Fortnightly, 5 April 2017

Fortnightly, 5 April 2017

April 5, 2017


5 April 2017
9 Nissan 5777
8 Rajab 1438




1.1  Israel Finalizes Deal for Major Subsea Gas Pipeline to Europe
1.2  Bank of Israel Hails 2016 as Best Year for Israeli Economy in Past Four Years
1.3  Netanyahu & Kahlon Reach Coalition-Saving Deal on Broadcasting


2.1  Bank Leumi & China’s Ping An to Cooperate in Promoting Israeli High-Tech in China
2.2  CyberArk Expands C3 Alliance to Drive Greater Cyber Security Innovation & Collaboration
2.3  ControlUp Raises $10 Million Series B
2.4  Bank of America Offers Robust Forecast on Israeli Economy
2.5  Freightos Raises $25 Million
2.6  Andersen Global Expands Presence in Israel with Yaron-Eldar


3.1  Amazon Agrees to Buy Middle East Online Retailer Souq.Com
3.2  neXgen Group Launches Vidsys CSIM platform for Smart Cities
3.3  Grimaldi’s Pizzeria International Inks Development Agreement for Expansion into UAE
3.4  Goldman Sachs in Talks for Equities License in KSA
3.5  Vioguard Signs Representation Agreement with Channels Business Group of Saudi Arabia
3.6  Bureau Veritas and Cotton Egypt Association Partner to Verify ‘Egyptian Cotton’
3.7  Sound Energy Announces New Gas Discovery in Morocco
3.8  Papa John’s Announces Opening in Casablanca, Morocco


4.1  Israel Turning Garbage Dump into Energy Resource
4.2  Lebanon Ranks 125th on the 2017 Energy Architecture Performance Index
4.3  Jordan & Germany Sign €44 Million Solar Energy Grant
4.4  UAE Says Green Energy Shift to Save $192 Billion
4.5  UAE’s Sheikh Maktoum Inaugurates 200MW Second Phase of the Al Maktoum Solar Park
4.6  Morocco’s King Mohammed VI Launches Final Stage of World’s Largest Solar Energy Complex


5.1  Lebanese Average Inflation Rose 4.6% Y-o-Y by February, Lifted by Oil Prices Recovery
5.2  Lebanon’s Tourism Sector Posted a 12.25% Improvement by February
5.3  Egypt & Jordan Sign Gas Supply Deals
5.4  Jordan & UNICEF Sign JD1.1 Million Protocol

♦♦Arabian Gulf

5.5  Qatar’s Foreign Trade Surplus Soars 74% in February
5.6  UAE Health Care Market to Grow to Dh103 Billion by 2021
5.7  Saudi Arabia’s GDP Growth Rises in Fourth Quarter

♦♦North Africa

5.8  Egypt to Allocate 1% of GDP for Social Protection Programs in 2017/18
5.9  Egyptian ICT Minister Heads Mission to US Seeking Strategic Partnerships
5.10  Egypt’s Foreign Currency Records its Highest Level Since 2011


6.1  Turkey’s Annual Inflation Rises To 11.3% In March – Highest Since 2008
6.2  Food Prices Key in Turkey’s Skyrocketing Annual Inflation
6.3  Cyprus’ Hydrocarbon Exploration Negotiations Successfully Concluded
6.4  Greece & EU/IMF Lenders Said to Agree on Key Labor Reforms and Pension Cuts



7.1  Passover Will Be Celebrated Starting 10 April
7.2  Bank of Israel Prepares to Issue New Banknotes Featuring Women
7.3  Nicaragua Restores Diplomatic Ties to Israel After 2010 Break


7.4  Rising Sea Level to Swamp Land in Three UAE Emirates


8.1  Israel Looks to Leverage Tech in $50 Billion Medical Marijuana Market
8.2  Marrone Bio Innovations & Evogene Advance Novel Bacteria into Insecticidal Phase
8.3  Teva Receives FDA Approval of AUSTEDO Tablets for the Treatment of Huntington’s Disease Chorea
8.4  Emosis, BioRap & Rambam MedTech Collaborate on Novel Hypercoagulation Diagnostics Kit


9.1  Variscite’s DART-6UL Product Line Enhanced with 696MHz Processor & Low-Power i.MX 6ULL
9.2  FST to Reveal New Generation of Biometrics-Based Visual Identification
9.3  Sodyo Introduces FarQR – The Next Generation QR Code
9.4  PointGrab Partners with Serraview, Taking Aim at $43 Billion Smart Office Market


10.1  Israel’s Defense Exports Increase by 14% in 2016
10.2  Israel’s Building Starts Slightly Down in 2016
10.3  Bank of Israel Announces Growth Adds NIS 4.5 Billion to Tax Revenues


11.1  MIDDLE EAST: OPEC’s Rebalancing Act
11.2  ISRAEL: IMF Executive Board Concludes 2017 Article IV Consultation with Israel
11.3  SRAEL: MIXiii BIOMED 2017 – the Numbers Behind the Digital Health Industry in Israel
11.4  GCC: New Generation Royals and Succession Dynamics in the Gulf States
11.5  GCC: GCC Food & Beverage Market Stays Resilient
11.6  OMAN: The Omani Succession Envelope, Please
11.7  EGYPT: Why Egypt is Moving Forward on Free Trade
11.8  EGYPT: IMF Program to Support Fiscal & External Position; Reform Pace May Slip
11.9  EGYPT: Cairo Metro Drowns in Debt and Risks Shutdown
11.10  TUNISIA: Bond Bolsters Tunisia Liquidity as IMF Delay Shows Risks
11.11  CYPRUS: IMF Staff Completes Mission for the First Post-Program Monitoring to Cyprus


1.1  Israel Finalizes Deal for Major Subsea Gas Pipeline to Europe

Israel’s National Infrastructure, Energy & Water Minister Steinitz hosted a summit of European energy ministers on 3 April, where an agreement to build the longest underwater natural gas pipeline in the world was announced.  In attendance were energy ministers from Cyprus, Greece and Italy, along with the European Union’s envoy for energy and climate affairs.  Following the official signing, Steinitz took his colleagues on a flight tour of Israel’s offshore gas fields.  According to Steinitz, the project, which is currently in advanced stages of analysis and has already demonstrated initial technical and commercial feasibility, can be finished by 2025; or in other world within eight years.  The overall cost of the project, estimated at around 20 billion shekels ($5.5 billion), will be covered entirely by the private sector.  When asked if the pipeline agreement — expected to be some 2,000 kilometers (around 1,200 miles) long — poses a threat to a parallel joint-pipeline agreement with Turkey, Steinitz said the current deal does not reduce the importance of additional potential projects with other countries.  (Various 03.04)

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1.2  Bank of Israel Hails 2016 as Best Year for Israeli Economy in Past Four Years

On 29 March, the Bank of Israel announced that the Israeli economy grew by 4% in 2016, exceeding projections by 1.2% and marking the most solid economic performance for the country since 2012.  Israel’s economy grew by 2.5% in 2015 and 3.2% in 2014.

In its 2016 annual report, the bank noted that the GDP hit a record $337 billion; Israel had a record $12.4 billion surplus in its current account balance of payments; unemployment dropped to 4.8% in 2016; public debt dropped to an all-time low of 62.8% of GDP; the number of employed Israelis hit a record high of 3.74 million people; the GDP per capita reached a historic high of $36,800; private consumption climbed by 6%; and Israelis overall standard of living increased by 5%.

At 4%, Israel’s economic growth was double of the United States’ economic growth in the past year; 2.3 times higher than the average growth among Organization for Economic Cooperation and Development members and 2.5 times higher than average growth in the Eurozone.  According to the data, since 2011, the Israeli economy grew by a cumulative 21.6%, exceeding all OECD member states.

The report further noted that since 2011, per capita growth has increased by a cumulative 14.2%, and private consumption has risen by a total of 25.2%, meaning Israelis’ standard of living improved by an astonishing 17.8% since 2011.  Per capita growth in Israel increased by an average of 1.9% during this period of time, compared with an average growth of 0.8% in the U.S., 1.1% among OECD nations and 1.3% in the European Union.  The data indicates that Prime Minister Netanyahu and Finance Minister Kahlon’s goals of improving Israel’s ranking among OECD nations is succeeding.  (BoI 29.03)

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1.3  Netanyahu & Kahlon Reach Coalition-Saving Deal on Broadcasting

The crisis over the new Israel Broadcasting Corporation, which at least on the surface had threatened to lead to early elections in Israel, apparently ended on 30 March, at least as far as relations between Minister of Finance Kahlon and Prime Minister Netanyahu are concerned.  The journalists in the new corporation, on the other hand, have already announced the beginning of a public campaign, and have threatened a petition to the High Court of Justice.

Under the compromise hammered out between Kahlon and Netanyahu, with the active mediation of Attorney General Mandelblit, the new corporation will not deal with news and current affairs, even though it has already recruited journalists and managers for precisely that purpose.  A new news and current affairs broadcasting company will be established within the corporation, referred to in the agreement as “the News Corporation,” with a separate management and council, similar to the news companies of commercial channels Channel 2 and Channel 10.

Under the agreement, only employees of the old Israel Broadcasting Authority (IBA), which is supposed to be dismantled to give way to the new corporation, will be allowed to work in the new news company.  This includes those already hired by the corporation.  Until permanent managers are appointed, the managers of Reshet Bet (radio) and Channel 1 (television) will manage the new company.  The manager of Reshet Bet will be the editor-in-chief of news.  The supervisory council of the new news company will be selected according to the existing format set forth in the Public Broadcasting Law, which constituted the basis for the establishment of the corporation, i.e. a selection committee with no ostensible political involvement.

The changes involved require legislation and a two-week postponement in the operation of the new corporation has therefore been agreed.  It appears that Netanyahu’s supporters have deliberately made sure that the new news company will be defined as a news and current affairs company, which rules out any possibility that the heads of the existing corporation will engaged in core current affairs activity, including, among other things, production of an investigatory program.  According to an announcement by the Prime Minister’s Office, a “Supervision Bill” designed to make all broadcasting agencies, both public and commercial, subject to a single supervisory council whose members will be chosen by the government, will be suspended or held back “at this stage.”  (Globes 30.03)

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2.1  Bank Leumi & China’s Ping An to Cooperate in Promoting Israeli High-Tech in China

Israel’s Bank Leumi and Ping An, China’s largest insurance group, signed a strategic cooperation agreement to promote the entry and integration of Israeli high-tech companies into the Chinese market.  The agreement was signed as part of Israeli Prime Minister Netanyahu’s visit to China, marking the 25th anniversary of diplomatic relations between the two countries.

As part of the agreement, Leumi-Tech, Leumi Group’s high-tech banking arm, will constitute a bridge between Leumi Group customers and the Ping An Group.  Israeli technology companies with potential and interest in the Chinese market will be introduced to Ping An, which will assist these companies either through establishing relationships with Ping An subsidiaries, integrating suitable companies in high-tech complexes built by Ping An’s real estate company, or by getting them acquainted with relevant Chinese entities.  Ping An will also aid in the process of obtaining financial and tax benefits allocated by the Chinese government for the benefit of technology companies in general and startups in particular.  This international agreement stems from the Leumi Group’s desire to leverage Leumi-Tech’s capabilities in assisting Israeli high-tech companies that wish to penetrate the Chinese market, through cooperation with a major Chinese entity. This cooperation will constitute a foundation for these companies and is necessary for them to succeed in China.

Leumi-Tech, the high-tech banking arm of the Leumi Group, one of the leading and largest banking corporations in Israel, was founded in 2014 with the main goal of promoting financing and development of the Israeli high-tech industry.  Leumi-Tech provides companies operating in Israel and abroad with a comprehensive package of services, including: credit and financing, investments and partnerships, unique products and services tailored to the specific needs of the industry, and an innovative global platform for managing their international financial operations.  (Bank Leumi 22.03)

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2.2  CyberArk Expands C3 Alliance to Drive Greater Cyber Security Innovation & Collaboration

CyberArk announced the expansion of the C3 Alliance, CyberArk’s global technology partner program.  Extending the power of privileged account security through new partners and technology integrations, customers can better protect against advanced threats through a deeper set of innovative cyber security solutions.  New C3 Alliance partners and integrations include Atos, Datablink, DB Networks, DBmaestro, EZMCOM, Flexera Software, Gemalto, Hexadite, Illusive Networks, Omada, OneLogin, Palo Alto Networks, Phantom, Proofpoint, Qualys, Radiant Logic, RSA, STEALTHbits Technologies, SyferLock, Thales, Utimaco, Vistara and Yubico.

Launched in April 2016, the C3 Alliance was established to bring enterprise software, IT security and services providers together in order to deliver proactive protection, detection and response to customers by putting privileged account security at the core of their cyber security strategies.  The program now has 45 partners and features 63 product integrations to increase the value of existing IT investments and improve security across enterprise priorities associated with cloud, identity security, application security and endpoint.

Petah Tikva’s CyberArk is the only security company focused on eliminating the most advanced cyber threats; those that use insider privileges to attack the heart of the enterprise.  Dedicated to stopping attacks before they stop business, CyberArk proactively secures against cyber threats before attacks can escalate and do irreparable damage.  The company is trusted by the world’s leading companies – including more than 45% of the Fortune 100 – to protect their highest value information assets, infrastructure and applications.  (CyberArk 22.03)

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2.3  ControlUp Raises $10 Million Series B

ControlUp, the leading provider of an ITOps analytics and management platform, announced that it raised $10 million in a Series B funding round.  The round was led by K1 Investment Management and Jerusalem Venture Partners, and brings the company’s total funding to $13.3 million.  With thousands of customers worldwide, ControlUp spearheads the Collective IT Analytics revolution.  By harnessing the power of big data to analyze operational IT data from a global customer base to find patterns, detect problems, establish dynamic baselines and generate actionable targeted insights, ControlUp reshapes ITOps to open the door for smarter IT.

The announcement comes on the heels of a hot year for ControlUp.  In September 2016, the company announced the launch of ControlUp 6, which provides unsurpassed troubleshooting and issues remediation capabilities in enterprise grade hybrid-cloud datacenters.  In August, ControlUp joined the Microsoft Enterprise Cloud Alliance, extending its tools to support Microsoft Hyper-V and Microsoft Azure-based workloads that reside in the datacenter or in hybrid clouds.  The company also launched ControlUp Insights in April, a new platform that empowers IT administrators to deliver interactive reports with unprecedented visibility and control of hybrid cloud workloads.

ControlUp is the leading provider of a powerful, yet easy-to-use ITOps analytics and management platform.  Used by thousands of companies worldwide, ControlUp helps ITOps teams to monitor, analyze and directly remediate problems in their on-premise, hybrid cloud and cloud infrastructures.  ControlUp is headquartered in Silicon Valley with R&D in Israel, and is backed by Jerusalem Venture Partners and K1 Investment Management.  (ControlUp 28.03)

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2.4  Bank of America Offers Robust Forecast on Israeli Economy

A new Bank of America Merrill Lynch report on Israel from March said the country’s economy “is on a robust recovery path with growth rates running at 3 to 4% levels.”  Bank of America Merrill Lynch, which is the investment and banking division of Bank of America, predicts that the Israeli currency will continue to appreciate against the dollar in the coming months.  According to the report, the dollar-shekel exchange rate “could dip to 3.55 by mid-year 2017 but we target 3.65 by year-end.”

