters, switches, software and silicon that accelerate application runtime and maximize business results for a wide range of markets including high performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services.  (Mellanox 02.04)

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9.11  Checkmarx Named Leader in the Gartner 2018 Magic Quadrant for Application Security Testing

Checkmarx has been named a Leader in Gartner’s 2018 Magic Quadrant for Application Security Testing.  The quadrant assesses vendors’ completeness of vision and ability to execute.  Checkmarx’s Application Security Testing platform includes Codebashing (Secure Coding Education), CxSAST (Static Application Security Testing), CxOSA (Open Source Analysis), and CxIAST (Interactive Application Security Testing) which complement each other and ensure reduced application risk without impacting software delivery schedules.

Checkmarx’s trajectory extends into 2018 with the company once again reporting a record breaking 2017 on multiple aspects including being named the fastest growing cybersecurity company in Israel for five years in a row with 70% sales growth and a broad adoption worldwide of the Checkmarx application security platform and services.

Ramat Gan’s Checkmarx is an Application Security software company whose mission is to help development organizations deliver secure applications faster.  Amongst the company’s 1,500+ customers are five of the world’s top 10 software vendors, four of the top American banks, many government organizations and Fortune 500 enterprises, including SAP, Samsung and  (Checkmarx 29.03)

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10.1  Israeli Startups Raised Over $300 Million in March

According to IVC-ZAG, Israeli startups raised about $330 million during March.  The figure may be more as some companies prefer not to publicize the investments they have received.  According to the data, Israeli startups raised an estimated $260 million in January and $500 million in February bringing the first quarter total to just below $1.1 billion, up from $1.03 billion in the first quarter of 2017.  In 2017, Israeli startups raised a record $5.24 billion, according to IVC-ZAG, which was up from $4.8 billion in 2016, which was itself a record.

Nearly one third of March’s figure was due to $100 million raised by social trading company eToro.  Other major financing rounds in March included $30 million raised by cybersecurity company BioCatch, $30 million raised by AI medical diagnostics company Medial EarlySign and $29 million raised by fintech company Capitolis.  Medical monitoring company Continuse Biometrics raised $20 million and SaaS security platform Luminate Security raised $14 million.  (IVC-ZAG 02.04)

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10.2  Food Prices in Israel Drop by 5%, OECD Report Finds

The price of food in Israel has dropped 5% in the past two years, the Organization for Economic Cooperation and Development reports.  Nevertheless, average food costs in Israel are still 19% higher than the average for OECD nations.  The drop in food prices is particularly interesting given that net salaries have risen by 3% in the same time period.

A number of factors have contributed to lower food prices.  In 2014, the market for fresh beef was opened to increased imports, which economists from the Finance Ministry say led to drop in beef prices that ranged from 7 to 17%  The 1% cut to Israel’s Value Added Tax and a 3.5% cut in corporate taxes, as well as higher caps for imported foodstuffs also helped lower food prices.  Additional actions such as the revocation of exclusive marketing deals for grocery chains have also affected food prices.  (IH 28.03)

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10.3  Israel Triples Whisky Imports

Figures provided by the UK embassy in Israel show a record of 4.5 million bottles of Scotch whisky imported into Israel in 2017.  In monetary terms, Scotch whisky imports have soared from £10 million in 2012 to over £30 million (NIS 140 million at NIS 4.70/£) in 2017.  Scotch whisky imports totaled £26 million in both 2015 and 2016.

Scotch whisky accounted for 4.5 million bottles of the 22.9 bottles of UK alcoholic beverages imported to Israel in 2017, according to the Edinburgh-based Scotch Whisky Association.  An alcoholic beverages reform introduced eight years ago greatly reduced the price of expensive alcoholic beverages in Israel.

The favorite blended malt whisky brands of Israeli’s are Johnny Walker Black Label, Johnny Walker Red Label and 12 year-old Chivas Regal.  In the single malt category, Israel’s preferred tipple is Glenfiddich 12 and Glenlivet.  Malt whisky imports to Israel account for 22% of all UK whisky imports into Israel.  The boom in Scotch whisky imports into Israel is part of the record of $9.1 billion set in imports and exports of goods between Israel and the UK in 2017, compared with $7.2 billion in 2016, according to Central Bureau of Statistics figures.  (IH 28.03)

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10.4  Tourist Overnights in Israeli Hotels Keep Rising

Figures published by the Israel Hotel Association economic department show that foreign tourists accounted for 824,000 overnights, approximately half of the 1.6 million overnights in Israeli hotels in February.  This figure is 18% more than the number of foreign tourist overnights in February 2017 and 46% more than the number in February 2016.  Most of the overnights were in Jerusalem (34%) and Tel Aviv (21%).  The number of Israeli overnights in hotels in February was 778,000, about the same as in the corresponding month of 2017.

The number of hotel rooms also grew, as the current number of available hotel rooms is 54,095, 3% more than last year and 6% more than in 2016.  The construction boom is continuing – new hotels were recently opened in Jerusalem and Tel Aviv, and even in Eilat construction of a new hotel is beginning, following a halt for many years.

The Ministry of Tourism’s grants to developers totaled NIS 181 million.  These grants involved construction of 2,570 rooms in 35 projects to be opened in the coming years.  The biggest grant, NIS 35 million, is expected to be for preserving and building a low-cost hotel in Jerusalem with 248 rooms.  Grants were approved for five projects in Jerusalem with a total of 482 rooms.  Plans also include a 356-room hotel in Netanya, 240-room vacation hotel in Rishon LeZion and a hotel in Bat Yam with 275 luxury suites.  Grants for developers are according to the Ministry of Tourism’s criteria and mapping of priority areas.  These areas do not include Tel Aviv and Herzliya.

Tel Aviv was recently ranked ninth on the list of the world’s most expensive cities, a fact that is probably hampering potential growth in incoming tourist traffic in Israel.  High overnight prices in Israel are usually an unpleasant surprise for visiting tourists, compared with the plunging prices of flights.  A vacation in Israel is regarded as expensive, which is why the Ministry of Tourism’s objective is to encourage construction of medium-rated hotels that will provide a wider range of prices.  (MoT 22.03)

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11.1  JORDAN:  Slowing Jordan’s Slide Into Debt

Kirk H. Sowell posted on 22 March in the Carnegie Endowment that Jordan has managed to reduce budgetary deficits for 2018, but rising operational costs and stagnant sources of revenue will keep it reliant on foreign aid.

