Fortnightly, 5 September 2018

Fortnightly, 5 September 2018

September 6, 2018


5 September 2018
25 Elul 5778
25 Dhul Hijjah 1439




1.1  Israel to Invest More than $123 Million in Research Universities
1.2  State of Israel Officially Worth NIS 17.6 Trillion


2.1  BIRD-F to Invest $2 Million in New Projects for First Responders
2.2  PepsiCo to Purchase SodaStream for $3.2 Billion
2.3  Pitchbook Names OurCrowd Most Active Venture Investor in Israel
2.4  Indegy Raises $18 Million to Accelerate Go-to-Market for its Industrial Cyber Security Portfolio
2.5  Sichuan Airlines Begins Tel Aviv – Chengdu Flights in September
2.6  Manikay Partners & Others Assume Control of the Tel Aviv Stock Exchange
2.7  Spotinst Raises $35 Million and Continues to be a Market Leader
2.8  Pagaya Raises $14 Million in Series B Funding
2.9  Tokyo Opens Israeli Startup Accelerator
2.10  prooV Named a Global Leader in Cloud Computing
2.11  Sky Invests $4 Million in Israeli VC Fund Remagine


3.1  Egypt’s Sisi at Signing of $18 Billion in Contracts with Chinese Companies


4.1  GAM Installs Solar-Powered USB Phone-Charging Bus Stops in Amman
4.2  Cairo Reportedly the Most Polluted City on Earth
4.3  Greek Island Will Be Mediterranean’s First to Run on Renewable Energy


5.1  Average Lebanese Inflation Rose by an Annual 6.23% by July 2018
5.2  Jordanian Unemployment Slightly Up, But Drops Among Women

♦♦Arabian Gulf

5.3  Kuwait Said to Begin Work on 111 Kilometer Railway Project
5.4  UAE Online Spending Forecast to Reach $9.8 Billion by End of 2018
5.5  First Emirati-Built Satellite to Launch into Space on 29 October

♦♦North Africa

5.6  Egypt & Ethiopia Agree to Overcome Obstacles During Grand Renaissance Dam Negotiations
5.7  Egypt Considers Putting Limits to the Budget Deficit & Borrowing
5.8  Egypt’s Non-Oil Private Sector Grows for the Second Month in a Row
5.9  Egypt – EU Trade Reaches $13.4 Billion Over First 6 Months of 2018
5.10  Morocco’s Year-to-Date Budget Deficit is More Than MAD 20 Billion
5.11  Rising Imports Bring Morocco’s Trade Deficit up 8% Year-to-Date
5.12  World Bank Agrees to Help Morocco Reduce Debt to 60% GDP


6.1  Turkey’s Foreign Trade Deficit Narrows 58% in August
6.2  Turkey Hikes Gas, Power Prices By Up To 14% As Lira Crisis Deepens
6.3  Turkey Could Start Drilling in Eastern Mediterranean this Fall
6.4  Turkish Automotive Sales Contracted 53% in August
6.5  Greece’s Supreme Court Repeals Wine Tax



7.1  Rosh Hashanah – the Jewish New Year
7.2  Fast of Gedaliya Marked on 12 September
7.3  Yom Kippur – Holiest Day in the Jewish Calendar – Falls on 18/19 September
7.4  Israel’s Muslim Community Grows By 2.5%, Marries Younger
7.5  Record Number of Ultra-Orthodox Schoolchildren to Study Core Curriculum
7.6  Technion & Hebrew University Ranked Among the World’s 100 Leading Universities


7.7  Two Million Jordanian Students Head to Classrooms for Coming School Year
7.8  Islamic New Year Holiday Announced for UAE Public Sector
7.9  UAE Students Start New Academic Year
7.10  Egypt to See New Educational System in September


8.1  FSD Pharma and SciCann Therapeutics Launch Clinical Research Program in Israel
8.2  NRGene to Offer the First Broad Soy Diversity & Haplotype Database
8.3  Alpha Tau in Final Stages of Raising Investment of Several Tens of Millions of Dollars
8.4  BlueWind Announces Positive Results of Implantable Tibial Nerve Neuromodulator
8.5  STERO Biotechs Secures Patent of CBD as Steroid Sparing Treatment
8.6  NovellusDx and Primetech Sign an Exclusive Dealer Agreement in Japan
8.7  Body Vision Medical Announces $8.5 Million in Funding
8.8  STK REGEV ‘Hybrid’ Fungicide, Now Registered in Argentina
8.9  NRGene and RCK to Develop DNA Tests for Medical Cannabis