In 2018, the shekel is expected to weaken even further, and the exchange rate could climb to 3.70.  The report further said the Bank of Israel was “defying gravity” by checking the appreciation of the shekel against the dollar.  The report said the Israeli currency is expected to strengthen in part because of the “potential future inflows from natural gas,” which would offset some of Israel’s expenditures on foreign energy and open up more export opportunities.  The likely inclusion of Israel in Citigroup’s World Government Bond Index this year is expected to have a positive effect that could strengthen the shekel as well, the report said.  Merrill Lynch economists concluded that “on the financing side, Israel remains an attractive destination for foreign direct investment.”  (IH 29.03)

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2.5  Freightos Raises $25 Million

Israeli online logistics technology company Freightos announced the completion of a $25 million Series B extension round, led by GE Ventures, with participation by additional investors.  This brings the company’s total funding to $50 million since it was founded in 2011.  The funds will be used to scale the Freightos Marketplace globally while continuing development of Freightos’ software suite of global freight pricing, routing, and sales automation.  Since its July 2016 launch, the Freightos Marketplace has grown exponentially, with a 600% increase in orders in the first six months, a 100% growth in the first quarter of 2017 orders compared with Q4/16, over 10,000 registered users, and dozens of sellers, including top twenty global freight forwarders.

Freightos technology already digitizes freight operations for over 1,000 logistics providers and global supply chain companies, including Nippon Express, CEVA Logistics, Hellmann Worldwide Logistics and Sysco Foods.  Continuing the company’s mission of transparency, the Freightos International Freight Index provides free global freight rates insights, a service that otherwise costs thousands of dollars.

Jerusalem’s Freightos operates the world’s online marketplace for shipping.  Freightos also provides Freightos AcceleRate software as a service to automate pricing and routing for leading carriers, freight forwarders and shippers.  At the heart of the Freightos marketplace and AcceleRate SaaS are a unique patent-pending freight pricing and routing engine, and a database of millions of ocean, air and land freight price rates, updated daily.  The Freightos group now includes WebCargoNet, based in Barcelona, Spain, the world’s leading network for distributing air cargo rates from airlines to freight forwarders and from forwarders to importers and exporters.  (Globes 29.03)

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2.6  Andersen Global Expands Presence in Israel with Yaron-Eldar

San Francisco’s Andersen Global announced an enhanced presence in Israel by way of a collaboration agreement with Yaron-Eldar, Paller, Schwartz & Co., a law firm with locations in Tel Aviv and Haifa specializing in all aspects of taxation law, both in Israel and internationally.  The addition of Yaron-Eldar as a Collaborating Firm of Andersen Global is a part of a larger expansion strategy in Israel and the Middle East.  Yaron-Eldar provides tax law, international tax, real estate tax, and indirect tax services for both large and small public and private companies as well as individuals.  With the addition of Yaron-Eldar, Andersen Global now has a presence in 61 locations worldwide.  (Andersen Tax 03.04)

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3.1  Amazon Agrees to Buy Middle East Online Retailer Souq.Com has agreed in principle to buy 100% of Dubai-based online retailer from its shareholders.  Goldman Sachs acted as adviser for and helped to arrange the deal., which sells consumer electronics, fashion, household items and other goods, is one of the most high-profile names in the Middle East’s online shopping market.  The sources didn’t disclose the price Amazon and have agreed on for the deal.

The Middle East’s technology sector, including e-commerce, is expanding quickly due to the region’s young and tech-savvy population. Kuwait, Saudi Arabia and the UAE are in the top seven worldwide for mobile phone penetration.  Last year raised $275 million from a funding round with investors to support its future growth. Investors participating in that funding round included Tiger Global Management, Naspers, Standard Chartered Private Equity, International Finance Corporation and Baillie Gifford.  (Reuters 22.03)

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3.2  neXgen Group Launches Vidsys CSIM platform for Smart Cities

Vienna, Virginia’s Vidsys, the leading global software technology manufacturer of Physical Security Information Management (PSIM) and Converged Security and Information Management (CSIM) software, announced that the UAE’s neXgen Group, a leading smart city advisory and managed services provider, will be offering Smart Safety & Security as a service leveraging Vidsys’ CSIM multi-tenant cloud-based solution.  neXgen Group specializes in extending smart city technology solutions as a service to governments, real estate and enterprise customers across the region and has been actively involved in flagship projects such as Smart Dubai and Smart Riyadh, contributing its regional consulting expertise and in-country Smart City managed services.  Through the new solution offering, neXgen customers will have access to Smart Safety & Security as a managed service with customization based on individual business needs.

The platform is part of a broader Smart City initiative across neXgen’s Middle East network. The Middle East North Africa (MENA) digital transformation market is projected to expand at a CAGR of 15.1% from 2014 to 2020. Countries, including the UAE, are increasingly introducing e-Government and smart city initiatives, with the objective to transform themselves into digitally-enabled countries.  (Vidsys 27.03)

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3.3  Grimaldi’s Pizzeria International Inks Development Agreement for Expansion into UAE

Scottsdale, Arizona’s Grimaldi’s Pizzeria plans to expand internationally by opening five of its world-famous, coal-fired, brick-oven pizzerias in the UAE over the next five years.  Partnering with Tablez Food Company to ensure a seamless expansion, this international franchise agreement represents Grimaldi’s first brand expansion beyond North America.  Tablez Food Company, an entity specializing in the development of unique food and beverage concepts, was the premiere partner of choice for Grimaldi’s due to its vast experience in international expansion efforts in the region with other notable franchise ventures.  Grimaldi’s Pizzeria, one of the most awarded pizzerias in the United States and the only upscale pizzeria to be bestowed the coveted Five Star Diamond Award, represents the first and only pizza concept in Tablez’s renowned portfolio.  Beyond the Middle East, Grimaldi’s Pizzeria has engaged other investment groups in key growth markets around the globe in an effort to secure multi-unit franchise partners to introduce and develop the brand in regions including Southeast Asia, South America, Central America, Europe, Mexico, Canada and Australia.  (Grimaldi’s Pizzeria 29.03)

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3.4  Goldman Sachs in Talks for Equities License in KSA

Goldman Sachs Group is in preliminary talks for an equities license in Saudi Arabia as the US lender seeks to take advantage of the country’s economic reforms, according to people familiar with the matter.  The bank has yet to file a formal application, sources say, but while talks are ongoing, no final decisions have been made.  The bank may also decide against going ahead with the submission.

Goldman is following banks including HSBC Holdings Plc, Citigroup and Ashmore Group Plc, which already acquired equities licenses in the kingdom after the country opened to foreign investment in 2015.  Saudi Arabia is emerging as an attractive opportunity for international banks as the kingdom takes steps to overhaul its economy, including plans for what could be the largest initial public offering with the listing of Saudi Arabian Oil Co.  Goldman Sachs set up a dedicated Saudi Arabian business in 2008 after securing a license from the Capital Markets Authority.  The bank is currently eligible to offer asset management services to institutions and companies as well as advise on corporate finance transactions in the country.  The new license would allow them to buy and sell Saudi Arabian equities as well.

Saudi Arabia’s stock exchange is the Arab world’s largest with a total market capitalization of about 1.61 trillion riyals ($429 billion).  (Reuters 26.03)

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3.5  Vioguard Signs Representation Agreement with Channels Business Group of Saudi Arabia

Bothell, Washington’s Vioguard and Channels Business Group-Channels Medical Solutions (CMS) announced an agreement for CMS to act as an Authorized Representative in Saudi Arabia.  This means that CMS will partner with Vioguard to get the American company’s patented self-sanitizing keyboards approved by the Saudi Food and Drug Authority and to represent Vioguard in the Middle East.  The two companies signed the deal at this year’s Arab Health Convention in Dubai.  Vioguard’s flagship product is a self-sanitizing automated keyboard and mouse system that uses high-powered germicidal ultraviolet light, known as UV-C.  The timing of the agreement is critical, especially because of the Middle East Respiratory Syndrome (MERS) coronavirus, a severe respiratory illness that was first reported in Saudi Arabia in 2012 and has since spread to several other countries in the Middle East the last few years.  (Vioguard 03.04)

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3.6  Bureau Veritas and Cotton Egypt Association Partner to Verify ‘Egyptian Cotton’

Hong Kong’s Bureau Veritas Consumer Products Services (Bureau Veritas), leaders in testing, inspection/audit, advisory and certification services, have announced an exclusive partnership for the next 5-years with the Cotton Egypt Association (CEA) to provide conformity assessment services to verify that the materials are traceable to confirmed lots of true Egyptian Cotton at any stage of production.  The Egyptian Cotton Logo is a mark that helps restore faith as to the authenticity of products bearing the claim, Egyptian Cotton.  It demonstrates that the CEA has certified that the product is true Egyptian Cotton by conforming to the requirements in the Factory Audits and Testing services and is ready for retail.  The exclusive agreement with Bureau Veritas brings global scale and reach to the scheme thanks to Bureau Veritas’ leadership position within the retail / consumer goods marketplace with test labs and auditors worldwide.  Bureau Veritas’ Consumer Products Services division is a leading global quality assurance and sustainability provider for the global consumer product and retail markets.  (Bureau Veritas 29.03)

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3.7  Sound Energy Announces New Gas Discovery in Morocco

The latest findings of Sound Energy’s TE-8 drill in the Westphalian and TAGI reservoir sands have confirmed the existence of a “very significant” gas column across Tendrara.  After announcing that it had completed drilling of the TE-8 well last week, reaching its target depth of 3,120 meters, Sound Energy has now completed the logging phase, making use of the Saturn 3D Radial Probe MDT.  The British-based upstream gas company has thus confirmed the gas shows previously observed during the drilling stage.

The confirmation bodes well for Morocco.  Sound Energy’s Chief Executive explained that the “TE-8 has now established that the primary hydrocarbon system proven in Algeria extends into the more favorable Moroccan license and fiscal regime.”  The company has also confirmed the identification of a full sequence of thick TAGI reservoir sands. The reservoir is thought to extend 12 kilometers to the northeast of the company’s two previous wells at Tendrara.

The company did note that the gas found in the reservoirs is of lower quality and would require additional mechanical stimulation.  TE-8 is the third well Sound Energy has drilled on the license after the TE-6 and TE-7 wells, whose production tests concluded with successful results. Sound Energy intended for TE-8 to prove the volume of additional gas in the TAGI (Trias Argilo-Greseux Inferieur) reservoir through deeper drilling in the Paleozoic formation.  The Tendrara License covers an area of 14,500 km2 in the Eastern Region, in the northeast of Morocco; 55% of the region’s drilling is operated by Sound Energy, with the rest run by ONHYM (25%) and OGIF (20%).  (SE 29.03)

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3.8  Papa John’s Announces Opening in Casablanca, Morocco

Louisville, Kentucky’s Papa John’s International continues its global growth with the opening of a new restaurant in Morocco.  Papa John’s is known worldwide for its BETTER INGREDIENTS. BETTER PIZZA. brand promise and will now bring Better Pizza to Casablanca, Morocco.  Following Egypt & Tunisia, Morocco will be only the third country in Africa to boast a Papa John’s franchise.

Moroccan-based Planet Pizza Inc. has the exclusive development rights for the Papa John’s brand in the country and plans to build 20 stores in Morocco.  The Morocco development is part of Papa John’s strategy of continued global expansion. In 2016, Papa John’s International opened restaurants in 6 new countries, Iraq, Israel, France, Spain, The Netherlands and Tunisia and is currently looking for potential franchisees.  (Papa John’s 27.03)

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4.1  Israel Turning Garbage Dump into Energy Resource

Israeli officials launched a refuse derived fuel (RDF) plant at the Hiriya Recycling Park – a waste sorting and recycling plant that sits at the foot of the region’s towering former garbage dump.  The largest such project to date in Israel, the facility will be producing alternative fuel to provide a source of energy for cement production at the nearby Nesher plant.  The RDF plant is an innovative, flexible and modular plant, which serves as successful model for a collaboration between industry that needs raw materials for energy and an urban sector that needs a solution to the waste problem and a technological body that is ready to take a risk despite the challenge.

The NIS 400 million RDF plant will be absorbing about 1,500 tons of household waste every day, or approximately half the garbage from the residents of the Gush Dan region – amounting to a total of half a million tons of trash each year, according to the project.  Behind the facility’s launch was a team of partners, including the Hiriya Recycling Park, the Dan Municipal Sanitation Association, Nesher Israel Cement Enterprises and the Veridis environmental service corporation.

Using industrial and municipal waste as a combustion material, RDF has become recognized globally as an environmentally friendly fuel source and is commonly used to power the cement industry, a statement from the partners said.  The household waste is sorted using advanced technological methods, and those materials appropriate for burning – such as plastic bags, other plastics, textiles, tree trimmings, cardboard and paper – are used as an alternative fuel source at the Nesher plant.  The new RDF facility is expected to produce about 500 tons of RDF fuel substitute daily, serving as a combustion material that will provide 20% of the thermal energy necessary to operate the Nesher factory.  (Various 27.03)

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4.2  Lebanon Ranks 125th on the 2017 Energy Architecture Performance Index

According to the World Economic Forum, Lebanon ranked 125th out of 127 countries on the 2017 edition of the global Energy Architecture Performance Index (EAPI) issued by the World Economic Forum.  The index assesses the selected countries energy systems based on three dimensions: economic growth and development, environmental sustainability, energy access and security.  Lebanon’s performance on the index has been stagnant.  Lebanon ranked 99th on the dimension of economic growth and development, 117th on the dimension of environmental sustainability and 105th on the dimension of energy access and security.  Lebanon’s weak positioning is partly linked to the weak level of diversity of its energy sources, the weak quality of electricity supply and the relatively high CO2 emissions from electricity production.  Globally, the top five spots were earned by advanced economies: Switzerland, Norway, Sweden, Denmark and France.  In the MENAP region (including Pakistan), Morocco was the best performer, ranking at 57th, followed by Pakistan in 65th place, Algeria in 81th place, Egypt in 90th place and Sudan in 93rd place.  (Blom 29.03)

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4.3  Jordan & Germany Sign €44 Million Solar Energy Grant

On 28 March, Jordan and Germany signed a €44 million grant agreement to fund the Energy Supply for Host Communities and Syrian Refugees project’s second phase, according to the Planning and International Cooperation Ministry.  Planning and International Cooperation Minister Fakhoury signed the grant agreement, provided by the German government’s KfW Development Bank.  The project aims to reduce electricity costs by generating electricity from solar energy at a 30-35 MW capacity.  Fakhoury said the grant is a step in the implementation process of the commitments Germany made during the London donor conference to support Syrian refugees and the region, held in February 2016.  The planning minister highlighted the importance of having the international community continue to support Jordan, especially by increasing grants for the implementation of projects aimed to boost the resilience of host communities under the Jordan Response Plan 2017-2019.  Fakhoury said the grant money will be used to implement the project, including the funding of the solar energy system, connecting the network, consultation services and additional measures.  (JT 29.03)

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4.4  UAE Says Green Energy Shift to Save $192 Billion

The United Arab Emirates forecasts that savings generated by switching half its power needs to clean energy by mid-century will outstrip the investment costs.  The Gulf state plans to invest $150 billion in renewable power to 2050, weening the country from dependency on subsidized natural gas power in stages, Minister of Energy Al-Mazrouei said at a conference in Berlin.  Clean energy sources will help it save $192 billion, he said.  The UAE leadership is “bullish” about achieving the goal after realizing that the nation can forgo subsidies in the switch to clean power from LNG, Al-Mazrouei said. Sticking to the strategy will “save the environment and at the same time save us lots of money,” he said.