Jordan’s 2018 budget, which became law on 18 January, appears to be a success for Prime Minister Hani al-Mulki.  When he assumed office in 2016, Jordan was headed toward insolvency, with the debt-to-GDP ratio having increased from just over 60% to 93.4% between 2011 and 2015, an increase of about 6% per year.  Over the course of two budgets Mulki has dramatically slowed the slide, keeping the debt-to-GDP ratio from rising above 95.3% with the help of significant foreign aid.  Yet this fiscal discipline is squeezing an already weak economy and Jordan has barely begun the process of economic restructuring necessary for a sustainable economy.

Jordan’s budget consists of two parts.  For 2018, the main “public” budget was JD9.02 billion ($12.7 billion), funded by JD 8.50 billion in internal revenue and foreign aid, leaving a deficit of JD 523 million.  The “government units” budget, which contains a range of official institutions but is dominated by electric and water utilities, is JD 1.81 billion ($2.6 billion), funded by JD 1.42 billion in revenue, JD 191 million in subsidies from the main budget and JD 55 million in foreign aid, leaving a JD 148 million deficit.  This left a total deficit of JD 671 million ($946 million), or a relatively respectable 2.5% of GDP, thus explaining the slow rate at which the debt-to-GDP ratio is growing.  Of course, without the JD 755 million ($1.1 billion) in foreign aid, the deficit more than doubles and the debt-to-GDP ratio quickly goes over 100%.

Mulki’s success at slowing Jordan’s slide into debt is due not to cuts in spending in the main budget, but to increased internal revenues and, to a lesser extent, reduced spending on electricity subsidies.  However, the Jordanian government will be hard pressed to make such dramatic changes in future budgets.

Domestically generated revenues such as taxes, customs and fees increased dramatically from JD 6.2 billion in 2016 to JD 6.9 billion in 2017 and are projected to increase further in 2018.  Because Jordan has historically been under-taxed, its rentier political model relying on foreign aid, it was able to nearly double domestic revenues from just JD 4.2 billion in 2011 to JD 7.8 billion in 2018.  However, this means the government is taking an extra 14% of GDP out of an already weak economy each year.  Higher rates combined with the negative impact of regional conflicts on Jordan’s trade and tourism sectors has killed off domestic growth.

While Jordan’s GDP growth has for years hovered just above 2% – already a low figure for a developing country – even this growth can be entirely accounted for by external aid.  During 2017 Jordan received $1.78 billion in compensatory aid for hosting Syrian refugees, and combined with the $1.1 billion in direct budget aid for 2018 and $1.5 billion in remittances from citizens working abroad, these external stimuli account for 11% of GDP.

Meanwhile, external economic impacts on Jordan from instability have improved only modestly.  Tourism is recovering from its post-2011 collapse, increasing from 4.8 million tourists in 2016 to 5.2 million in 2017.  Yet this figure remains short of the 2010 peak of 8.2 million; in early 2016, the government estimated that it had lost 6.9 million tourists total due to the Arab Spring.  Likewise, the collapse in trade with Syria and Iraq has yet to show any real recovery.  The 2014 security collapse contributed to a nearly two-thirds decline in Jordanian exports to Iraq from $2 billion in 2014 to $695 million in 2017.  While security has improved to a degree, and the Trebil border crossing into Anbar reopened last September, Iraq’s erection of a 30% tariff to protect its own producers in late 2016 has made recovery slow.  Although Amman and Baghdad agreed on 28 February to exempt certain Jordanian products, it remains unclear whether this partial removal of the tariff, if implemented, will revive trade.

However, overall operational spending increased in 2017 by JD 523 million and is projected to increase in 2018 by an additional JD 426 million, driven primarily by rising costs for the military, internal security forces, pensions and interest on debt.  These four sectors account for two-thirds of operational spending, while capital spending for 2017 actually declined slightly to JD 1.025 billion from JD 1.029 billion.  Military spending in particular increased rapidly, up from JD 1.24 billion in 2017 to JD 1.43 billion in 2018.  Furthermore, the fact that most spending growth is in these non-productive sectors means vital long-term sectors such as education and infrastructure will continue to be squeezed.

The dramatic decline in utilities spending will also be difficult to replicate.  A combination of better management of energy purchases and steady increases in what consumers pay for electricity has brought the utilities deficit way down from a high of $1.21 billion in 2014 – after Egypt cut off its exports of below-market natural gas and Jordanian policymakers scrambled to find cheap alternatives – to just $114 million in 2017 and $148 million in 2018.

Any efforts to reduce spending further through austerity measures are likely to be met with domestic backlash.  Already, reductions in subsidies for bread in particular have brought weekly protests and garnered more media attention than any other issue.  In January, the Muslim Brotherhood bloc, called the National Alliance for Reform, pushed a no-confidence vote in Mulki’s government on this basis, although it failed because parliament is structured to guarantee a pro-government majority.  Yet Mulki’s bread subsidy reduction is modest.  Whereas before the government subsidized bread generally, which also benefited non-citizens, who are nearly one-third of the population, now prices are higher but citizens receive direct payments to compensate.  Even though the 2018 budget includes an increase of between 67 and 100% for three kinds of bread, this raises the prices merely to Egyptian levels.  Furthermore, the direct cash payments will not only compensate poorer Jordanians, but also all government employees, regardless of how highly paid.

In response to the protests, on 13 February, Mulki declared openly that his predecessors had left the country at the brink of insolvency and that the failure to take tough revenue-raising measure would lead to a debt crisis which would destroy the country – and he is correct.  What is more doubtful is Mulki’s assertion that Jordan “will get out of the bottleneck” in 2019.  While the measures to raise taxes and reduce subsidies buy time, they leave Jordan struggling to stay afloat and dependent on the continued flow of extensive aid.  Since the Arab Gulf states have scaled back the foreign aid they extended to Jordan after 2011, the kingdom is ever more dependent upon U.S. foreign aid support.  Aid to Jordan already accounted for 40% of all U.S. aid to the Middle East, and then-Secretary of State Rex Tillerson committed on 14 February to increasing U.S. economic aid even further, from $1 billion annually to $1.3 billion.  At over 10% of Jordan’s annual budget, this is a bailout in all but name.

To survive, Jordan needs to find a way to reduce military spending, the only discretionary part of the budget that is increasing rapidly and radically restructure its economic model – or else get used to living permanently on the edge of economic ruin.