As the costs for solar power fall rapidly, Gulf and Middle East states are reevaluating their power strategies, which currently rely subsidiaries for electricity generated with liquid natural gas.  The UAE has set an “incredibly ambitious” clean power target, starting from scratch just a few years ago.  In September, Chinese panel maker JinkoSolar Holding Co. and Japanese developer Marubeni Corp. won a tender for a solar plant in Abu Dhabi with a record bid of 2.42 US cents a kilowatt-hour.  About $1 billion has been invested in utility-scale solar in the UAE since 2007.  (Bloomberg 27.03)

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4.5  UAE’s Sheikh Maktoum Inaugurates 200MW Second Phase of the Al Maktoum Solar Park

Sheikh Mohammed Al Maktoum, Vice President and Prime Minister of UAE and Ruler of Dubai, has inaugurated the 200 MW second phase of the Mohammed bin Rashid Al Maktoum Solar Park.  The project reflects a new era in the excellence and leadership of the UAE, as it increases the share of clean and renewable energy.  The inauguration coincided with the International Day of Happiness.

The 200MW second phase 2 of the solar park is the largest and first project of its kind in the region’s solar energy sector, based on the IPP model.  The project was implemented through a partnership with the consortium led by ACWA Power from Saudi Arabia and Spain’s TSK, with an investment of AED 1.2 billion.  The project will provide clean energy to 50,000 residences in the Emirate, reducing 214,000 tonnes of carbon emissions annually.  This phase installed 2.3 million photovoltaic (PV) solar panels over an area of 4.5 square kilometers.  The efforts of Shuaa Energy 1, which was established by DEWA and the consortium led by ACWA Power and TSK, have been vital in completing the work efficiently and professionally, with 1.5 million Safe Man Hours without Lost Time Injury.  (DEWA 26.03)

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4.6  Morocco’s King Mohammed VI Launches Final Stage of World’s Largest Solar Energy Complex

King Mohammed VI launched (in Ouarzazate province) Noor Ouarzazate IV power station, the final stage of the world’s largest solar energy complex with a total capacity of 582 MW.  This new project, which will be developed on an area of 137 ha using photovoltaic (PV) technology, shows King Mohammed VI’s determination to optimize the exploitation of Morocco’s natural resources, preserve its environment, promote its economic and social development and to ensure the future of upcoming generations.  It reflects the special interest given by the King to energy projects, a real lever for development, and his desire to further promote Morocco’s expertise in a sector at the cutting edge of technology benefiting both Morocco and the African continent as a whole.

The construction of Noor Ouarzazate IV power station is in line with Morocco’s international commitments to reduce greenhouse gas emissions and its major goal of increasing the share of renewable energies in the national electricity mix to 52% by 2030.  Worth over MAD 750 million, Noor Ouarzazate IV has a capacity of 72 MW.  It uses photovoltaic technology which makes it possible to produce electrical energy directly from the solar radiation captured by semi-conductor cells.

Noor Ouarzazate IV power station, scheduled to start operating in Q1/18, will be developed as part of a partnership involving the National Agency for Solar Energy (Masen), a central player in renewable energies in Morocco, and a consortium of private operators led by the group ACWA POWER.  German Development Bank KfW Bankengruppe, contributed MAD 659 million to the financing of the project.  The second and third power stations of Noor solar complex (Noor II and Noor III) were launched by the Sovereign on 4 February 2016.  Their completion rate reached 76% and 74% respectively.  With a capacity of 200 MW, Noor II plant is developed on a maximum area of 680 ha, based on solar thermal technology, with cylindrical parabolic trough.  Noor III plant is built on an area of 750 ha using a solar power tower (150 MW).

Noor Ouarzazate II, III and IV, combined with Noor Ouarzazate I (160 MW) that started operating in February 2016, make Noor Ouarzazate the largest multi-technology solar production site in the world, with a total investment of MAD 24 billion.  (MWN 01.04)

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5.1  Lebanese Average Inflation Rose 4.6% Y-o-Y by February, Lifted by Oil Prices Recovery

Lebanon’s average consumer price index (CPI) rose 4.6% y-o-y to reach 98.73 by February 2016 as 12 out of its 13 components posted yearly upturns.  Inflation during the first two months of the year was mostly driven by utilities and transportation sub-indices that climbed by respectively 8.4% and 8.1%.  In fact, the recovery of global oil prices led to the increasing prices of transportation, which constitutes 13.10% of the CPI, and the utilities sub-index which encompasses water, electricity, gas and other fuels (grasping a weight of 28.4% of the CPI).  In addition, Food and non-alcoholic beverages added a marginal 0.6% y-o-y over the first two months of 2017, while clothing and footwear substantially rose by an average of 10.3% over the same period.  On a different note, the health sub-index was the only component to show contracting prices after recording a 1.2% yearly slip by February 2017.

On a monthly basis, the consumer price index inched 0.6% up in February 2017 from the previous month. In details, the 4.5% increase of the clothing and footwear sub index was the most highlighted in February compared to minimal upticks or stagnating prices in other CPI components.  In the coming period, consumer prices may witness further increases following the introduction of new taxes to fund the awaited new salary hike for civil servants and public and private teachers.  (CAS 21.03)

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5.2  Lebanon’s Tourism Sector Posted a 12.25% Improvement by February

According to the Ministry of Tourism, the number of tourists visiting Lebanon during the first two months of 2017 rose by 12.25% year-on-year (y-o-y), where the total number of tourists went up from 191,808 to 215,309.  Arab tourists, representing 40.21% of all tourists, showed a 26.96% increase to 86,565 by February.  This increase is heavily influenced by the number of Iraqi incomers, which surged 36.49%, to 37,237.  Moreover, the number of tourists from Jordan and Egypt increased 20.11% and 5.33%, respectively.  In contrast, the number of incomers from the United Arab Emirates dropped from 948 to 329.  As for the number of European tourists that constituted 37.59% of the total, it rose 33.91% y-o-y to 80,930 by February 2017.  This can be attributed mainly to the numbers of French, British and German tourists which respectively grew by 40%, 33% and 39% to reach 22,307, 9,464 and 9,627.  The numbers of American and Asian travelers rose by 5.3% and 7.5% respectively y-o-y to 28,710 and 14,013.  In February alone, tourist numbers reflected a healthy 13.1% progress compared to the same period in 2016.  (MoT 03.04)

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5.3  Egypt & Jordan Sign Gas Supply Deals

Egypt’s Minister of Petroleum El-Molla has signed four gas deals with Jordanian officials on the sidelines of the third Jordan International Energy Summit held on 3 April in Amman.  The deals included a memo to import and export natural and liquefied gas, in addition to other deals brokered by the Jordanian-Egyptian Fajr Company for Natural Gas Transmission and Supply.  During the summit, El-Molla highlighted the latest gas deals signed by Cairo with Iraq and Cyprus, as well as Egypt’s recently discovered Zohr natural gas field, the largest ever found in the Mediterranean.  The field was discovered in August 2015 by Italian oil company Eni, with an estimated 850 billion cubic meters of gas.  The first production from the gas field is scheduled by the end of 2017.  Egypt’s production of natural gas is currently estimated at around 4.4 billion cubic feet per day (bcfd), and is expected to increase by 1.5 bcfd by the end of 2017.  (Ahram 04.04)

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5.4  Jordan & UNICEF Sign JD1.1 Million Protocol

Jordanian Minister of Planning and International Cooperation Fakhouri signed an agreement on 28 March with the United Nations Children’s Fund (UNICEF) Representative in Jordan Robert Jenkins under which the UN body will extend JOD1.1 million to support the National Aid Fund (NAF).  The protocol aims to fund studies, build the capacities of the NAF and also establish a program for direct grants to the most vulnerable Jordanian children.  The project would provide NAF with JOD722.000 in direct support to 2,000 marginalized Jordanian children on a monthly basis for 12 months.  Moreover, it will fund activities to boost the capabilities of the NAF and its infrastructure as well as update its IT and archiving systems.  The protocol is part of the ministry’s efforts to achieve comprehensive and sustainable development around the Kingdom and improve economic, social and service conditions, in addition to contributing to national efforts to find solutions to the problems of poverty and unemployment.  (Petra 28.03)

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►►Arabian Gulf

5.5  Qatar’s Foreign Trade Surplus Soars 74% in February

Qatar’s February trade surplus increased by 74% from a year earlier, according to data released by the country’s Ministry of Development, Planning and Statistics.  The country’s surplus rose to QR12.3 billion ($3.38 billion) in January from QR10.8 billion in December and up from QR7 billion in January 2016.  Exports of petroleum gases and other gaseous hydrocarbons climbed 18.9% to QR12.20 billion.

Pressure on Qatar’s state finances is easing because of higher oil prices and the government may not need to issue an international bond this year, but it is still seeking ways to save money, finance minister Ali Sherif al-Emadi said last month.  Qatar’s 2017 budget, announced in mid-December, projected its deficit would shrink to QR28.3 billion riyals from QR46.5 billion planned for 2016.  Since the 2017 budget assumed an average oil price of about $45, the deficit is now close to disappearing.  The International Monetary Fund (IMF) has forecast that Qatar’s real GDP growth is expected to reach 3.4% in 2017 from about 2.7% in 2016 as the country effectively adjusts to the new reality of sustained lower energy prices.  (AB 27.03)

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5.6  UAE Health Care Market to Grow to Dh103 Billion by 2021

A new study by research company Mena Research Partners (MRP) has suggested that the UAE’s health care sector will grow by 60% in the next five years.

The move towards quality healthcare, increase in demand for preventive care and digital health will contribute to a massive 60% growth of the healthcare sector in the UAE in five years.  The current AED 64 billion ($17 billion) market will surge to over AED 103 billion ($28 billion) in 2021, driven by a shift in demand for preventive care, a rise in specialist medical services, more efficiently integrated healthcare solutions, as well as the high growth potential within specific medical device and pharmaceutical sub-sectors.  Medical tourism and mandatory insurance will also contribute to the sector’s growth.

The country aims to achieve a world-class healthcare system and become among the leading countries, not only regionally, but in the world in terms of quality of healthcare, according to the UAE Vision 2021 National Agenda.  To achieve that, the National Agenda emphasizes the importance of preventive medicine and seeks to reduce lifestyle-related diseases to ensure a longer, healthier life for citizens.  In fact, the healthcare sector in the UAE is witnessing structural shifts and, as a result, is changing fast to adapt to the demands of a younger, more health-conscious population asking for preventive care rather than curative care and, along the way, is more engaged in its own well-being.  Being itself a digitally savvy population that enjoys one of the highest digital connectivity in the world, the new generation is redrawing the blueprints of the future of healthcare in the UAE.  It is looking for a more personalized and specialist healthcare.  While doing this, it is moving more towards interaction and self-management which is aided by the ever-growing digital technology in the sector.

The findings of the report also reveal that, while the healthcare market has been growing at over 10% year on year since 2015 and is expected to continue in this trajectory, there will be an upsurge of 15 to 25% in some subsectors across the three pillars of the market: a) healthcare providers-currently accounting for at 76% of the total market, b) medical devices-estimated at 6%) and c) pharmaceuticals and life sciences- estimated at 18%.  In its report, MRP sized in excess of 20 sub-segments and identified a number of niche areas that health providers need to cater over the next few years.  The research also identifies key mega trends shaping demand for and delivery of healthcare as well as niche trends influencing medical provider models.  (MRP 28.03)

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5.7  Saudi Arabia’s GDP Growth Rises in Fourth Quarter

Saudi Arabia’s GDP, adjusted for inflation, grew 1.2% from a year earlier in the fourth quarter of 2016.  The rate of growth increased compared with 0.9% in the third quarter, which was the slowest rate in over three years, according to preliminary data from the country’s Central Department of Statistics showed.  They also showed that the Q4 GDP growth was well below the 4.3% growth registered in Q4/15.  The kingdom’s oil sector grew by 4% in the final quarter of last year compared to non-oil sector growth of just 0.4%.

Saudi Arabia has seen its first deflation for more than a decade early this year, although the negative growth eased in February compared to January and is expected to be short-lived.  Earlier this month, credit rating agency Moody’s Investors Service raised its outlook for Saudi Arabia’s banking system to “stable” from “negative”, in a fresh sign that global investor confidence in the kingdom is recovering after plunging due to low oil prices.  (AB 01.04)

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►►North Africa

5.8  Egypt to Allocate 1% of GDP for Social Protection Programs in 2017/18

Egypt’s finance ministry plans to allocate a part of the savings made from the government’s ongoing economic reform plan to support social protection programs, Minister of Finance Amr El-Garhy announced.  El-Garhy said that the allocations would represent 1% of Gross Domestic Product (GDP).  Egypt’s GDP stood at EGP 2.7 trillion in the fiscal year 2015/16.  The country started a fiscal reform program in July 2014 in an attempt to curb a growing state budget deficit, which registered 12.2% of GDP in fiscal year 2015/16, through cutting subsidies and introducing new taxes.

El-Garhy said the reforms that would be implemented in the coming fiscal year 2017/18 would include more spending on social security pensions as well as healthcare, medication, low-cost housing, milk for infants and technical training for youth.  Egypt’s total subsidy bill in the coming fiscal year (2017/18) is estimated at EGP 385 billion, up from EGP 285 billion in the current fiscal year.  El-Garhy said that the bill includes food subsidies and social safety network initiatives Takaful and Karama.  The Takaful and Karama program, established by the government in early 2015, is a national social safety net program aimed at protecting the poor through income support.  (Ahram Online 26.03)

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5.9  Egyptian ICT Minister Heads Mission to US Seeking Strategic Partnerships

Egyptian Minister of Communications and Information Technology Yasser ElKady traveled to the United States on an official mission (13-23 March) to the West Coast and New York.  The visit aimed to promote investments in the ICT sector and develop Egypt-US strategic partnerships in advanced industries and technologies.  The mission was in line with Egypt’s President’s key assignments to the sector, which includes establishing a promising industry in the electronics field within three years; creating a base of specialists—with 16,000 trainees initially—in advanced technological areas; and creating knowledge environments across Egypt through technology parks that will, in turn, promote the ICT Egyptian industry and create purely Egyptian knowledge and high-quality products competing globally.

The mission agenda encompasses holding a number of meetings with executive officials of global multinationals in the technology development and information systems including Oracle, SAP, General Electric, Dell, Cisco, HP, Synopsys, Mentor Graphics, Honeywell and Infor.  This is in addition to companies specialized in the field of big data management such as Cloudera; e-payments services companies such as Visa International and MasterCard; and major international companies in the field of call centers and outsourcing such as Teleperformance and Sutherland.  The meetings also embrace other companies including research and advisory firms such as IDC and A.T. Kearney. The agenda comprises visits to some academic institutions, aiming to discuss cooperation in the field of technological innovation, entrepreneurship and incubation of startups.

The Egyptian ICT sector attracts international technology companies, where many of them selects Egypt as a destination for developing products and establishing international technical support centers.  Providing investment advantages and incentives, and competent human calibers capable of competing globally are among the factors for which Egypt is selected as a favored destination.  (MCIT 10.03)

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5.10  Egypt’s Foreign Currency Records its Highest Level Since 2011

Egypt’s balance of foreign currency reserves recorded its highest level since March 2011 reaching about $28.5 billion, while the volume of cash inflows reached more than $17 billion since that date, which improved the ability of banks to meet all customer and government requests for foreign exchange and its ability to repayment some debts, as well as the provision of about $23 billion to finance foreign trade deals, said CBE Governor Tareq Amer.

Prime Minister Ismail visited the Central Bank of Egypt (CBE) headquarters and held a meeting with Amer and the Bank’s officials.  Amer and other Bank officials gave a presentation to Ismail about the most important developments in the foreign exchange market since the flotation of the pound on 3 November 2016.  The success of the flotation measures was reflected in the improvement in the stock market’s performance, which reached its highest level ever after a six-year suspension — a clear indication of foreign investors’ increased confidence in the integrity of the banking reform program and in the ability of Egypt’s economy to achieve high and sustainable growth rates, Amer added.

The CBE will soon issue its first report on monetary policy, including the general and basic inflation rate, said Amer.  The CBE is keen to promote transparency, enhance communication with all institutions and citizens and address internal and external public opinion, the CBE governor said.  (Al-Masry Al-Youm 03.04)

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6.1  Turkey’s Annual Inflation Rises To 11.3% In March – Highest Since 2008

Turkey’s annual inflation hit its highest in more than nine years in March, surging 11.29%, as the prices of food, transportation and alcohol all showed double-digit increases, TUIK showed on 3 April.  Consumer prices rose 1.02% since the previous month.

Annual inflation was at its highest since October 2008.  The highest annual increase was 21.71% in alcoholic beverages and tobacco, according to TUIK data.  It was followed by transportation with 17.69% of increase, health with 13.28%, food and non-alcoholic beverages with 12.53% and miscellaneous goods and services with 12.51%.    The highest monthly increase was 1.99% in clothing and footwear. In March 2017, the indices rose for food and non-alcoholic beverages by 1.93%, for health by 1.88%, for recreation and culture by 1.55% and for housing by 1%.

Turkey’s annual consumer price inflation hit double digits in February for the first time since April 2012.  Inflation has been stoked by chronic weakness in Turkey’s lira currency, which has been hit by political concerns and worries about the direction of monetary policy, according to analysts.  The Central Bank has resorted to using unorthodox methods to tighten, fueling investor concern it is wary of an outright rate hike.   After its last monetary policy committee meeting, the bank said in a statement that it would continue to use all available instruments in pursuit of the price stability objective.  Producer prices rose 16.09% year-on-year and 1.04% month-on-month, the data also showed.  (TUIK 03.04)

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6.2  Food Prices Key in Turkey’s Skyrocketing Annual Inflation

The Turkish Central Bank has stated that the rise in food prices was the main factor behind the historic rise in annual inflation in March, adding that some increases were seen in furniture and home appliance prices despite “temporary tax cuts.”   Turkey’s annual inflation hit its highest in more than nine years in March, surging to 11.29% as the prices of food, transportation and alcohol all showed double-digit increases, official data showed on 3 April.

In its latest price developments note on 4 April, the Central Bank said annual food inflation was the main driver behind the rise in Turkey’s consumer price index, partly due to last year’s base effect.  The delayed effect of the Turkish Lira’s depreciation also played a key role in rising main goods prices.  While the highest monthly increase was 1.99% in clothing and footwear, the indices rose for food and non-alcoholic beverages by 1.93%.  Annual inflation in the latter group rose to 12.5% with a 3.8% year-on-year increase, said the Central Bank report.

The Central Bank said cost-push pressures and the volatility in food prices in recent months led to a sharp increase in inflation.  The sharp rise in inflation is expected to continue in the short term due to lagged pass-through and the base effect in unprocessed food prices.

Meanwhile, there continues to be a significant difference between food producer and consumer prices.  According to the latest price report by Turkish Industrialists Association (TZOB), there was a difference of up to 485.24% in the producer and consumer prices of apples in March.  The difference was 451.11% in dried onions and 398.33% in dried apricots.  The TZOB and government officials have repeatedly accused speculative middlemen of hiking consumer prices in this group.

The highest annual increase was 21.71% in alcoholic beverages and tobacco through March, according to TUIK data.  It was followed by transportation with a 17.69% increase, health with a 13.28% increase, food and non-alcoholic beverages with a 12.53% increase and miscellaneous goods and services with a 12.51% increase.  Turkey also saw a rise in furniture and home appliances prices in March despite tax cuts in these sectors, according to Central Bank data.  (TDN 04.04)

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6.3  Cyprus’ Hydrocarbon Exploration Negotiations Successfully Concluded

Cyprus has successfully completed negotiations with the selected bidders for the offshore hydrocarbon exploration licenses in the island’s exclusive economic zone, Energy Minister Lakkotrypis said on 26 March.  The applicants selected were a consortium of ENI and Total for Block 6, Eni for Block 8, and a consortium consisting of ExxonMobil and Qatar Petroleum for Block 10.  Lakkotrypis said this was a very important development for Cyprus and the Eastern Mediterranean in general because it reinforced the prospect of hydrocarbons in the area, especially if one looked at the research projects that have been proposed and agreed.  The contracts agreed reflect this expectation and show that companies believe there are prospects, he said.  He said the companies were quite optimistic as to the prospects of the Eastern Mediterranean, and more specifically the Cyprus EEZ.   (CNA 07.03)

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6.4  Greece & EU/IMF Lenders Said to Agree on Key Labor Reforms and Pension Cuts

Greece has agreed with its lenders on key labor reforms, spending cuts and energy issues, moving closer to clinching a deal before a meeting of Eurozone finance ministers on 7 April.  Negotiations between Athens, the European Union and the IMF – which has yet to decide if it will participate in Greece’s current bailout – have dragged on for months, rekindling fears of a new crisis in Europe.  The latest progress is expected to help allow the return of EU and IMF mission chiefs to Athens in the coming days to finalize details with Greek finance and labor ministers before the Eurogroup meeting in Malta.  Talks are now held through teleconferences.

The main focus of the talks has been pension cuts, energy and labor reforms.  Athens agreed last month to adopt more measures, worth 2% of GDP, to help convince the IMF to participate in the bailout, which is sought by EU countries including Germany.  Greece will cut pensions by up to 1% of GDP in 2019, two officials told Reuters on condition of anonymity. Lowering the tax-free threshold to save roughly another 1% of GDP has also been agreed, an EU official said.  Greece is likely to start legislating for the reforms agreed once the deal is sealed.

Greece hopes that wrapping up the second review of bailout progress will pave the way for crucial talks on post-bailout debt relief.  Finance Minister Tsakalotos has said debt restructuring would help the country return to markets before its bailout expires.  Earlier, a spokesman for the European Stability Mechanism, the Eurozone’s bailout fund, said that possible additional debt relief measures for Greece could be decided only at the end of the bailout program.  (Reuters 29.03)

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7.1  Passover Will Be Celebrated Starting 10 April

On Monday night, 10 April, Israel and world Jewry will begin the week-long celebration of the Passover (Pesach) holiday.  Passover celebrates the liberation of the Jewish People from slavery in Egypt by the hand of G-d.  It is central to Jewish identity and Jewish practice, since the Exodus and life in the wilderness led to the true birth of the Jews as a distinct entity.  Jacob and Josef came to Egypt numbering 70 souls and Moses led 600,000 out after the defeat of Pharaoh.  Probably the most significant observance related to Pesach involves the removal of chametz (or leaven) from Jewish homes and businesses.  This commemorates the fact that the Jews leaving Egypt were in a hurry and did not have time to let their bread rise.  Even converts to Judaism relate to the Exodus as their own ancestors as having left Egypt.  It is also a symbolic way of removing the “puffiness” (arrogance, pride) from our souls.  Instead, special non-leavened bread called matzah is consumed, among a myriad of other special holiday dishes.

On the first night of Pesach (first two nights for Jews outside of Israel), there is a special family meal filled with ritual to remind Jews of the significance of the holiday.  This meal is called a seder, from a Hebrew root word meaning “order,” because there is a specific set of information that must be discussed in a specific order.  The seder is full of symbolism, all pointing to one salient point:  that Jews all remember that G-d took us out of slavery in Egypt to freedom to observe his Torah.  Pesach lasts for seven days (eight days outside of Israel).  The first and last days of the holiday (first two and last two outside of Israel) are days on which no work is permitted.  Work is permitted on the intermediate days.  These intermediate days on which work is permitted are referred to as Chol Ha-Mo’ed, as are the intermediate days of Sukkot.  Though work is permitted, many take vacations and a full work environment returns only after the holiday.  Passover ends on 17 April in Israel, 18 April in the Diaspora.

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7.2  Bank of Israel Prepares to Issue New Banknotes Featuring Women

On 28 March, the Bank of Israel revealed that the new 20 and 100 shekel bills, which feature the portraits of prominent Hebrew-language female poets, have reached the final design stages.  The NIS 20 bill is red and will be imprinted with the image of Rachel Bluwstein Sela — commonly known as Rachel the Poetess — and the NIS 100 bill is orange and will feature the portrait of Leah Goldberg, one of Israel’s most beloved poets and writers.  Originally planned to begin circulation in 2016, the new bank notes will join the redesigned NIS 50 and NIS 200 bills, released in 2014 and 2015, which feature the images of poets Shaul Tchernichovsky and Nathan Alterman.  Like the 50 and 200, the new notes will incorporate advanced technology.  The images imprinted on all the new bills were decided in 2012 by former governor of the Bank of Israel Stanley Fischer.

Each bill is to be distinctive in color and length to aid the blind and those with impaired vision in identifying the banknote values better.  Though the portrait of former prime minister Golda Meir, Israel’s first and only female prime minister, was featured on the NIS 10 bill, which was issued in 1985 and circulated until the 1990s, there have been no images of women featured on Israeli currency since.  Additional details regarding the launch date of the two remaining denominations, the security features embedded in them, and timetables for the replacement of existing banknotes with the new banknotes will be provided by the Bank of Israel in the near future.  The printing work of the new denominations will cost the state NIS 716 million (about $198 million).  (Various 29.03)

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7.3  Nicaragua Restores Diplomatic Ties to Israel After 2010 Break

Nicaragua and Israel have decided to reestablish diplomatic relations, effective immediately, after they were suspended in 2010.  Nicaragua’s Foreign Ministry said that the two governments place great importance on the renewal of relations with the aim of promoting joint activity for the welfare of both peoples and to contribute to the fight for peace in the world.  Nicaraguan President Ortega suspended diplomatic ties with Israel in 2010 in protest after Israeli commandos stopped a flotilla trying to infiltrate into Gaza.  In 2012, Ortega, a leftist Cold War antagonist of the United States, urged Israel to destroy its nuclear weapons as he hosted then-Iranian President Mahmoud Ahmadinejad in Managua.  (Various 28.03)

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7.4  Rising Sea Level to Swamp Land in Three UAE Emirates

A one meter or more increase in sea level is likely to inundate some parts of Ajman, Sharjah and Umm Al Quwain by end of the century, according to a new report.  In its “UAE Climate Change Risks & Resilience” report, Emirates Wildlife Society in association with World Wide Fund (EWS-WWF) said coastal cities are likely to be at increasing risk from sea level rise, storm surges and associated flooding.  Coastal areas house nearly 85% of the population of the UAE as well as many prestigious properties including hotels and resorts.  Fujairah and the East coast will be more vulnerable to cyclones, storm surge than the West coast (where most industrial facilities are) and locations inside the Gulf, it added.

According to the report, Dubai’s urban area has almost tripled in less than two decades (1984-2003), with an artificial expansion of the city surface thanks to the Palm Islands and the World archipelago projects, making the share of built environment potentially exposed to inundation significant.  Similarly, Abu Dhabi is considered vulnerable to SLR as the city’s major developments and industrial infrastructure are built along the emirate’s islands.  There is also a risk that further urban development could occur close to natural flood plains and wadis, which are areas of natural water collection, as it is happening in many countries in the region, EWS-WWF said.  (AB 28.03)

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8.1  Israel Looks to Leverage Tech in $50 Billion Medical Marijuana Market

Israel, a leader in marijuana research and health technology, is attracting international investment as it tries to position itself as a cutting-edge exporter in the rapidly-growing market for medical-grade cannabis.  With estimates that the global market for medical marijuana could reach $50 billion by 2025, the Israeli government is set to allow the local industry to start exporting and projects annual revenues in the hundreds of millions of dollars.  The strategy is to create medical-grade cannabis with quality and efficacy ensured along the entire supply chain from cultivation to manufacture and distribution.

In contrast to the United States, which is currently the biggest legal marijuana market, authorities in Israel are liberal in their support of research and development.  Licensed marijuana growers work with scientific institutions in clinical trials towards the development of cannabis strains that treat a variety of illnesses and disorders.  There are about 120 studies ongoing in Israel, including clinical trials looking at the effects of cannabis on autism, epilepsy, psoriasis and tinnitus.  The health ministry wants to share its acquired knowledge and train doctors from abroad.  Talks are underway with Australia, Germany, Brazil and others.

Jerusalem gave the go-ahead in February to legislation that would allow export.  More than 500 Israeli companies have applied for licenses to grow, manufacture and export cannabis products, according to government officials, and some are already capitalizing on the booming US market.  In the past year, American and other firms have invested about $100 million to license Israeli medical marijuana patents, cannabis agro-tech startups and firms developing delivery devices such as inhalers.  Tikun Olam, Israel’s largest grower, has partnered with US companies to cultivate marijuana in four US states.  (Reuters 23.03)

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8.2  Marrone Bio Innovations & Evogene Advance Novel Bacteria into Insecticidal Phase

Davis, California’s Marrone Bio Innovations, a leading global provider of bio-based pest management and plant health products, and Evogene announced today that MBI will advance certain novel bacteria and Evogene-identified related proteins into MBI’s bio-insecticide product development pipeline under their previously announced multi-year collaboration for the discovery and development of novel insect control solutions.  The collaboration, initiated in July 2014, and supported by funding from the Binational Industrial Research and Development (BIRD) Foundation, aims to bring to market new insect control solutions – both seed traits and bio-insecticides – through leveraging the expertise and distinct assets and capabilities of each party.  The parties have agreed to share revenues from any products that may result from this collaboration.

Utilizing its proprietary computational platform BiomeMiner and other predictive discovery capabilities, Evogene identified candidate proteins from tens of thousands of proteins within selected insecticidal strains from MBI’s extensive and proprietary bacterial collection.  The proteins’ bioactivity for pest control was then validated in insect assays, with the result that a subset of the candidate proteins demonstrated positive insecticidal results.  The advancement represents the completion of the collaboration’s discovery phase and a shift by the companies towards product development.  The bacteria that were selected to advance into MBI’s pipeline contain candidate proteins with positive insecticidal properties, while in parallel Evogene continues its product development efforts to develop seed trait solutions based on such proteins.

Rehovot’s Evogene is a leading biotechnology company for the improvement of crop productivity.  The Company has developed a proprietary innovative technology platform, leveraging scientific understanding & computational technologies to harness Ag ‘Big Data’ for developing improved seed traits (via: GM and non-GM approaches), as well as innovative ag-chemical and novel ag-biological products.  Evogene has strategic collaborations with world-leading agricultural companies like: BASF, Bayer, DuPont, Monsanto and Syngenta, focusing on innovative crop enhancement and crop protection solutions.  (Evogene 28.03)

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8.3  Teva Receives FDA Approval of AUSTEDO Tablets for the Treatment of Huntington’s Disease Chorea

Teva Pharmaceutical Industries announced that the U.S. Food and Drug Administration (FDA) has approved AUSTEDO (deutetrabenazine) tablets for the treatment of chorea associated with Huntington’s disease (HD).  Previously referred to by the developmental name SD-809, AUSTEDOTM is the first deuterated product approved by the FDA and only the second product approved in HD.  The product was previously granted Orphan Drug Designation by the FDA.