Kirk H. Sowell is the principal of Utica Risk Services, a Middle East-focused political risk firm.  (Carnegie 22.03)

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11.2  JORDAN:  ‘B+/B’ Ratings Affirmed; Outlook Remains Stable

On 23 March 2018, S&P Global Ratings affirmed its ‘B+/B’ long- and short-term foreign and local currency sovereign credit ratings on Jordan.  The outlook remains stable.

At the same time, we affirmed the ‘B+’ long-term foreign currency issue rating on the sovereign-guaranteed bond of senior unsecured debt issued by The Development and Investment Projects Fund of the Jordan Armed Forces.


The stable outlook balances our expectation that the government’s net debt stock as a percentage of GDP will marginally decrease over the period through 2021, against the risk that Jordan’s external liquidity position will deteriorate further.

We could lower our ratings on Jordan if strong bilateral and multilateral donor support were to diminish, or the pace of fiscal consolidation were to slow.  This could result in higher government external debt issuance, raising both government debt service and the economy’s external financing needs.

We could raise the ratings if Jordan’s external imbalances were to significantly narrow for a sustained period, or if terms of trade were to stabilize. We could also raise the ratings if the economic outlook were to markedly improve.


The ratings on Jordan are constrained by its high public debt levels; the economy’s large external financing needs, which are driven by large current account deficits; and by pressures from the ongoing regional conflicts, which have slowed the country’s growth trajectory.  Rising government external commercial borrowing also exposes Jordan to higher external risks and borrowing costs, in our view.

That said, the ratings are supported by the authorities’ efforts to implement greater fiscal consolidation and measures to reduce losses in state-owned enterprises, which we expect will result in gradually falling government debt levels over the forecast horizon through 2021.  International assistance from the U.S. and the Gulf Cooperation Council (GCC; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) continue to support the ratings.

Institutional and Economic Profile: Economic growth will likely remain subdued in the context of regional developments –

-We expect donors to continue to support Jordan amid the ongoing conflict in Syria and fiscal pressures resulting from refugee inflows.

-We forecast that economic growth will be low, averaging 2.7% over 2018-2021, compared with 6.5% over 2000-2009.

-Structural reform efforts will be anchored by the ongoing three-year International Monetary Fund (IMF) program (2016-2019).

The ongoing conflict in Syria continues to affect Jordan and we expect international support for Jordan to remain strong.  Jordan is one of the most stable countries in the region, and maintaining this relative stability is an important foreign policy objective for the U.S. and the GCC.  Donor support has included grants for budget support (3.0% of GDP on average over 2012-2017), U.S. military aid (about 1% of GDP in 2017), three U.S.-guaranteed Eurobonds of $3.75 billion issued over 2013-2016, and $3.75 billion in total project funding from the GCC since 2012.  In January 2018, the U.S. committed to providing economic and military aid of $1.275 billion annually (approximately 3% of 2018 GDP) over five years, representing a 28% increase from 2017 and the first five-year Memorandum of Understanding with Jordan.  Jordan also benefits from concessional lending from bilateral partners and multilateral agencies (close to 20% of GDP in 2017), which have been important sources of financing for Jordan’s twin fiscal and external deficits.

Nonetheless, we expect some decrease in donor support, particularly budget support, over the coming years.  During 2017, foreign grants continued declining, by 15% year on year to about 2.5% of GDP (from 3.0% in 2016 and 4.9% in 2014).  Moreover, in 2019, the IMF’s three-year Extended Fund Facility program of $723 million will end, the GCC funds are set to expire, and the first U.S.-guaranteed bond of $1 billion will mature.  Our base-case scenario does not incorporate a material shift in donor funding, but we consider that the overall international funding commitment could weaken from current levels as the military conflict in Syria eases and as existing agreements expire.  Meanwhile, expenditure pressures will remain heavy, given the significant increase in population since 2011.

We estimate that real GDP growth remained subdued at about 2% in 2017.  Regional developments have significantly affected tourist arrivals and foreign investment, while lower oil prices and weakened macroeconomic activity in the GCC reduced remittance and investment inflows.  We do not anticipate a quick resolution to the Syrian conflict and security risks will remain high, which will weigh on economic growth.

That said, we expect a slight rebound in growth over the next four years, supported by rising exports and investment projects, particularly in the energy sector.  The opening of the border with Iraq in late August 2017 and the recent decision by the Iraqi government to exempt several Jordanian exports from customs duties should support higher Jordanian exports and transit fee receipts.  Nevertheless, logistical issues and ongoing security concerns pose downside risks to the normalization of trade to pre-2015 levels.

Jordan’s economic growth has not kept pace with the rapid rise in its population.  We estimate GDP per capita of $4,100 in 2018. Including our growth forecasts through 2021, 10-year weighted-average real GDP per capita is expected to contract by about 1%, significantly lagging peers at similar income levels.  However, population growth has normalized and refugee inflows have slowed since the closing of the borders with Syria in June 2016.

The country’s policymaking and institutional capacity have been strained by both the regional protests and revolutions of 2011 and the Syrian crisis.  Large refugee inflows, resulting in an increase in the population by 50% since 2011, and security concerns have weighed on public resources.  In particular, rising military, medical, and education costs have led to a deterioration in Jordan’s fiscal position and rising debt levels, as well as a growing reliance on donor support.

Given the challenging environment, we expect that risks to Jordan’s public finances will persist and that improvements will only gradually become visible over the forecast period, supported by the IMF reform package, which provides a policy anchor. In our view, centralized decision-making reduces the predictability of future policy responses, especially given the changing demographics and the rising desire for more political participation among parts of the population.

Flexibility and Performance Profile: The government’s debt stock remains high, while the external position has worsened

-We expect a higher proportion of government external debt to be issued on commercial terms as foreign grants and concessional debt flows decrease from current levels.

-The gradual advance of fiscal reforms, combined with lower financial pressures at state-owned enterprises, will help to stabilize high government net debt levels.

-Jordan’s current account position deteriorated in 2017 and external financing needs will remain high through 2021.

Jordan’s central government debt levels have increased substantially to an estimated 95% in 2017 from around 62% of GDP in 2011.  The increase stems from high fiscal deficits and rising government-guaranteed debt at state-owned National Electric Power Company (NEPCO) and the Water Authority of Jordan (WAJ).  We estimate general government debt at 79% of GDP in 2017.  We net out the social security sector’s (SSIF) holdings of government paper because the SSIF falls within the definition of general government, under our criteria.  In our view, this level of debt makes Jordan vulnerable should it face additional financial or economic shocks.

Moreover, we expect that the government’s debt profile will rely increasingly on foreign currency commercial debt. Jordan issued two Eurobonds in 2017, amounting to $1.5 billion, following a $1.0 billion issuance in 2016.  Its exposure to foreign currency debt rose to 44% of total debt at end-2017 as a result.  We anticipate that the government will issue more international bonds to meet its funding needs and in an attempt to lengthen its debt maturity profile, particularly as grants and concessional funding decrease.  The U.S.-guaranteed bonds mature over 2019-2025 and it is unclear if the U.S. government will roll over these guarantees.  As the proportion of external commercial debt rises, interest costs would also increase, though we expect these to remain under 10% of total revenues over 2018-2021.

The authorities aim to reduce public debt levels by 13% to 82% of GDP by 2021, supported by fiscal reforms under the IMF program.  We expect public debt to decline more slowly to around 89% of GDP.  Despite the introduction of cash transfers to citizens and other welfare measures in the 2018 budget, several public protests ensued over the rising costs, along with a vote of no confidence against the government in parliament, which did not pass. Increasing taxes is politically more contentious in the context of the low-growth environment, high unemployment of around 18%, and ongoing regional instability.

Alongside the implementation of growth-enhancing reforms, the government’s reform program targets a mix of revenue- and expenditure-side measures, including the removal of tax exemptions.  The latter relate to an array of general sales tax (GST), customs, and income tax exemptions, which have contributed to the decline in tax revenues to 15% of GDP in 2017, from 23% in 2006.  The government’s fiscal consolidation efforts in 2017 were broadly on track, although the removal of several GST exemptions were delayed, and the central government deficit narrowed to 2.6% of GDP, from 3.2% in 2016.

The government has already implemented several measures under the 2018 budget that will help reduce fiscal deficits gradually.  The measures include the removal of the flour subsidy; raising GST taxes on several basic commodities to 10% (previously, exemptions had brought down rates to 4% and 8%); and increased taxes on imported cars, carbonated drinks, and cigarettes.  The government will also increase taxes on oil derivatives over the coming months.  In 2019, the government plans to introduce a revised tax law, which would include lower thresholds for income taxes and penalties for tax evasion, and phase out all GST exemptions, resulting in a unified GST rate of 16% on all products.

The weak performance of NEPCO and WAJ in recent years has resulted in significant financial costs to the government.  The government has been directly servicing NEPCO’s debt payments since 2013, and will do the same for WAJ from 2018 to reduce WAJ’s interest costs.  We therefore include the government-guaranteed debt of NEPCO and WAJ of around 12% of GDP in 2017 in our general government debt stock calculations.

However, financial pressures at NEPCO have eased since 2016, when it delivered a small profit. It reached close to breakeven in 2017, despite higher oil prices, according to the authorities.  NEPCO has benefitted from switching energy sources to liquefied natural gas from diesel, as well as from tariff hikes in recent months.  The start of gas imports from the Leviathan field in Israel in 2020, barring delays or political obstacles, could help to further reduce costs.  In our view, political considerations caused the government to delay applying an automatic tariff adjustment mechanism in 2017 that would have passed to consumers any increases in oil prices over NEPCO’s operational breakeven via a fuel surcharge.  Although the government has started to implement the mechanism, delayed or only partial implementation of tariff hikes would result in losses, given the higher average oil prices in 2018.  This would make it tougher for the government to achieve fiscal consolidation if NEPCO requires additional transfers.  Although losses at WAJ continue, it has a target date for operational cost recovery by 2020.

We estimate that Jordan’s external financing needs have increased to over 160% of current account receipts and usable reserves in 2017, owing mainly to a larger current account deficit and high proportion of short-term debt.  We estimate that the current account deficit increased in 2017 to 11.4% of GDP, significantly higher than our previous estimate of 8.5%, and up from 9.5% in 2016.  The deterioration reflects the closure of key trade channels with Iraq and Syria, falling remittances since 2014, and relatively weak prices of key minerals exports such as phosphate, combined with higher oil prices forcing up oil imports.  We forecast that the current account position will improve gradually, with growth in exports from 2018, but that deficits will remain elevated at an average of 9.6% of GDP over 2018-2021.  We expect these deficits will continue to be financed by foreign direct investments, debt inflows (mostly government external debt), grants, and project lending.

Central bank gross reserves (including gold) declined by more than $1 billion in 2016 and remained broadly stable in 2017 at $15.6 billion.  The key factors behind the lower reserves include external imbalances and rising deposit dollarization.  There were also one-off capital outflows in 2017 linked to the sale of a foreign stake in Arab Bank to resident investors.  Despite attempts to shore up reserves in 2017 through the issuance of U.S. dollar domestic bonds of $500 million in March and Eurobonds of $500 million in May and $1 billion in September, total reserves did not increase from 2016 levels.

The Jordanian dinar’s peg to the U.S. dollar supports price stability, although it also limits the central bank’s room for policy maneuver.  Despite weak economic growth, the central bank has followed the U.S. Federal Reserve in hiking the interest rates to maintain competiveness of the Jordanian dinar.  It raised the key benchmark rate (as well as other policy rates) by a total of 125 basis points to 4% between December 2016 and December 2017.  We expect that continued monetary tightening and fiscal consolidation will dampen credit growth and consumption to some extent over the next two years.  The rise in inflation to 3.3% in 2017 from -0.8% in 2016 reflects the rise in oil prices, along with tax increases.  We expect inflation to remain at 3% in 2018, given the impact of the recent fiscal measures and higher oil prices, before trending toward 2.5% thereafter.

Nonresident deposits in the financial sector make up around 40% of total external short-term debt. Although these deposits have steadily increased over the years, and we understand that they mainly relate to the Jordanian diaspora, we view their reversal as a potential risk.  (S&P 23.03)

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11.3  SUDAN:  Sudan’s Big Business Lobbying US to Help Attract Foreign Dollars

Matthieu Favas posted on 19 March in Quartz Africa that in 2008, Hania Fadl, CEO and founder of Khartoum’s Breast Cancer Center, bought a mammography machine from General Electrics.  Despite being brand new, the high-tech piece of kit then spent much time being kaput: replacing faulty parts always took months; flying in engineers to fix it required a special license.  This is because Sudan was under a trade embargo imposed by the US since 1997, a retribution for the country’s role as a host of terrorist groups.

That 20 year blockade recently ended.  In October, citing Khartoum’s improved counter-terrorism efforts, the Trump administration lifted economic sanctions, which also included a freeze on government assets and tight restrictions on financial institutions dealing with Sudan.  Dr Fadl is now looking to buy a second mammography machine. She says the breast cancer center, a privately funded non-profit, will shortly try to raise money from US, European and Middle Eastern donors.