A rare and fatal neurodegenerative disorder, HD affects more than 35,000 people in the United States. Chorea – involuntary, random and sudden, twisting and/or writhing movements – is one of the most striking physical manifestations of this disease and occurs in approximately 90% of patients.  The FDA approval was based on results from a Phase III randomized, placebo-controlled study to assess the safety and efficacy of AUSTEDO in reducing chorea in patients with HD (First-HD).

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by approximately 200 million patients in 100 markets 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 the world-leading innovative treatment for multiple sclerosis as well as late-stage development programs for other disorders of the central nervous system, including movement disorders, migraine, pain and neurodegenerative conditions, as well as a broad portfolio of respiratory products.  (Teva 04.04)

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8.4  Emosis, BioRap & Rambam MedTech Collaborate on Novel Hypercoagulation Diagnostics Kit

French diagnostics company Emosis, BioRap Technologies and Rambam MedTech, the technology transfer companies of the Rappaport Institute at the Technion – Israel Institute of Technology and Rambam Healthcare Campus, have entered into an exclusive license agreement to develop and commercialize hypercoagulation kit.  Prof. Benjamin Brenner and Prof. Anat Aharon from the Rappaport Institute and Rambam Healthcare Campus developed a proprietary technology enabling measurement of micro-particles based biomarker for identifying and monitoring high risk patients who should be treated for coagulation complications.  Emosis will use its know-how and IP to develop the biomarker as a commercial kit while BioRap Technologies and Rambam MedTech will perform some of the supporting research.

Haifa’s Rambam MedTech is the technology transfer company for Rambam Healthcare Campus, and serves as the industrial liaison to bring medical innovations to market.  Haifa’s BioRap is the Rappaport Institute’s technology transfer company.  The company provides the legal framework for the inventions and innovations of RI researchers, protecting discoveries and innovations with patents, and working with industry to bring scientific discovery to the market.  (Emosis, BioRap and Rambam MedTech 04.04)

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9.1  Variscite’s DART-6UL Product Line Enhanced with 696MHz Processor & Low-Power i.MX 6ULL

Globally recognized SoM design and manufacture company, Variscite, announces extensions to its popular DART-6UL platform this month. New configurations will support 696MHz Cortex-A7 speed grade and the low-power i.MX 6ULL variants.  Measuring only 25 mm x 50 mm, this highly optimized cost and power platform is commonly used in fast emerging applications, such as the Internet-of-Things.  The DART-6UL accommodates the rapidly growing network of connected objects from smart homes, to wearables and white goods, as well as many other portable and battery operated embedded systems.  Introducing the enhanced 696MHz processor speed grade and the 6ULL variants enables Variscite to further optimize its SoM offering to customers in various embedded segments.  A wide range of interfaces, fully certified WiFi/BT connectivity, low size and low power can all be satisfied within a very attractive price range – starting from only $24.

Lod’s Variscite is a leading System on Modules (SoM) and Single-Board-Computer (SBC) design and manufacture company.  A trusted provider of development and production services for a variety of embedded platforms, Variscite transforms clients’ visions into successful products.  (Variscite 28.03)

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9.2  FST to Reveal New Generation of Biometrics-Based Visual Identification

FST Biometrics, the leading visual identification solutions provider, revealed strategic elements of IMID Access 4.0, a new generation of biometric visual identification solutions, incorporating deep learning to enhance flexibility, accuracy, fraud prevention and user experience.  IMID Access 4.0, commercially available this month, uses a fusion of biometrics-based technologies for a robust list of identification-oriented applications, including access control, employee time-and-attendance and retail consumer experience.  Utilizing FST’s visual identification technology, IMID Access can be implemented in low light environments, is equipped to overcome fraud attempts and employs long-term enrollment.

Rishon LeTzion’s FST Biometrics is the leading visual identification solutions provider. FST’s proprietary algorithm is at the core of the company’s In-Motion Identification (IMID) solutions, which offer speed and accuracy for a highly convenient user experience.  IMID’s adaptability makes it the ideal solution for a diverse range of applications, and its flexibility ensures lower TCO for customers.  IMID solutions are a fusion of technologies that include facial recognition and behavioral biometrics.  (FST Biometrics 28.03)

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9.3  Sodyo Introduces FarQR – The Next Generation QR Code

Binyamina’s Sodyo announced the release of a new groundbreaking QR Code – FarQR – solution for broadcasters that is poised to forever change the TV advertising business model.  Sodyo’s disruptive technology allows viewers to point their smartphone at the TV screen and scan a FarQR Code that broadcasters place within the content or commercials.

FarQR Codes resolve the distance issue by allowing a detection range of 100 times the size of the code.  QR Codes currently have a detection range of 10 times the size of the code.  FarQR Codes are a perfect fit for television and outdoor digital.  Their current focus is television, because of the obvious need and benefit for TV broadcasters.  Broadcasters place a FarQR Code on a commercial.  The viewer points their phone to the screen and interactive content from the broadcaster instantly appears on the phone from any viewing distance.  FarQR Codes allow interaction between the two most important screens in our lives – TV and smartphone.  Thanks to FarQR Codes, broadcasters can enrich content, engage and captivate the audience in ways they never imagined possible.  (Sodyo 28.03)

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9.4  PointGrab Partners with Serraview, Taking Aim at $43 Billion Smart Office Market

PointGrab, developer of the CogniPoint edge-analytics smart sensing solution, announced a partnership with New York’s Serraview, a leading provider of workplace management and optimization software.  By integrating CogniPoint with Serraview’s cloud-based space planning software, the companies will help organizations transform their workplaces by delivering real-time space utilization intelligence, resulting in less wasted space, increased employee productivity and better talent attraction.  The integration of CogniPoint into Serraview’s smart office environments solution allows organizations to collect data crucial to tracking and understanding how their employees work best, such as occupants’ presence, count and position in the workspace.  By utilizing advanced deep-learning neural networks technology, CogniPoint delivers the actionable analytics necessary to optimize space management, energy savings and business intelligence.

Serraview’s smart office environment solution fosters a collaborative environment in a connected workplace.  Timely and accurate utilization analysis aggregated from multiple data sources helps organizations make the best use of smart office environments and their entire workplace portfolio.  Serraview’s intelligent wayfinding services remove the anxiety around non-assigned seating, helping employees easily find the right workspace and each other.

Hod HaSharon’s PointGrab is a leading machine learning and computer vision company that provides smart sensing solution to the building automation industry.  The company applies its superior deep-learning technology to the building automation ecosystem, where opportunities to gather data are abundant, but efficient, real-time analytics are lacking.  The company is fast growing and supported by world leading engineering company ABB, the global leader in lighting, Philips Lighting, and sector expert EcoMachines Ventures of London, and applies a joint development and market approach with global leading lighting and engineering companies.  (PointGrab 30.03)

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10.1  Israel’s Defense Exports Increase by 14% in 2016

On 29 March, figures published by the Ministry of Defense International Defense Cooperation Authority (SIBAT) showed that exports of weapons systems and technologies amounted $6.5 billion in 2016, an $800 million increase (+14%) compared with $5.7 billion in 2015.  The Ministry of Defense figures show that 20% of defense exports in 2016 came from companies upgrading airplanes and avionics systems, the leading subsector, followed by observation and optronics, missiles, rockets, and air defense systems.

A breakdown of 2016 defense exports by countries shows clearly that Asian Pacific countries continue to be the main export target for Israeli companies.  Exports to these countries totaled $2.6 billion in 2016, $300 more than in 2015.  Exports also rose to the European market, North American countries, Latin American countries, and African countries.

Conversely, together with the growing competition in the target markets of Israeli companies, the Ministry of Defense noted the financing difficulties in defense deals in developing countries as one of the challenges facing the local industry.  These countries, most of which are in Africa, want to buy weapons systems from Israel, but are having difficulty paying for them.  In an attempt to accommodate them, Israeli companies are offering special financing and credit plans to governments making it possible to spread the payments for defense deals over many years.  The Ministry of Defense figures show that Israeli defense exports to Africa totaled only $163 million in 2015, but leaped to $275 million in 2016, similar to the export figures for Africa from three years ago.

Some 8% of 2016 defense exports consisted of cyber systems and intelligence and information systems.  Defense sources believe that the cyber systems involved were for defense against cyber-attacks, not attack systems.  (SIBAT 29.03)

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10.2  Israel’s Building Starts Slightly Down in 2016

According to a release by the Central Bureau of Statistics’, construction starts numbered 52,432 new housing units in 2016, about the same as the 52,790 housing starts in 2015.  The figures are preliminary, and may be revised later.

The Bank of Israel recently published a study asserting that Central Bureau of Statistics housing starts figures were inaccurate and that the revision of the initial figures in the ensuing months gave a different picture.  The Bank of Israel added that that where publications in recent years were concerned, the figures had been upwardly revised later by 10%.  For example, 2015 housing start figures published in early 2016 indicated that there were fewer than 50,000 housing starts. Several months later, however, the figure was upwardly revised to over 52,000.  If the bias pointed out by the Bank of Israel Research Department also applies to the current figures, it is possible that housing starts in 2016 were higher than reported by the Central Bureau of Statistics.  (Globes 23.03)

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10.3  Bank of Israel Announces Growth Adds NIS 4.5 Billion to Tax Revenues

According to the Bank of Israel Research Department, growth during 2016 contributed some NIS 4.5 billion in surplus tax revenues.  The 2016 tax revenue surplus totaled NIS 7.5 billion.  The unexpected growth in tax revenues is attributable mostly to imports of consumer goods, mainly cars, which contributed NIS 5 billion to the gap between the original revenue forecast and actual tax revenues. NIS 4.5 billion is attributable to faster than expected growth in nominal GDP.  The Bank of Israel believes that revenues from taxes on imported cars and real estate together amounted to 0.5-0.7% of GDP in recent years.

In its report, the Bank of Israel predicts that the 2017 budget deficit will be, lower than the 2.9% of GDP target set in the budget, and will be 2.5% of GDP in 2018, also slightly less than the 2.9% of GDP target for that year.  The Bank also warned that the transfer of IDF bases to the Negev is liable to be delayed if no revenue is found to pay for the cost, which will amount to NIS 2.8 billion in 2017 and NIS 2.1 billion in 2018.  This project is contingent on revenues from the sale of land by the Israel Land Authority (ILA).  (BoI 23.03)

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11.1  MIDDLE EAST:  OPEC’s Rebalancing Act

On 15 March Rabah Arezki and Akito Matsumoto posted in the IMF that in November 2014, the Organization of Petroleum Exporting Countries (OPEC) decided to maintain output despite a perceived global glut of oil. The result was a steep decline in price.

Two years later, on November 30, 2016, the organization took a different tack and committed to a six-month, 1.2 million barrel a day (3.5%) reduction in OPEC crude oil output to 32.5 million barrels per day, effective in January 2017. The result was a small price increase and some price stability.

But the respite may be temporary, because the price increase is likely to stimulate other oil production that can come on line quickly. A recent sharp decline in prices because of higher than expected oil inventories in the United States underlines the temporary nature of the respite the OPEC agreement provides.

The OPEC Agreement

Saudi Arabia, Iraq, the United Arab Emirates and Kuwait are bearing the brunt of the OPEC cuts, which could be extended another six months, while some member countries such as Nigeria and Libya have been exempted.  Moreover, non-OPEC producers joined in and agreed to cut about 600,000 barrels a day.  Russia committed to cut 300,000 barrels, and 10 other non-OPEC oil producing countries agreed to cut the remaining 300,000 barrels a day.

These agreements appear to have brought supply and demand into balance at a price just above $50 a barrel – largely because of the high degree of compliance by OPEC members with the level of production agreed to last November.  OPEC reported that compliance was close to 90% in January—a level that would be in sharp contrast with the typically low adherence by OPEC members to those set in earlier production agreements.  There are some reports that compliance is lower, but Saudi Arabia has signaled it will do whatever it takes to enhance the credibility of the agreement and has cut its production more than required.

That said, there are several threats to the effectiveness of the agreement, even in the short term.  Some OPEC members (Iraq, Libya and Nigeria) have increased their production since October.  Furthermore, not only did non-OPEC producers make smaller reductions than OPEC, they also do not have to reach their production targets as soon.  For example, Russia has so far cut only 120,000 of the 300,000 barrels a day it promised.  And some analysts believe that some of the targeted reductions are phantom, reflecting a natural decline from historically high production levels rather than active cuts.

Shale Oil Threat

But perhaps the biggest threat to the attempt to achieve price stability comes from shale oil producers.  The $6-a-barrel increase in spot oil prices that followed the hints last September of an OPEC production agreement is expected to stimulate investment in oil production in 2017, after significant declines in the previous two years.  An increase in shale oil output in the United States could quickly offset much or all of the OPEC and non-OPEC production cuts, because shale wells can begin production within a year of the initial investment, unlike conventional oil investments, which take a number of years to come to fruition.

The shale effect has happened before.  In early 2014, even though excess supply was building up, oil prices remained at around $100 a barrel because market participants expected OPEC to cut production to support prices—creating a floor price that stimulated non-OPEC production of not only shale oil, but oil from relatively high-cost sources as well.  The floor price did not last long because oversupply built up—and oil prices began to fall, precipitously after the OPEC meeting in November 2014.

Despite OPEC’s greater ability to sustain the recent production agreement, a somewhat similar sequence of events is likely to occur now because of shale oil’s fast responsiveness to price changes.  US shale oil investment declined very sharply following the drop in oil prices that started in 2014 and within a few months, production declined.  The oil price rebound in 2016 helped boost investment, which was further enhanced by the announcement in September 2016 in Algeria that OPEC intended to cut production levels. By February 2017, US oil investment, as measured by the number of drilling rigs in operation, reached its highest level since November 2015.

Moreover, the shale oil threat is greater because producers in the United States have become more efficient thanks to improved operations and increased selectivity in the wells they exploit.  Although the ultimate capacity of shale oil production is uncertain, its behavior is now a central feature of the new oil market and will help lead to more limited and shorter production and price cycles.

Bottom Line

The OPEC agreement has hastened the rebalancing of the oil market—that is, when the supply of oil is in line with demand and accompanied by stable prices.  The OPEC production agreement should reduce excess supply—at least temporarily.  But the futures market in oil prices suggests that expectations are firmly anchored at around $50 a barrel.  The forces unleashed by the OPEC agreement will limit its effectiveness over the next few years.  (IMF 15.03)

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11.2  ISRAEL:  IMF Executive Board Concludes 2017 Article IV Consultation with Israel

On March 24, 2017, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Israel.

Israel is enjoying strong economic growth, estimated at 4% in 2016, supported by strong domestic demand—partly due to high vehicle sales ahead of a tax increase—and an export rebound.  Unemployment declined to 4.4% in Q4/16 and wage increases have picked up.  Nonetheless, inflation remained below the 1–3% target range of the Bank of Israel (BOI), reflecting external factors and government measures to reduce the cost of living.  The BOI has held the policy rate at 0.1% since February 2015 and stated that monetary policy in Israel will remain accommodative for a considerable time.  Strong revenues contained the fiscal deficit to 2.1% of GDP in 2016 and the public debt ratio declined to 62% of GDP.