Sudan’s travails show how impactful US sanctions can be – even after being lifted.  America’s influence might be waning, but its embargoes still have the power to block trade relationships, curb access to financing and make life very difficult for businesses.  While sanctions relief is good news to entrepreneurs, many find that reconnecting to the global economy after being shut out for years is an uphill battle.

Khartoum Breast Cancer Center is a member of the US-Sudan Business Council (USSBC), a group comprising some of Sudan’s largest private businesses that played an instrumental role in inspiring others – including the government – to lobby the US for sanctions relief.  Bank of Khartoum, also part of the USSBC, managed to get its name off the sanctions list as early as 2011 (the government later mandated the same law firm, Squire Patton Boggs, to convince Washington it should end the broader embargo).  KBCC got cleared in 2016, soon after Dr Fadl’s appeal to US lawmakers prompted a seven-strong Congress delegation – including Janice Schakowsky of Illinois and Marcia L. Fudge of Ohio – to visit the center.

The USSBC has since embarked on a new mission: it wants the US government to help it attract the foreign investment Sudan badly needs to modernize its economy.  Two decades of isolation have made the country particularly reliant on oil, which it started exporting just as sanctions kicked off.  For a while, that allowed Sudan to weather much of the blockade: GDP nearly quadrupled in the decade to 2007.  But South Sudan, which seceded in 2011, took away around 75% of Sudan’s oil reserves.  Exports plummeted overnight.

At about the same time, Sudan also found itself cut off from the global financial system.  In the aftermath of the financial crisis, the US started imposing hefty fines on banks dealing with Sudan – even non-US ones.  Weary of finding themselves in Washington’s crosshairs, foreign lenders stopped supplying the country with dollars.  Companies turned to the black market; interest rates jumped.  “Sudan became an economy run on cash. That created a fertile environment for corruption and money laundering,” says Ahmed Abdellatif, president of CTC Group, a Sudanese conglomerate.

Sanctions have now gone, but those problems remain.  Foreign banks are still reluctant to open dollar correspondent accounts for their Sudanese peers, reckons Fadi Al Faqih, Bank of Khartoum’s boss, lest they get punished should the US reverse foreign policy.  Sudan remains on Washington’s list of states sponsors of terrorism, which worries Western compliance officers.  The lack of financing is holding up progress. “The key to attracting FDI or having Sudan’s cost of business come down is re-establishing US dollar clearing relationships,” says Al Faqih.

In response, the USSBC has launched a “big outreach effort” to Western law firms, encouraging them to produce explanatory notes targeted at multinationals and development financiers, says Ihab Osman, its chairman.  The council is also sponsoring a conference in New York in April that will specifically cover the country’s banking issues and it wants Washington to help it attract tech titans to Sudan.  “The Apples and Googles of this world may be daunted by the amount of paperwork needed to come here.  The State Department could sit down with the dotcom companies to explain, encourage, make our case,” Abdellatif says.

Within the US administration, the council’s main contacts are the technical arms responsible for supporting US trade and investment abroad. But more informal discussions are also taking place.  “Many of the USSBC’s membership studied in the US and maintain excellent links in Washington,” a spokesman says.  “Some relationships were changed as new staff and elected officials came in, but the USSBC continues to work with lawmakers in Washington.”

Not every country shied away from Sudan during the sanctions era.  China, in particular, has sought to fill the void left by Western companies.  It established its first oil venture in Sudan just before the US embargo came into force; it is now a salient force in the construction, power and agriculture sectors, among others.  But those investments have failed to boost productivity, says Rolf Traeger, an economist with the UN’s Conference on Trade and Development, because they did not foster technology transfers and the adoption of modern management techniques.  He points out that Sudan’s manufacturing sector has shrunk drastically since 1997.

The USSBC’s efforts are aiming at the right target.  The example of Iran, where a lack of economic progress has recently fueled mass protests, suggests sanctions relief is not enough in itself for foreign investors to rush in.  It doesn’t help that the sanctions imposed on Sudan were uniquely complex, as they were progressively reinforced to punish human rights violations and other offenses.  Besides, Sudan remains saddled with high inflation and bulging debt. Getting a nice word from Washington may help. “For investors, there’s so much low-hanging fruit,” says Abdellatif.  “But Sudan very much remains an exotic destination.”  (Quartz 19.03)

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11.4  TUNISIA:  IMF Executive Board Completes Second Review under EFF Arrangement

On 23 March 2018, the Executive Board of the International Monetary Fund (IMF) completed the second review of Tunisia’s economic reform program supported by an arrangement under the Extended Fund Facility (EFF).  The completion of the review allows the authorities to draw an amount equivalent to SDR 176.7824 million (about $257.3 million), bringing total disbursements under the arrangement to the equivalent of SDR 631.3661 million (about $919 million).

In completing the review, the Executive Board approved the authorities’ request for moving towards quarterly reviews from the current semi-annual schedule.  Overall disbursements available throughout the program remain unchanged.  The Board also approved the authorities’ request for waivers of non-observance of end of December performance criteria on net international reserves, net domestic assets, the primary fiscal deficit, and current primary spending; and the non-observance of the continuous performance criterion on imposing or intensifying restrictions on the making of payments and transfers for current international transactions.  It also granted approval for the retention of an exchange restriction barring trade credit for certain non-essential imports until December 31, 2018.

The four-year EFF arrangement in the amount of SDR 2.045625 billion (about $2.98 billion, 375% of Tunisia’s quota) was approved by the Executive Board on 20 May 2016.  The government’s reform program supported by the EFF aims at reducing macroeconomic vulnerabilities, ensuring adequate social protection, and fostering private sector-led, job-creating growth.  Priorities include growth-friendly and socially-conscious fiscal consolidation to stabilize public debt below 73% of GDP by 2020 while raising investment and social spending, reversing the recent trend of accelerating inflation, and continued exchange rate flexibility to support exports and strengthen international reserve coverage.  Structural reforms supported under the arrangement focus on improving governance, the business climate, fiscal institutions, and the financial sector.

Following the Executive Board discussion, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair, made the following statement:

“Tunisia has experienced a modest recovery in 2017, but continues to face elevated macroeconomic vulnerabilities, and unemployment remains high.  Debt has continued to increase, inflation has accelerated, and international reserve cover is now less than three months of imports.  Decisive implementation of the policies under the Fund-supported program is necessary to sustain macroeconomic stability.

“The authorities have begun to address these challenges through a deficit-reducing budget for 2018, monetary policy tightening, and a renewed commitment to a flexible exchange rate.  Structural reforms have started to improve governance, strengthen the business environment, modernize the civil service and pensions, and restructure public banks.

“Successful fiscal adjustment will require strong policy implementation.  It will be critical to increase tax revenue in an equitable manner and reign in current spending to reduce debt and increase investment and social expenditure.  The 2018 priorities are to strengthen tax collection, implement the voluntary separations for civil servants, not grant new wage increases unless growth surprises on the upside and enact quarterly fuel price hikes.  It will be as important to distribute the adjustment burden equitably across society and protect the vulnerable.  Public-private partnerships should only proceed with adequate legal and regulatory frameworks.

“The Central Bank of Tunisia has demonstrated its commitment to low inflation through a widening of the interest corridor followed by a strong policy rate increase.  Further hikes will be needed to move real interest rates into positive territory unless inflation quickly subsides.

“Building on the real exchange rate depreciation in 2017, exchange rate flexibility will remain critical to correct the remaining overvaluation of the real exchange rate, improve the current account deficit, and rebuild reserves.  This will require adherence to the FX intervention budget and more competitive FX auctions.

“The authorities have increased near-term financing for social security.  This should be followed by equitable and sustainable pension reforms.  Finalizing the database of vulnerable households, which is critical for the targeting of social assistance, will help preserve the social contract.

“The authorities have made considerable progress on structural reforms.  They established the High Anti-Corruption Authority and are building institutions in support of the investment code, including the one-stop shop.  The legislation to facilitate the reduction of NPL portfolios will help public bank restructuring. Ongoing enhancements to the AML/CFT regime will address Tunisia’s deficiencies in this area.

“Significantly improved program implementation, supported by quarterly reviews, and the continued support of the donor community for Tunisia’s reform efforts will be critical in the time ahead.”  (IMF 26.03)

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11.5  MOROCCO:  Fitch Affirms Morocco at ‘BBB-‘; Outlook Stable

On 29 March 2018, Fitch Ratings affirmed Morocco’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BBB-‘ with a Stable Outlook.

Key Rating Drivers

Morocco’s ratings are supported by continued macroeconomic stability, reflecting a track record of prudent economic policies and a general government (GG) deficit below the ‘BBB’ category median.  These factors are balanced by weak development and governance indicators as well as high general government and external debt ratios and large current account deficits (CAD) relative to peer medians.

Medium-term macroeconomic prospects are stable.  We project GDP to grow by an annual average of 3.8% in 2017-2019, in line with the 10-year average of 3.9% and higher than the ‘BBB’ category median of 3.1%.  Despite supportive levels of rainfall, agricultural GDP will grow only slightly in 2018 due to unfavorable base effects after a bumper harvest during the 2016/2017 season.  Consequently, GDP growth will slow to 3% in 2018 from 4.6% in 2017 before picking up to 3.8% in 2019.  We project inflation to remain below Bank al-Maghrib’s (BAM) implicit target of around 2%, enabling monetary policy to remain accommodative and support credit supply.

Despite the continuous expansion of manufacturing facilities financed by foreign direct investments, particularly in the automotive industry, non-agricultural growth has not picked up momentum.  This is attributable to persistent structural impediments, including skilled labor shortages, long payment delays in the public and private sectors, the large size of the informal sector and barriers to competition.  The government is attempting to tackle these impediments by gradually implementing growth-enhancing structural reforms, expanding the supply of public services and enhancing public investment in the renewable energy and transport sectors.

Public finances are gradually improving.  We project the central government (CG) deficit to narrow from 3.5% in 2017 to 3.2% in 2018 – against a government target of 3% – and further to 3% in 2019.  Reflecting this improvement, the total GG deficit, which also includes social security, local governments and extra-budgetary units, will narrow to 1.4% of GDP in 2019 from 2% in 2017, against a ‘BBB’ category median of 2%, while the GG primary deficit will shift to balance for the first time since 2014.  CG debt peaked at 64.7% of GDP in 2016 and will decline slightly to 63.1% in 2019, leading to a commensurate decrease in GG debt to 48.6% in 2019 from 50.1% in 2016, under our baseline.

The Organic Budget Law (OBL) has strengthened public finance management and is contributing to curbing spending through stronger budget procedures and capping of budget wage allocations and multi-annual transfers of capital spending appropriations.  The government is yet to implement some of the main tax reforms recommended by the 2013 tax conference to boost the mobilization of domestic revenues.

Government guarantees on state-owned enterprises’ (SOEs) debt are high, at 14.3% of GDP at end-2017 but the probability of their materialization on the sovereign’s balance sheet is low, in our view.  The government has devised a plan to clear VAT credits of MAD10 billion (0.9% of GDP) owed to the private sector. VAT credits owed to SOEs amounting to MAD28.6 billion (2.6% of GDP) at end-2016 according to the Court of Audit are still to be addressed.

We expect more than 70% of the central government’s financing needs to be covered from domestic sources over the coming two years.  The interest burden is moderate and the share of dirham-denominated debt in total GG debt is high, at 72% at end-2017.  The disbursement of the $5 billion grant envelope pledged by the Gulf Cooperation Council (GCC) in 2012 will be completed in 2018 with a last expected payment of MAD7 billion ($700 million)

We expect the government to slowly increase exchange rate flexibility by gradually broadening the dirham floating bands over the coming years, but the transition to the authorities’ stated goal of a full-float regime remains a long-term prospect, in our view.  A first step in this direction was achieved in January with the widening of the floating bands of the dirham to a still tight range of +/-2.5% around the reference price from +/-0.3%.

The CAD will stabilize at 3.8% of GDP in 2018-2019 against a ‘BBB’ category median of 0.4%, reflecting a stable trade deficit while stronger tourism receipts will be offset by lower GCC grants.  Imports will grow at a steady rate, with higher energy imports in line with oil prices and stable growth in import-intensive infrastructure investment.  Exports and tourism will be lifted by an expanding manufacturing supply, firmer growth in the Eurozone and the penetration of new markets.

Net external debt will decline to 13.5% of GDP in 2019 from 16.6% in 2016, above the ‘BBB’ category median of 8.3%, based on our forecasts.  However, external risks are mitigated by a high share of official loans in gross external debt (42% in 2016) and the comfortable level of FX reserves, which we project to average at 6.3 months of current account payments in 2017-2019. Inflows of FDI will remain sustained and finance more than half the CAD in 2018-2019.  The outstanding two-year precautionary liquidity line (PLL) with the IMF will expire in July.  We do not expect external financing conditions to be significantly affected if the government decides against seeking a successor program.