Housing prices rose at an average pace of 7.5% y/y in 2016, even after nearly doubling in real terms since 2007.  Housing loans grew at a similar pace, bringing household debt to a still modest 74% of disposable income.  Residential investment has risen but completions remain below estimated household formation.  Some softening in the housing market emerged recently, with mortgage volumes and housing sales slowing and price declines recorded in late 2016, which may reflect a rise in mortgage interest rates driven by earlier macroprudential measures together with changes in real estate taxes.  Israel’s banking system is sound and the authorities are taking a range of measures to promote efficiency and competition in the banking sector, including the separation of credit card companies from the two largest banks.

Israel’s near-term economic outlook is positive.  Growth is expected to settle around 3% and inflation is likely to rise gradually, although with significant uncertainty around the timing of such a rise.  In the longer term, however, the rising share of Haredi (ultra-orthodox Jews) and the Israeli-Arabs in the working-age population could slow potential growth and raise poverty given the lower labor force participation and average productivity of these groups.

Executive Board Assessment

Executive Directors commended Israel’s sound policies, which have resulted in strong macroeconomic performance.  While noting that the near-term outlook remains favorable, Directors also recognized that the country faces important structural challenges from elevated housing prices, high incidence of poverty and inequality, low labor productivity, and low labor force participation in some groups of the population.  Against this backdrop, Directors called for continued sound policies that safeguard macroeconomic and financial stability and for deeper structural reforms that help improve potential growth, while reducing poverty and inequality.

Directors noted that the Bank of Israel (BOI) has maintained an appropriately accommodative monetary policy given that inflation remains below target.  Most Directors concurred that monetary policy tightening should await clearer evidence of inflation returning toward the target in a lasting manner so as to avoid a premature policy tightening, although a few Directors considered that an earlier tightening might be warranted.

Directors called for reforms that expand housing supply in order to improve affordability—particularly for young and low-income households—and thereby also limit macro-financial risks from this sector.  They welcomed recent progress in expediting land planning, and encouraged steps to improve municipal incentives for residential development, increase land privatization and urban renewal, and reduce construction times and costs.  Directors considered macroprudential policies to be appropriately tight, and welcomed the BOI’s continued vigilance in relation to macro-financial risks.

Directors agreed that the banking system is sound.  They welcomed the authorities’ plans to promote competition and efficiency in the sector, but underscored the importance of safeguarding financial stability when implementing these reforms.  Directors noted that the separation of two credit card companies from banks should be supervised closely.  They agreed that steps to facilitate new entry into the banking sector should be complemented with a strengthening of the bank resolution and deposit insurance frameworks.  Directors also supported the establishment of the Financial Stability Committee to improve regulatory coordination.

Directors noted that the 2017–18 budget allows for higher fiscal deficits, which could reverse the declining trend in the public debt ratio.  Against this backdrop, most Directors agreed that currently favorable macroeconomic conditions provide an opportunity to protect fiscal buffers by reducing the central government deficit to around 2% of GDP in coming years, including by saving any revenue over-performance in 2017.  A number of Directors considered that the increases in the fiscal deficit and debt ratio could be accommodated without jeopardizing debt sustainability, especially given the need to implement structural reforms and raise essential public investments.  More generally, Directors supported additional spending on education, training, and infrastructure, financed by increased central government efficiency, procurement savings and lower tax benefits.  Directors welcomed the improvements in the medium-term fiscal framework, especially the recent strengthening of expenditure commitment controls, and emphasized that political ownership of fiscal targets is key to their effectiveness.

Directors stressed that inclusiveness is central to sustaining strong growth and reducing poverty.  They recommended expanding well-performing active labor market programs and promoting job creation for communities with lower participation, including through better transport connections and financing access for business development.  To more immediately reduce poverty while reinforcing work incentives, Directors generally favored increasing the Earned Income Tax Credit.  They also encouraged product market reforms, especially lowering trade barriers and regulatory burdens, so as to increase competition, boost productivity and reduce living costs.  (IMF 28.03)

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11.3  ISRAEL:  MIXiii BIOMED 2017 – the Numbers Behind the Digital Health Industry in Israel

Start-Up Nation Central released a report highlighting Israel’s digital health industry towards MIXiii BIOMED 2017, Israel’s premier international life science conference and exhibition, 23-25 May 2017, Tel Aviv.  The detailed report describes the current status of the digital health industry in Israel, including its subsectors (Health Analytics, Telemedicine, Clinical Workflow, Wearables & Sensors and Personal Health Tools), the number of companies and investments in each subsector, the active incubators and accelerator in the field and more.

The digital health sector worldwide, as well as in Israel, is rapidly transforming passive patients into active healthcare consumers.  This global trend of patient empowerment resulted in Personal Health Tools becoming the largest subsector in recent years. Israel’s unique capabilities in information, communication, mobile, and cyber technologies, together with more than 25 years of expertise in implementing health IT, electronic medical records, and business analytics, offers Israel the opportunity to become a truly influential player in the global digital health arena.

According to the report, the Israeli digital health sector grew significantly in 2016, in both funding and number of companies.  The total investment in 2016 was $183 million, an increase of almost 30% compared to 2015 ($144 million).  Personal Health Tools and Health Analytics accounted for over 70% of deal volume in 2015 and 2016.  The Health Analytics subsector, pertaining to companies that collect and analyze data to solve medical problems for businesses and consumers, received the most funding in the past two years: $84 million in 2015 (59% of total investments), and $58 million in 2016 (32% of total investments).  Another subsector that received considerable funding in 2016 is Clinical Workflow: $55 million (30% of total investments).  This subsector includes companies that enable hospitals, clinics, labs, and other healthcare stakeholders to work more efficiently.  Also the Wearables & Sensors subsector received considerable funding in 2016: $46 million (25% of total investments).

According to the report, the number of digital health companies in Israel has risen substantially in recent years, reaching a total of approximately 385 companies.  The Personal Health Tools subsector has skyrocketed, becoming the most prominent subsector, with 174 companies (45% of the sector).  This subsector includes companies that provide end-users with software-based tools to track, manage, and even treat their own health conditions.  The second largest subsector is Health Analytics with 85 companies.  These companies play an important role in the ability to predict, prevent, diagnose and treat medical conditions.

As the Israeli digital health sector concentrates on patient empowerment, the borders between subsectors begin to blur, converging under Personal Health Tools.  Wearables, sensors, big-data analytics and telemedicine platforms integrate to form powerful B2C and B2B2C healthcare products.  The data collected from wearables and sensors is being leveraged more and more by the rapidly-growing market of Health Analytics and Personal Health Tools software.  The user is not only tracked and monitored passively, but receives real-time feedback, turning him/her into an active participant in the process.  In sum, the various subsectors are becoming more interconnected, centering on individuals and empowering them.

Guy Hilton, Chief Marketing Officer, Start-Up Nation Central, stated, “With one of the most advanced healthcare systems in the world, coupled with extensive experience in the areas of information, communications and cyber, Israel has become in recent years a promising center for technologies that analyze and process medical information.  These technologies enable institutions and health consumers to effectively and creatively address substantial challenges, and as such, play a significant role in shaping digital health.  Most of the investments in Israel in the past two years have focused on these technologies, while the global industries have focused on other areas.  Furthermore, since many of the solutions developed in Israel are based on software and target the end-user, they can be widely implemented. Taking advantage of these trends can position Israel as a meaningful player in the global healthcare industry.”

Ruti Alon, MIXiii BIOMED Co-Chairperson and CEO and Founder, Medstrada, said, “The positive trend of growth in the digital health industry in Israel, as evident from the report, is indeed encouraging.  In order to fully realize the potential of the technologies in this field, there is a need to understand global healthcare systems and markets.  To this end, the Biomed conference offers a perfect platform for meetings and networking between researchers, physicians, senior executives in hospitals and life science companies, academia and industry from Israel and around the world.  Among the co-organizers of the conference are the Cleveland Clinic and the Mayo Clinic, both among the leading medical centers in the US and worldwide.  In addition, we are expecting delegations from East Asia and Europe.  One of the main subjects this year is aging and age related diseases.  Today, healthcare systems focus especially on the area of trauma and sicknesses relating to the elderly.  Most of the companies presenting at the conference in general, and specifically in the digital health track, will try to address the needs and solves problems relating to the treatment of this group.”


MIXiii BIOMED is Israel’s leading international life science conference and exhibition, to take place on 23-25 May 2017 at the David InterContinental Hotel in Tel Aviv.  For the 16th consecutive year, MIXiii BIOMED is the largest meeting place for healthcare professionals from Israel with international colleagues and partners.  As such, this world-class event presents an opportunity for global participants to experience Israel’s life science innovation and vibrant biomedical industry at its best.  Previous successful conferences hosted over 6,000 industry players, scientists, engineers and investors including more than 1,000 attendees from over 45 countries.  Hundreds of Israeli life science companies will present and exhibit their products, services and technologies allowing for hands-on experience.

In addition to offering a unique opportunity to learn about the latest innovations and technologies of the Israeli life science industry, one of the conference’s main subjects this year is aging and age related diseases.  Some of the topics that will be presented are: The impact of aging on population health and world economy; Longevity: genetics and epigenetics; Precision diagnostics and medicine; Regenerative and cell therapy; Robotics and aging; Age related diseases: cancer, neurodegenerative diseases, diabetes, CHF, hypertension and more; Health IT, digital health and cybersecurity; Continuum of care for the elderly patient; From Academia to Industry as related to aging and age related issues.

This year the conference’s group of organizers has been expanded to include various leading international healthcare institutions such as the Cleveland Clinic and the Mayo Clinic, with the objective of enhancing the exposure of the Israeli industry to key global opinion leaders and experts, and allowing local and international attendees to mix and exchange knowledge and ideas.  Israel’s leading medical centers, including Tel Aviv Sourasky Medical Center, Sheba Medical Center at Tel HaShomer, Hadassah Medical Center and Rambam Health Care Campus, have also joined the effort.  In addition to IATI and Kenes Exhibitions, and with the aim of continuing to increase the flow of investors in the Israeli biomed industry, OurCrowd, the world’s largest crowd funding organization, has been added as a co-organizer.  Finally, Start-Up Nation Central, which connects between global entities and companies and Israeli innovation, has also joined the team.  (Start-Up Nation Central 27.03)

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11.4  GCC:  New Generation Royals and Succession Dynamics in the Gulf States

On 21 March, Kristin Smith Diwan wrote in the Arab Gulf States Institute in Washington that as Arabian Gulf monarchies face a generational transition in leadership, new challenges are emerging.  The intensified royal competition comes amid dramatically transformed information environments; societies that are better educated and more engaged in public affairs; and an unstable regional environment that invites intervention.  These forces are disrupting the continuity of long-standing norms that regulate ruling family interaction, and testing the assumption that royal competition supports political stability.

This paper examines these contemporary dynamics – new generation competition, the populist temptation, foreign patrons, and the new information environment – illustrating their impact on the ruling houses of the Gulf Arab countries.  While drawing upon examples from across the Gulf Cooperation Council states, this study focuses on the two countries where the competition for leadership of the next generation is most intense: Saudi Arabia and Kuwait.

After presenting the formal laws and informal rules that have regulated ruling family interaction and succession, the paper looks at how the transition away from the founders’ generation of royals is unleashing new antagonisms and ambitions.  The three countries that made that transition in the 1990s – the United Arab Emirates, Qatar and Bahrain – experienced significant changes in direction, as young royals sought to leave their marks on the direction of both government and foreign policy.  The two dynastic monarchies that have not yet made this transition are experiencing intensified competition over the leadership of the next generation.  The passage from brothers and cousins in Saudi Arabia and Kuwait to their sons and nephews means a natural culling of ruling lines: a decisive contraction of the ruling elite with stark implications for future material and power prospects.  The resulting rivalries are pushing royal contenders to look beyond family coalitions, to social constituencies and external allies, to buttress their claims to the throne.

The alignment of rival princes with social constituencies can provide an avenue for greater public engagement in monarchies.  But it can also exacerbate social divisions: sectarianism in Bahrain and Kuwait; urban and tribal divisions in Kuwait; and liberal-Islamist divisions in Saudi Arabia.  Royal alignments across the Gulf may also strengthen state ties, such as the close relations between Saudi Arabia and the UAE, and Saudi Arabia and Bahrain, but may backfire if allies are perceived to be choosing sides in a factional battle.  Saudi-Qatari relations suffered in the past, and Saudi-Emirati relations could suffer under a Saudi Arabia led by Mohammed bin Nayef al-Saud, the crown prince.

The danger for ruling families reaching beyond the royal house is magnified in an information environment where leaks, intentional or not, can be shared widely.  Saudi Arabia and Kuwait have seen royal dissidents bring charges against rivals to public light through traditional and social media.  Princes further removed from power – a more common occurrence as royal houses multiply in size – may also be tempted to use publicity to sue for a better position within the ruling family.  All of these actions challenge the projection of royal unity and, if taken too far, can diminish the deference shown by the public to the royal family.

Thus far, royal competition has not led to violent struggles for power or permanent dangerous rifts, suggesting that the traditional model of “band-wagoning” with the winner still holds.  Nonetheless, the struggle for next generation leadership, even if ultimately resolved, may breed instability in the interim.  Kuwait’s parliamentary dysfunction, Bahrain’s failed strategies toward the Shia opposition, Saudi Arabia’s assertive intervention in Yemen and aggressive efforts to reform the kingdom’s economy have at least some roots in factional competition.  Increasingly, both Gulf citizens and Gulf allies may need to adjust their expectations and calculations as competing strategies and sometimes ideologies weaken the notion of a unitary leadership.  (AGSIW 21.03)

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11.5  GCC:  GCC Food & Beverage Market Stays Resilient

The food and beverage (F&B) industry in the GCC region has been flourishing for decades thanks to a significant inflow of tourists, booming young population, large number of expatriate residents, high per capita income, etc.  All of these have contributed to the market’s buoyancy and diversification.  The region’s hospitality industry, which contributes significantly to the F&B market’s growth, is itself anticipated to grow at a compound annual growth rate (CAGR) of 7.6% from around $25.4 billion in 2015 to $36.7b in 2020, while the annual average growth rate of tourist arrivals is expected to reach 7.8% by 2024.

According to a UN forecast of the projected demographics of the region, by 2020 GCC cities will be hosting 85% of the population. Urban populations in the UAE and Qatar are expected to grow the fastest.  A report by Orient Planet Research of the Orient Planet Group, titled “Feeding the Growing Appetite of the GCC F&B Market,” released at the end of last year, forecast that food consumption in the GCC would reach 51.9mn metric tons (MT) by 2019. It is expected to rise at a CAGR of 3.5% between 2014 and 2019.

The per capita food consumption in the region averaged 851.9 kg in 2012 and it is expected to grow at an annual average of 1% to reach 900.1 kg in 2019, with Kuwait recording the highest levels, followed by Saudi Arabia and the UAE, an industry report by UAE’s Al Masah Capital Limited reveals.