Risks for the sovereign stemming from the banking sector are moderate.  The profitability of Moroccan banks is stable and their deposit-based funding structure is a credit strength.  However, Fitch assesses their asset quality as weak due to very high single-obligor concentration and above peer-median share of non-performing loans at 7.6% in 2017.  The sector’s capital adequacy ratio was 13.6% at end-2017, lower than the ‘BBB’ category median of 16.2% and the transition to the IFRS 9 framework will lead to higher regulatory capital needs.  The expansion of the country’s three largest systemic banks into Africa brings growth opportunities but generates additional risks, with overseas activity accounting for a quarter of the sector’s assets and more than a fifth of profits.

Structural features are a major constraint for the ratings. Challenges raised by below-median governance and development indicators, persistently high unemployment, notably among the youth, and regional disparities have fueled social tensions that are illustrated by recurrent protests that remain geographically circumscribed and limited in magnitude.  Political stability has been preserved in recent years and there is a broad consensus among political parties on the economic reform agenda.

Rating Sensitivities

The Stable Outlook reflects Fitch’s assessment that upside and downside risk to the rating are currently balanced.

The main factors that may, individually or collectively, lead to negative rating action are as follows:

-Deterioration in public finances leading to an upward trajectory in GG debt/GDP

-Weakening of medium-term growth prospects leading to a widening of the gap between Morocco’s development indicators and the ‘BBB’ category medians

-Security developments or social instability affecting macroeconomic performance or external balances or leading to fiscal slippages

The main factors that may, individually or collectively, lead to positive rating action are as follows:

-Continued fiscal consolidation leading to a trend reduction in GG debt/GDP

-Sustained improvement in the current account balance consistent with declining net external debt-to-GDP

-Over the medium term, the implementation of structural reforms bolstering growth potential and leading to an improvement in development indicators. (Fitch 29.03)

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11.6  MOROCCO:  Morocco’s Difficult Path to ECOWAS Membership

Riccardo Fabiani posted on 28 March on Sada that although Morocco is aiming to diversify its trade relations into West Africa, political and social opposition within ECOWAS raises questions about its real intentions.

Over the past few years, Morocco’s economic integration with Sub-Saharan Africa has accelerated.  Between 2008 and 2016, Moroccan exports to the rest of the continent grew an average of 9% every year, while foreign direct investment (FDI) rose by 4.4%. In particular, Senegal, Mauritania, Cote d’Ivoire and Nigeria have emerged as the biggest African buyers of Moroccan products, which ranged from foodstuffs to machinery and chemical goods.  Unsurprisingly, in this time the trade balance between Rabat and West Africa recorded a net surplus for Morocco.  This was partly compensated by a strong influx of Moroccan FDI into the region, mainly concentrated in banking, insurance, manufacturing, and telecommunications.

This reorientation toward Africa is the outcome of a long process in which Morocco has reassessed the benefits and losses of its previous priority on pursuing trade and investment ties with the European Union and United States.  Initially this approach helped Morocco build a domestic manufacturing base.  Its long-term impact was mixed.  First, the integration of former Soviet bloc states in the European Union meant that many companies outsourced or delocalized their production to these new members, instead of Morocco.  Second, the end of the Multi-Fiber Agreement in 2004 exposed the Moroccan textile industry to competition from low-cost producers in Southeast Asia.  As a result, Rabat’s vertical trade and investment integration with its much bigger economic partners ended up highlighting the country’s weaknesses and led to what some economists identified as a process of premature deindustrialization.  With its relatively higher labor costs, lower human capital levels, poorer infrastructure quality, and lower state capacity, Morocco struggled to compete with Asian and Eastern European economies.  Morocco’s trade, tourism, remittances and FDI further suffered after the beginning of the Eurozone crisis in 2007 because of the country’s dependence on Southern Europe’s struggling economies.

In response, Morocco has started to look at other markets and partners for growth.  Moroccan authorities want to reduce their dependence on Europe and diversify into emerging markets where their firms can benefit from being relatively competitive.  While Moroccan firms cannot compete with European and U.S. firms, they are on a much stronger footing when faced with many Sub-Saharan companies, for example.  In addition, the difficult international access to Sub-Saharan markets gives Moroccan firms greater opportunities to pursue economies of scale.  Most importantly, Morocco’s long-term goal is to become a trade and production hub that can interface between European, American, and Sub-Saharan African trading blocs.

It is therefore unsurprising that, for example, in November 2017 Morocco began negotiations with the South American trading bloc Mercosur to establish a free trade area between them, hoping to become a corridor for Europe and the United States to export goods and services.  Thanks to its Tangiers cargo port facilities and its geographical position, the authorities believe that international firms will find it increasingly convenient to locate at least part of their operations in the country.  Becoming a logistics hub would help Morocco build up its service industry for transportation, shipping, and banking.  Moreover, Morocco hopes international firms will see it as a cheap manufacturing hub from where they can export goods everywhere in the world with few or no tariffs.  For instance, a U.S. firm exporting to Senegal faces a set of protectionist tariffs, but if it moves at least part of its production to Morocco these tariffs would all but disappear.

Yet although Sub-Saharan Africa is a natural target for economic expansion – due to its geographical proximity, its vast economic potential, and its growing demand for goods and investment – Morocco has faced some difficulty establishing trade relations there.  Morocco formally applied to join the Economic Community of West African States (ECOWAS) on 24 February 2017.  At the time, Rabat thought that this application was going to be a relatively smooth process, thanks to Morocco’s excellent diplomatic relations with all ECOWAS members and their preexisting trade and investment ties.  The membership request also came on the heels of Morocco’s successful return to the African Union on 30 January 2017, which Rabat saw as a great diplomatic victory.

Yet Morocco’s bid has faced strong objections from West African civil society organizations and economic interest groups.  In Nigeria, for example, a large coalition of trade unions, industrialists and NGOs lobbied the government against opening its borders to Moroccan goods, which they saw as a potentially lethal threat to domestic production.  In Senegal, the private sector has expressed its reservations about Morocco, whose higher productivity could undermine the country’s manufacturing base.