Qatar is Outperforming

People in the Gulf like to eat out, F&B advisory firm KPMG research said.  Focusing on the UAE alone, the firm said that as much as 67% of survey respondents dined out every weekend, 44% ate lunch outside or relied on takeaways, 66% of the respondents had brunch outside, at least, once a month, while three out four survey respondents ordered a takeaway or had food delivered to them, at least once a week.  The statistics for the other GCC member states was pretty much the same.

In terms of food consumption, Qatar is expected to grow the fastest between 2016 to 2019, with a CAGR of 5.5%, followed by the UAE.  In its “GCC Food Industry Report 2015,” Alpen Capital forecast that food consumption in Qatar was expected to reach 2.2mn MT in 2019.  Business Monitor International (BMI) forecast that up to 2020 food sales in Qatar would grow at a CAGR of 14.4%, especially through premiumization (the move towards more expensive premium products).

For the F&B companies, this is a logical move, especially in Qatar, where 79.2% households have annual net incomes above $25,000, and consumers have a strong propensity for premium branded, innovative food and drink products.  That is backed by another survey conducted by American Express Middle East, last year, which found that residents in Qatar spent around $4,074 of their monthly income on high-end products and services.

Additionally, mega events, like FIFA World Cup 2022, are expected to boost an already thriving F&B industry in Qatar, as nearly $40b worth of investments will be mobilized to build tourism infrastructure before 2022.  As a result, the hospitality industry in Qatar and the UAE, where the World Expo will take place in 2020, are expected to demonstrate an extremely fast annualized growth of over 10% up to 2020.

Qatar tourism and hotel market overview by Tri Consulting and Hostas hospitality intelligence stated that food and beverage sales generated about 46% of Qatari hospitality industry’s total revenues in 2015, although profits shrank to 42.4% due to lower revenues and higher operating expenses.

The ripple effect of declining hydrocarbon revenues has affected the local F&B industry, with consumers in Qatar becoming more cautious with their money, resulting in a decline in spending.  According to official statistical data, spending in restaurants and hotels was down by 3.2% in August last year compared to August 2015.  Nevertheless, Qatar is the world’s largest exporter of liquefied natural gas, and therefore it is less exposed to the effects of weaker oil prices than other GCC member states, says BMI, adding that the country will continue to outperform the rest of the region in the coming years.

Also, Qatar’s Ministry of Development Planning and Statistics (MDPS) expects that despite lower oil prices, real GDP growth this year will remain healthy at 3.8%, while BMI forecasts that private consumption will expand by 5% in real terms in 2017. BMI, however, warns that the small consumer base will limit Qatari market’s attractiveness for food and drink manufacturers, as well as mass grocery retailers.

Innovation is the Key

The UAE is one of the world’s leading F&B markets.  By lavishing establishments and star chefs, with a huge variety of food and drinks in the market, the UAE, especially Dubai, has found a place on the world map. In the UAE, consumer food services alone reached $14.266mn in 2015, growing at a CAGR of 9.3% since 2010, when they were estimated at $9.13m.

The London-based research Euromonitor International stated that the UAE’s F&B market will be worth $22.3b by 2020 (in 2015 it was measured at $14.2b, placing the UAE among the top 20 countries in the world).  KPMG, on the other hand, in its UAE-focused F&B report “Hungry for more?” emphasizes on innovation as a key factor for success in a highly diverse F&B market.  “The wide array of formats, concepts and cuisines offered in the UAE mirror its varied demographics. We understand the attraction of bringing something completely new to the market,” KPMG’s report stated. The UAE is expected to add more than 1,000 F&B outlets to its portfolio by next year.

Industry experts warn that the UAE’s F&B market growth, poses a threat of oversupply, adding that despite F&B sector resilience, nearly 15% of the outlets will not survive factors like stiff competition, increasing rents, and frequent staff turnover and rising food prices.

Residents of the UAE, where 66.8% of households have a net annual income higher than $25,000, are the third biggest spenders on food and beverages in the world, with food consumption in the UAE projected to reach 10.4m MT in 2019.  For example, as many as 60% of consumers visit a mall just to eat or drink, reported property advisor CBRE, adding that F&B accounted for 20% of the retail mix in Dubai and it is expected to grow to around 25 to 30% by 2020.

Saudi Arabia’s total food service sales are estimated at $8.8b, accounting for nearly half of the GCC market.  Industry reports add that there are 1,200 full-service chain restaurants in the kingdom, which includes casual dining (which is expected to grow 3% annually) and fine dining outlets.  Last year, overall food consumption in Saudi Arabia grew by 7.3% to $59.8b, and it is expected to reach $69.1b in 2018.

The UAE and Saudi Arabia are the largest food consumption centers in the Gulf, whose overall food service market is dominated by Fast Food or Quick Service Restaurants (QSR), which in 2015 had a 58.2% market share valued at $11.7b, according to Al Masah Capital.

The fast food segment is followed by Full Service Restaurant (FSR) with a 31.5% market share ($6.3b), and the Café & Bakery segment with a 10.3% share ($2.1b).  The consultancy is expecting that the GCC food service market will grow annually by 6.8%, reaching $28b in 2020.  (BQ Magazine 02.04)

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11.6  OMAN:  The Omani Succession Envelope, Please

Simon Henderson wrote on 3 April in The Washington Institute that Sultan Qaboos is ailing, and no one knows who will take over his role as the last word on all aspects of Oman’s regional policy.

The name of the next ruler of Oman is written on a piece of paper in a sealed envelope kept in the royal palace in the capital of Muscat.  It sounds like a bizarre Arab variation of an American television game show, but it isn’t.  There is also a second envelope, held in a different royal palace in the southern city of Salalah.  Apparently, it contains the same name, in case the first envelope cannot be found when the ruling incumbent, the ailing 76-year-old Sultan Qaboos bin Said, dies.

At this point, the question of how succession in this Arab Gulf sultanate will unfold becomes more than a little uncertain.  The most common version is that each envelope contains two names, the first and second choices of Sultan Qaboos on who should replace him.  But another version suggests that the Muscat envelope contains one name and the Salalah envelope contains another.  According to the generally accepted wisdom, when Qaboos dies – and he has been suffering from colon cancer since at least 2014 – a council made up of his relatives will meet to choose his successor.  Only if they can’t agree on a choice after three days do the envelopes come into play.  Wags suggest that members of the ruling family will be so concerned about the post-mortem legitimacy bestowed by the late sultan that they will ask to see the envelopes before making their selection.

The Al Bu Saidi dynasty in Oman has ruled for 14 generations.  Surprisingly for such a long-lived dynasty, the succession mechanism is not well-established.  Qaboos himself came to power in 1970 when the British backed a coup against his clinically paranoid father, Sultan Said bin Taimur.  According to the obituary of one of the plotters, when told he had to go, the sultan angrily tried to pull a gun from under his robes, accidentally shooting himself in the leg.  He was flown to London to live in luxury at the Dorchester hotel, where he died two years later.  Sultan Qaboos, briefly married to a cousin in the 1970s, has no heirs.  Hence the envelopes.

Oman has relished a quirky policy independence under Qaboos.  The sultanate is clearly not a major player by virtue of size or wealth, but its ruler has endeavored to make Oman relevant.  Although a member of both the Arab League and the Gulf Cooperation Council, Oman positioned itself as a mediator between Iran and the United States, first brokering hostage releases and then becoming the venue for the initial talks that led to the 2015 nuclear deal.  According to some accounts, it was the peripatetic Omani minister in charge of foreign affairs, Yusuf bin Alawi, who unintentionally tipped off the Israelis that the contacts were occurring, not realizing that Israel wasn’t at that time in the loop.

How much of Oman’s diplomatic straddling is attributable to the character of Qaboos rather than his country’s broader national interests is debatable.  Qaboos and many Omanis are Ibadi Muslims, which puts distance into the relationships with Sunni Arab Gulf states.  However, especially if expatriates are included, the majority of Oman’s population is Sunni. Shiites are a small but commercially successful minority.

This month may have seen the emergence of a front-runner in the race to succeed Qaboos.  On 2 March, it was announced that the sultan’s cousin Asad bin Tariq, whose name is widely assumed to appear in the envelopes, had been appointed deputy prime minister for international relations and cooperation affairs.  Further indication of Asad’s rising stature came when Qaboos sent him as the Omani representative to the Arab League summit in Jordan.  Once commander of the Omani army’s tanks and already the sultan’s “special representative,” Asad’s new position as deputy prime minister has no obvious responsibilities – but it may put him ahead in the succession stakes.

Asad’s rivals are judged to be his half-brothers, Haitham bin Tariq, the heritage and culture minister, and Shihab bin Tariq, a former commander of the Omani navy.  All three men are in their 60s, and it was their sister who was once married to Qaboos.

Reading the mind of Sultan Qaboos is complicated.  When he came to power, there were just three schools and a few miles of paved road in the country.  Now his nation of around 3.3 million people, with modest oil and gas reserves, is widely judged one of the better places to live in the Persian Gulf region.  Provided you don’t want political power, it is good to be an Omani: The country provides strong education and social services and some favored Omanis have become fabulously rich while developing the economy.

Qaboos is no democrat.  Even within the cabinet, he concentrates power in his hands, serving as prime minister, defense minister, foreign minister, finance minister and governor of the central bank.  He decides on every shift in policy.  In his absence – last year he went to Germany for two months of medical treatment and then became a recluse in one of his palaces in Oman for another three months – no decisions of significance are made.

His closest advisors are security and intelligence professionals in the so-called Royal Office, headed by Gen. Sultan bin Mohammed al-Numani.  According to the envelope theory, the general will lead the army council that will rule for three days while the family council works out who is going to be the next leader.

Sultan Qaboos has taken a strategic view of the region and Oman’s role in it and hasn’t neglected his ties with foreign intelligence officials, either.  At one point, he used to send his personal jet to London to collect a retired Middle East director of the British foreign intelligence service, MI6, whose analysis he particularly valued.  When Prince Charles, the British heir apparent, visited Muscat last November, he brought the current head of MI6 to his four-hour meeting with Qaboos.  Washington’s contacts are also good but lack that sort of intimacy.

Yet the sultan’s worldview can appear eccentric and often infuriates Oman’s notional allies in the Gulf and the West.  When homicide bombers attacked the law courts in the Syrian capital of Damascus recently, leaving scores of dead and injured, Muscat sent a message of condolence to the regime of President Bashar al-Assad – a step that many in Washington and other capitals saw as an unnecessary normalization of relations with a despot they would like to see overthrown.  Muscat has also been irritated by the Saudi and Emirati war in Yemen and has provided some diplomatic, and perhaps material, support to Iranian-backed Houthi rebels.  A late arriving member of the anti-Islamic State coalition, Oman is actually much more concerned about the safe havens for al Qaeda in the Arabian Peninsula in parts of southern Yemen.

The sultan was probably hoping for a payoff for enabling the Barack Obama-era U.S. diplomacy with Iran to secure a nuclear deal.  But nothing significant has come from Tehran other than a visit in February from President Hassan Rouhani.  Not even a telephone conversation between President Donald Trump and the sultan has yet to be reported.

There is a sense that Sultan Qaboos judges all his potential successors as much lesser men and is said to fear meddling in the process by outsiders.  He is particularly suspicious of the United Arab Emirates, which, despite its reputation in Washington as being the regional adult, has been accused by Muscat of running spy networks in the Omani military.

If Sultan Qaboos is not impressed by the possible successors within his family, could he perhaps cast a wider net?  He could potentially look to one of the three pillars of Oman’s political infrastructure – the tribal sheikhs, the security establishment, or the business community – for a candidate.  Even if he doesn’t, these groups will seek to exert influence on the family council by backing one of the current contenders or suggesting another person entirely, possibly a next-generation member of the Al Bu Saidi family.  A 2007 U.S. diplomatic cable, released by WikiLeaks, pondered the strengths of Asad’s 37-year-old son, Taimur, describing him as “personable, affable…[and] markedly overweight but apparently vigorous.”

Such a choice would imitate events in Qatar, where the 36-year-old Sheikh Tamim bin Hamad is emir, and Saudi Arabia, where Deputy Crown Prince Mohammed bin Salman, 31, seems likely to be the next king.  Having often regarded his neighboring Arab states with near disdain, it would be suitably ironic if Sultan Qaboos judged their systems worthy of trying at home.

Simon Henderson is the Baker Fellow and director of the Gulf and Energy Policy Program at The Washington Institute, and coauthor of its 2017 Transition Paper “Rebuilding Alliances and Countering Threats in the Gulf.”  (TWI 03.04)

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11.7  EGYPT:  Why Egypt is Moving Forward on Free Trade

Amr Mostafa posted on 22 March in Al-Monitor that experts consider Egypt’s recent actions supporting the Agadir Agreement significant, as Egypt has the largest market among the free-trade agreement’s member countries, which will enjoy greater trade and investment opportunities with the help of Egyptian labor and investment opportunities.

Work is underway to revive the Agadir Agreement on free trade, which has struggled to produce significant results for its members in recent years.  The original pact members — Egypt, Tunisia, Jordan and Morocco — also welcomed Lebanon and the Palestinian Authority to the group in April 2016.  The agreement is designed to expedite trade among the members and improve their connections with European markets. Other Arab League countries also are welcome to join.

Fakhri al-Hazaimeh is executive president of the Agadir Technical Unit (ATU), which is tasked with following up on the agreement’s implementation and providing technical and research support.  Hazaimeh met 5 March in Jordan with an EU delegation to update them on plans for the agreement.  On 8 March, the ATU released a guide for members on anti-dumping measures that also contains reference materials to support the agreement.  On 12 March, the unit released an export and import measures guide for members.

Farag Abdel Fattah, an economics professor at Cairo University who spoke with Al-Monitor, noted the ATU’s flurry of activity came immediately after Egypt finally ratified its accession to the agreement.  Egypt is the largest market among the Agadir member states.

In its 28 February, Egypt’s parliament approved decree No. 555, issued a year ago by President Abdel Fattah al-Sisi to recognize the Agadir authorized economic operator (AEO).  The AEO, which was signed on 4 March 2016, by the trade ministers of the four member countries at that time, designates the free-trade area among the members, sets a list of products traded, and defines the companies and individuals involved.

The Agadir Agreement’s lengthy journey began in 2001 with negotiations in the city of Agadir, Morocco.  When the original members signed the pact in 2004, they took a step toward establishing the Euro-Mediterranean Partnership EUROMED.

The Agadir Agreement’s initial timetable stipulated that as of 1 January 2005, member countries would be fully exempt from customs on industrial goods traded among themselves.  Chief among those goods were cars, provided that components from the member companies made up at least 40% of the cars.  Also, the members agreed to exempt manufactured agricultural and farming products under a program to be devised later to establish a major Arab free-trade zone, whereby the service sector would also be exempt from customs.

The ATU was supposed to study a project to connect member states through a transport network to increase trade. However, that project lost momentum when member countries failed to actually execute the Agadir Agreement until 2007.

Beginning in 2007, the agreement increased Egypt’s exports to member states by 115%, Jordan’s by 86%, Tunisia’s by 19% and Morocco’s by 6%.  However, in 2010 the member states’ trade ministers stopped meeting and implementing agreed-upon projects, and the customs exemption timeline also fell by the wayside.  It still isn’t clear why all the member countries neglected the agreement, although the Arab Spring revolutions in 2011 might have been at least partly responsible.  Now, it’s no surprise Egypt is looking to reactivate the agreement, given the tension between Egypt and some Gulf states, particularly Saudi Arabia since October 2016, according to Abdel Fattah.