This mobilization has so far managed to stall Morocco’s application despite Morocco’s relentless lobbying efforts.  For example, the General Confederation of Moroccan Enterprises (CGEM) announced in early March that it planned to meet with its counterparts in the biggest ECOWAS economies.  In December 2017, ECOWAS indefinitely postponed a final decision on this matter after publishing an impact report that analyzed the political, security, and economic effects of Morocco joining the group.  Under pressure from their domestic constituencies and from Morocco’s relentless lobbying efforts, the Nigerian and Senegalese governments seem unable to solve this apparently impossible equation.

Regardless of whether Morocco’s bid to join ECOWAS will be approved, Rabat’s application indicates it has purposefully avoided addressing the full implications of joining. ECOWAS imposes a common external tariff on its members of between 5 and 35%, which is supposed to protect the West African economies from international competition and to promote regional trade.  However, Morocco has had an Association Agreement establishing a free trade area between Morocco and the EU since 2000, as well as a Free Trade Agreement with the United States since 2004.  Not only will Morocco will be unable, by definition, to comply with both the ECOWAS tariff and the free trade agreement, agreeing to the tariff would also run counter to Morocco’s goal of becoming a global hub for production, logistics and trade.

Further questions surround Morocco’s willingness to join ECOWAS’ proposed common currency.  Eight of the fifteen ECOWAS members already share a currency, the West African CFA Franc and ECOWAS plans to introduce a currency called the Eco for the remaining members by 2020 and eventually merge the two.  In January, the Moroccan government widened the trading band for the Moroccan dirham, part of a series of reforms recommended by the International Monetary Fund (IMF) to introduce more exchange rate flexibility.  As this policy aims to reassure investors and to make its economy more resilient to external shocks, this indicates that the authorities are not interested in adopting a common currency or even merely pegging the exchange rate to the CFA Franc.  Morocco, which likely wants to join the bloc but opt out of the currency, has purposefully avoided addressing this issue, knowing that stating its position would only reinforce opposition to its application.

As for West African citizens, there has been so far no debate in Morocco about the desirability of potentially opening the borders to new Sub-Saharan migrants or whether this could be a potential “price” to pay for accessing the ECOWAS market.  Indeed, as ECOWAS citizens can move freely within this area, this could potentially have an impact on Morocco’s ability to absorb economic migrants attracted to the country’s relatively higher salaries – and likely influence Moroccans’ perceptions regarding these migrants’ impact on the high unemployment rate.

The impression is therefore that Morocco is purposefully avoiding giving any firm answer to these questions so it can expand its room to maneuver and obtain an ad hoc ECOWAS membership at the expense of the other states.

Riccardo Fabiani is a Senior North Africa Analyst at Eurasia Group.  (Sada 28.03)

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11.7  CYPRUS: Staff Concluding Statement of the Second Post-Program Monitoring Mission

An International Monetary Fund (IMF) mission visited Nicosia during 19 – 30 March 2018, for the second post-program monitoring (PPM) discussions.  PPM is part of the IMF’s regular monitoring of countries with significant outstanding IMF credit, with a focus on capacity to repay the IMF.  The IMF mission coordinated with the post-program surveillance mission of the European Commission and the European Central Bank, and the early warning system of the European Stability Mechanism.  At the conclusion of the visit, the IMF mission issued the following statement:

Since our last visit, Cyprus’s economic growth has continued to accelerate, supported by construction, tourism and professional services.  Unemployment has moderated further.  The fiscal position has improved markedly and public debt has declined below 100 percent of GDP.  Taking advantage of the declining cost of market-based financing, Cyprus made an early repurchase to the IMF in July 2017.  However, despite a sizable and sustained improvement in macroeconomic conditions, private sector indebtedness remains extremely high and continued weak payment discipline has kept nonperforming loans (NPLs) at very high levels.  The need for additional provisions and limited opportunities for new lending continue to weigh on banks’ profitability.

The current rapid pace of economic expansion is forecast to continue. GDP is projected to grow by 4 – 4¼ percent during 2018–19, underpinned by a pipeline of mainly foreign-funded, large construction projects, notwithstanding somewhat slower growth in private consumption due to better compliance by households with regard to their contractual debt obligations.  Over the medium term, growth is projected to ease to 2½% as construction projects are gradually completed.  The high import content of domestic demand, especially for construction materials, is projected to keep the current account deficit around 6 – 7% of GDP.  Tax revenue will benefit from the escalation in activity.  Under this baseline scenario, capacity to repay the Fund is seen as adequate, with repayments funded by large fiscal primary surpluses and by newly issued market-based debt securities on relatively favorable terms.  However, repayment capacity could be weakened if significant contingent liabilities from banks’ distressed assets materialize, an excess supply of luxury properties were to generate a new boom-bust cycle, or fiscal discipline were eroded by yielding to spending pressures.

Strengthening payment discipline, avoiding pro-cyclical policies and adopting macro-critical structural reforms would help preserve financial stability, protect the downward trajectory of public debt, and support balanced and durable growth.  Doing so would also safeguard capacity to repay:

1. Improving payment discipline and reducing NPLs. A decisive and durable reduction in NPLs requires strengthening Cyprus’s payment culture. Amending the legal frameworks for insolvency and foreclosure can support this goal by incentivizing borrowers to engage with banks to reach mutually-agreeable restructuring solutions based on commercial terms.  Limited, well-targeted fiscal support to lower-income distressed borrowers can strengthen their financial viability and promote payment compliance throughout the duration of the loan.  Reliance on third-party loan servicing companies should continue and be made fully operational, and any NPLs transferred to nonbank entities should not be merely warehoused.  The recently-announced search for strategic investors in the Cyprus Cooperative Bank is a welcome development and should proceed in a smooth manner.

2. Guarding against pro-cyclical policies. Recent fiscal performance has benefited from the cyclical upswing and incentives supporting the construction sector. To avoid spending cyclical or transitory revenue and to create space to absorb possible contingent fiscal shocks, annual ceilings on nominal spending should increase in line with medium-term output growth, with downward adjustment to compensate for any future cuts in tax rates or narrowing of tax bases. Incentives supporting the construction sector should be withdrawn.  A durable mechanism for keeping the public-sector wage bill in check should be instituted.  A system for close monitoring of the fiscal costs of the new National Health Service should be adopted and well-designed spending safeguards should be introduced.

3. Restarting targeted structural reforms. The effectiveness of commercial claims enforcement and the efficiency of the courts should be strengthened to improve the payment culture and investment environment. Plans for expedited investment procedures while also phasing out incentives for construction could attract capital into innovative sectors and help diversify the sources of GDP growth.  Corporate governance and operational efficiency should be strengthened in key semi-governmental and private entities to modernize the economy and make it more flexible.  (IMF 30.03)

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