“Tension is not the only reason, however, as the economic situation in the Gulf states has been deteriorating due to declining oil prices and the costly war in Yemen, which made the chances of any economic alliance with Egypt weaker.  Consequently, Egypt and many other Arab countries are looking for new regional partners through the Agadir Agreement,” he said.

“The Agadir Agreement has a promising future, and the evidence is that it led to an increase in exports in 2007.  Also, it sets the stage for a free and open market with Europe.  This increases Egyptian exports and attracts European investors to Egypt, as these would want to take advantage of raw material [prices].  Also, such a free-trade zone reduces the price of European imports, which increases citizens’ purchasing power,” Abdel Fattah added.

Not everyone has been a fan of the pact, however. Azzam Mahjoub, a University of Tunis economics professor, pointed out during a 2008 symposium titled “Agadir Agreement: Outcome and Prospects” that he did not expect the Agadir Agreement to have positive results.  He said trade exchange between member states was very weak and did not exceed 3% of their trade with Europe. He also criticized the lack of diversified traded goods.

Also, when member state trade ministers met in Cairo a year ago, Egyptian Trade and Industry Minister Tarek Kabil noted the 2015 trade exchange between Egypt and other Agadir members had amounted to only $500 million.  He pointed out that trade among the states is not commensurate with the level of available resources.

On the other hand, Cairo University economics professor Ahmed Ghoneim told Al-Monitor the Agadir Agreement should not focus solely on increasing trade, but rather serve as a prelude to reciprocity that increases member states’ industrial exports to Europe.  Hisham Ibrahim, another economics professor at Cairo University, told Al-Monitor, “Industrial complementarity will be a prelude to attracting many investments to the region because foreign investors will be able to take advantage of cheap labor in Egypt, with raw materials available at a reasonable price, to establish large factories.  However, Arab regimes must be aware of how important economic complementarity is for the recovery.”

Amr Mostafa is an Egyptian journalist who has worked for several newspapers, including Youm7, and focuses on diplomatic and legal issues.  (Al-Monitor 22.03)

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11.8  EGYPT:  IMF Program to Support Fiscal & External Position; Reform Pace May Slip

On 29 March 2017, Moody’s Investors Service said in a report that while Egypt’s IMF program will support gradual improvements to the country’s fiscal and external position, its social and economic costs risk slowing the pace of fiscal reform momentum.  The report, “Government of Egypt – IMF Program Supports Gradual Fiscal, External Improvements”, is now available on  The research is an update to the markets and does not constitute a rating action.

“The implementation of the IMF program’s targets, including reductions in fiscal deficits and government debt levels, as well as improvements in Egypt’s external liquidity position, will help address Egypt’s key credit challenges,” said Steffen Dyck, a Moody’s Senior Credit Officer and co-author of the report.  “However, ambitious fiscal consolidation targets will be challenging to achieve and could face implementation risks in a scenario of mounting public discontent.”

Moody’s projects that Egypt’s fiscal deficit will decrease to 11.0% of GDP in fiscal year 2017 and 8.5% in 2019, from 12.6% in 2016.  Moody’s forecasts are more conservative than the IMF program projections of 10.0% of GDP in fiscal 2017, reducing to 6.1% in fiscal 2019, driven by Moody’s somewhat lower growth assumptions and potential fiscal slippage, both in the near- and medium-term.

Although Moody’s expects Egypt’s fiscal challenges to remain high, the country’s monetary, fiscal and structural reforms will likely lead to slow but steady improvements for the sovereign credit profile beyond the timeframe of the IMF program.

The liberalization of Egypt’s foreign exchange regime and the depreciation of the Egyptian pound will initially keep the current account deficit high due to the pent-up demand for imports and the lower sensitivity of exports to the exchange rate.  Moody’s anticipates that the current account deficit as a percentage of GDP will increase in the 2017 fiscal year and fall only from 2018 onwards due to the weaker exchange rate.

Nonetheless, higher incoming portfolio and foreign direct investment flows, along with additional external funding from the IMF, multilateral and bilateral partners, will support Egypt’s balance of payments and international reserves position.  (Moody’s 29.03)

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11.9  EGYPT:  Cairo Metro Drowns in Debt and Risks Shutdown

Amira Sayed Ahmed posted on 26 March 2017 in Al-Monitor that the Cairo metro system owes vast sums to electrical, water and maintenance companies, and a recent move to double the price of a ticket to about $0.11 a ride isn’t enough to solve the debt problem.

Hit by a severe cash crunch, the state-run Egyptian Company for Metro Management and Operation failed to pay huge water and electricity bills worth about EGP 300 million ($16.6 million) for the past 18 months.  Compounding the problem is that water and power companies have warned that they will halt their services if these bills are not paid.  Between the hammer of these outstanding debts and the anvil of hefty annual losses, the three-line metro network is struggling to curb its budget deficit.

Metro spokesman Ahmed Abdel Hadi said the company owes EGP260 million in electricity bills and EGP40 million in water bills.  He said the utilities have warned that they will undertake legal procedures against the metro company if the bills are not paid.  The metro company also owes money to maintenance, cleaning, security and spare parts companies.  Abdel Hadi said ThyssenKrupp, a leading German industrial group in charge of maintaining the metro stations’ elevators and escalators, has refused to renew its contract with the metro company until it receives payment.  He said some elevators and escalators might become nonoperational under these circumstances.  He noted the metro is also plagued by continued losses due to the vast difference between what a ticket costs the customer and what each trip actually costs the company.

The issue of increasing metro ticket prices has sparked a heated debate in recent years.  The metro ticket is subsidized by nearly 96% and until this month, its price had not changed since 2002, despite the pound’s major decline against the US dollar.  The transportation minister in 2014, Hani Dahi, said the metro company’s annual loss was EGP 180 million; since that time, the pound has lost half its value against the dollar. Recent Transportation Ministry statistics show the metro’s annual loss is around EGP250 million.

The transportation minister in 2016, Galal el-Saeed, said ticket prices should be raised to ensure the continuation of this vital service.  Prime Minister Sherif Ismail also said last year that the price of metro tickets is too low to cover operational costs.  On 23 March, the Cabinet approved doubling the ticket price. Transportation Minister Hisham Arafat said the ticket price will increase to EGP 2 (about $0.11) to help offset the metro’s annual losses.

Some economic experts said increasing ticket prices is not a magic wand that will solve the problem, pointing out that bad management is another key reason for the miserable economic situation of the Cairo metro.  Economic expert Rashad Abdo told Al-Monitor, “Administrative failure is one of the main reasons the Cairo metro company is in the doldrums.  The whole administrative system should be updated.  The company should rely on [outside] experts to reach creative and sound solutions.  Merely talking about increasing prices whenever faced by any economic hurdle is an indicator of bad management and a lack of future vision.”

Abdo said halting metro service is not an option, as it would paralyze the whole country.  He said increasing ticket prices is just a partial solution.  “This issue mainly stems from the socialist economic approach adopted by former President Gamal Abdel Nasser [in office from 1956-1970].  Socialism gives the social aspect a top priority at the expense of the economic one.  Therefore, many public services are heavily subsidized by the state.  But this does not mean that such subsidies should be completely lifted to cope with economic challenges. There should be detailed studies about the country’s and citizens’ economic conditions to reach a compromise,” Abdo noted.

Metro tickets are subsidized in many countries worldwide, the expert said, and the subsidy percentage often can be amended without severely harming citizens’ pockets.  The Cairo metro went into operation in 1987 and was the first of its kind in Africa and the Arab world.  The metro has a daily ridership of more than 3.5 million. The fourth line is scheduled to be inaugurated by 2019-20.  The lack of financial resources is considered the main obstacle hampering the progress of the metro system.  Adding to its debt problems, the metro company reportedly got a loan of EGP10 million from the Egyptian Railway Authority to pay workers’ salaries.

Trying to find a way out of this predicament, member of parliament Mohamed Fouad submitted a parliamentary motion calling on the transportation minister to immediately provide the company with EGP 30 million as a temporary solution to ensure the normal operation of the metro system.

Saad Teima, the head of parliament’s Transportation Committee, told Al-Monitor that the panel is planning to hold an urgent session with the transport minister to discuss possible solutions.  “We will also meet with many officials at the metro company and the railway authority to listen to their problems.  These sessions will help the committee determine the root causes of these accumulated debts,” Teima said.

Amira Sayed Ahmed is a Cairo-based freelance journalist and full-time editor of local news at The Egyptian Gazette, Cairo’s oldest English-language daily.  She has been involved in writing about political, social, and cultural issues in Egypt since 2013.  (Al-Monitor 28.03)

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11.10  TUNISIA: Bond Bolsters Tunisia Liquidity as IMF Delay Shows Risks

Fitch Ratings said on 10 March that the postponed disbursement following an IMF program review highlights reform implementation challenges faced by Tunisia’s government.  Near term financing risks have been mitigated by the €850 million bond market issuance in February, further reform delays could increase uncertainty around Tunisia’s financing outlook.

A disbursement under Tunisia’s May 2016 IMF program, equivalent to around $320 million, was due following a program review in November.  But the Tunisian authorities have confirmed that the payment was postponed because of delays in a number of areas, including civil service and tax reform.  Political opposition in 2016 resulted in the withdrawal of a freeze on public sector wages in the proposed 2017 budget.  We now expect the wage bill to be near 15% of GDP by year-end.

The Tunisian authorities have since committed to a voluntary redundancy scheme for civil servants, which the government hopes will remove at least 10,000 employees from the public payroll by 2020.  The government is also considering share sales, including in the state-owned banks.  A successful review following the IMF’s next visit, expected by the government by the end of March, would result in a disbursement before end-H1/17.

We project a deficit of around 6% for this year, following a 2016 general government deficit we estimate at 6.4% of GDP.  We think Tunisia needs to borrow the equivalent of 7% of GDP in foreign currency to meet its 2017 budget and amortization needs.  Domestically, we estimate Tunisia will borrow the equivalent of 2.8% of GDP.

The €850 million market issuance last month eases foreign financing needs in the short term.  The seven-year Eurobond was priced to yield 5.75%, and represented Tunisia’s first standalone market issuance in over two years.  We estimate that net proceeds of €842 million would cover around 60% of 2017 foreign-currency principal amortization and interest payments.  This estimate assumes a loan extension from Qatar on $500 million due in April, in line with an agreement with the Qatari authorities.

Tunisia is mainly relying on multilateral funding to cover the remaining financing gap, including from the IMF (around $640 million), World Bank (around $500 million), African Development Bank (around $300 million), and European Union (€500 million). Fitch expects multilateral lenders to remain committed to Tunisia’s ongoing transition.  But as the IMF delay shows, financing risks related to disbursement delays (due to non-compliance) cannot be ruled out.  This would leave Tunisia reliant on less predictable or more expensive market financing.

Fitch downgraded Tunisia to ‘B+’ from ‘BB-‘ in February due to weaker economic growth performance and prospects in the context of heightened security risks, and the spill-overs to external and public finances. Improvements to the country’s security apparatus could contribute to a normalization of economic conditions.  GDP grew by 1.2% in 2016, with Fitch projecting an acceleration to around 2.5% over the next two years, reflecting higher private consumption and a projected pick-up in investments that will be aided by the adoption of a new investment law in September 2016, and the positive momentum generated in last year’s “Tunisia 2020” conference.  (Fitch 10.03)

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11.11  CYPRUS:  IMF Staff Completes Mission for the First Post-Program Monitoring to Cyprus

An International Monetary Fund (IMF) mission visited Nicosia during 27 – 31 March 2017, for the first post-program monitoring (PPM) discussions since Cyprus exited the Extended Arrangement under the Extended Fund Facility.  PPM is part of the IMF’s regular monitoring of countries with significant outstanding IMF credit, with a focus on capacity to repay the Fund.  The IMF mission coordinated with the post-program surveillance activities 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 exiting the IMF program one year ago, Cyprus’s economic recovery has gathered momentum, banks’ liquidity positions have improved, the restructuring of nonperforming loans (NPLs) has accelerated and the fiscal primary surplus has increased.  These developments served to strengthen Cyprus’s repayment capacity.  Nonetheless, continued very high levels of private sector indebtedness, nonperforming loans and general government debt remain vulnerabilities.  Decisive progress on repairing private balance sheets, while upholding fiscal prudence and completing pending structural reforms are essential to build resilience, reduce the risk of adverse shocks to balance sheets and raise potential growth.

“Over the medium term, growth is expected to remain brisk, although moderating gradually from the rapid pace of last year.  For 2017, GDP growth is forecast at around 2.5% on continued support from foreign demand and external financing.  Thereafter, growth is expected to ease marginally as repayment of private sector debt picks up, stabilizing at just above 2% from 2020.  Under these conditions, capacity to repay the Fund is expected to be satisfactory, supported by sizable fiscal primary surpluses, the back-loaded maturity profile of official debt and possible further operations to smooth redemptions of market-based debt.  However, repayment capacity would be weakened in the event of a new boom-bust growth cycle, if fiscal discipline is eroded or if risks in banks’ balance sheets materialize.

“A decisive upfront reduction in public and private debt is needed to rebuild policy buffers, cement confidence in macroeconomic fundamentals and policy commitments, deliver balanced, sustainable growth, and support balance sheet repair.  This requires effort in three main areas:

  1. Accelerating NPL Workouts & Reducing Excessive Debt Burdens: Restructuring has gained momentum over the past year, but NPLs remain very high and a portion of previously restructured loans tend to re-default.  High NPLs also weaken banks’ profits.  Restructuring progress across banks has been uneven, reflecting differences in the structure of their loan portfolios, the intensity with which various legal and other tools have been used, as well as in banks’ capacities to manage NPLs.  Banks should be further encouraged not to defer restructuring in the expectation that future increases in output and property prices would autonomously improve recovery rates.  Instead, they should focus on durable and sustainable loan work-outs, including through solutions that reduce a borrower’s debt to affordable levels.  Operational barriers to NPL resolution, such as regulatory incentives encouraging banks to delay recognition of losses or disposal of collateral, remaining impediments in the legal framework and capacity constraints in the courts, should be addressed. It is important that newly-issued bank lending, which is providing welcome support to the economy, is underpinned by robust lending policies, strong business plans from borrowers and close monitoring of credit risk.
  1. Frontloading Public Debt Reduction: Accelerating public debt reduction would help to create a prudent buffer and safeguard the downward trajectory of debt in the event of adverse shocks.  Recent fiscal outturns have been buoyed by cyclical developments, despite a sizable weakening of the underlying structural position since 2015.  Targeting a primary surplus of 3% of GDP (on a cash basis) for the next several years while saving any over-performance and directing additional resources to growth-enhancing investment would accelerate debt reduction and bolster potential output without materially lowering GDP growth.  Guarding against fiscal slippages, including from the envisaged national health service as well as from wage and social benefit spending, will also be essential.  Restarting the privatization program would also contribute to lowering public debt.  Completing pending reforms in the areas of revenue administration and public financial management, and adopting the package of civil service reform bills would also help safeguard public finances over the medium term.


Reinvigorating Structural Reforms:  Progress with macro-critical reforms has largely stalled. Advancing the reform agenda would increase capacity to cope with external shocks and create sustainable employment opportunities by improving the business environment.  Focus should be on expediting judicial reform to strengthen legal enforcement of commercial claims and speed up court procedures, restarting the privatization program to increase economic efficiency and competition, and streamlining business procedures to attract new service sectors.  (IMF 03.04)

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