9.1  CyberArk Launches SAP Certified Privileged Access Security Solution
9.2  Foresight Secures Additional Sale of QuadSight Prototype
9.3  Miami Dade College & Cyberbit Announce Opening of New Cyber Range Training Facility
9.4  mPrest Releases Underground Residential Distribution (URD) Cable Fleet Maintenance Optimization App
9.5  WhiteSource Integrates Its Open Source Security Solution With Fortify Software Security Center
9.6  Gazprom Space Systems & Gilat to Provide Broadband Connectivity Across Russia
9.7  Texas Advanced Computing Center Selects Mellanox HDR 200G InfiniBand
9.8  StePac Leads In Responsible Supply Chain Technology with Innovative Packaging
9.9  Minute Launches First Real-Time AI Video Analysis Platform for Live Streams Broadcasts
9.10  IAI – DOK-ING Collaboration on Robotic System NBC Agents Without Risking Human Lives
9.11  ColorChip to Showcase 100G-400G PAM4 Optical Transceivers for the 5G Network
9.12  Fieldbit and InfinityAR to Develop Software for Augmented Reality Smart Glasses
9.13  My Size Partners With FIT to Provide Innovative Measurement Solutions for Students


10.1  Israeli Startups Raised Nearly $300 Million in August
10.2  Israel Ranks 5th Worldwide in Per Capita Patents
10.3  Record Ben Gurion Airport Passenger Traffic Noted


11.1  LEBANON: Lebanon ‘B-/B’ Ratings Affirmed; Outlook Stable
11.2  IRAQ: Iraq Ratings Affirmed At ‘B-/B’; Outlook Stable
11.3  EGYPT: Moody’s Changes Outlook on Egypt’s Rating to Positive, Affirms B3 Rating
11.4  TUNISIA: IMF Reaches Staff Level Agreement on the Fourth Review
11.5  TURKEY: Moody’s Downgrades Turkey’s Ratings to Ba3 and Assigns Negative Outlook
11.6  TURKEY: Fitch Ratings Says Turkey Faces Lower Growth, Lengthy Forced Adjustment
11.7  GREECE: IMF Executive Board Concludes 2018 Article IV Consultation with Greece
11.8  GREECE: Moody’s Changed Greek Banking Outlook to Positive on Improving Asset Risk


1.1  Israel to Invest More than $123 Million in Research Universities

The Israeli Council for Higher Education announced it had approved an investment of $123 million to fortify research programs in Israeli universities.  The money will be invested over a five-year period, $24.7 million each year.  The planned investment is 83% larger than the resources allocated as part of the previous five-year plan, which was based on an annual investment of $13.4 million.  As part of the new plan, benefiting institutes will be required to match 25%-50% of the investment. 90% of the funds, some $110 million will be used for lab equipment.  (Various 18.08)

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1.2  State of Israel Officially Worth NIS 17.6 Trillion

The State of Israel is officially worth more than 17 trillion shekels or NIS 17,638,763,277,054 to be precise, Finance Minister Moshe Kahlon announced on 14 August as he opened trading on the Tel Aviv Stock Exchange (TASE).  To mark Israel’s 70th anniversary of independence earlier this year, the TASE conducted an initial estimate of the valuation the State of Israel would achieve if it were floated on the exchange.  The valuation, using the methodology employed by the World Bank in a recent a survey of the valuations of 140 countries, found that Israel would be worth NIS 16 trillion – Israel was not included in the original World Bank survey.  The valuation was then revised upward based on a questionnaire to the general public examining measuring human capital in the country.  (Various 14.08)

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2.1  BIRD-F to Invest $2 Million in New Projects for First Responders

On 31 July, the Board of Governors of the Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation announced the award of funding to two homeland security projects, selected by U.S. Department of Homeland Security (DHS) Science and Technology Directorate (S&T) and the Israeli Ministry of Public Security (MOPS), between U.S. and Israeli companies to advance technologies for first responders.  In addition to the grants from BIRD, the projects will access private sector funding, boosting the total value of the two projects to approximately $4.5 million.

Projects submitted for consideration are reviewed by representatives of the U.S. Department of Homeland Security, the Israel Innovation Authority and experts from the Israel Ministry of Public Security.  The projects approved include:

-ELTA Systems (Ashdod, Israel), a group and subsidiary of Israel Aircraft Industries, and TLC Solutions (St. Augustine, FL) will develop an advanced drone mounted search and rescue system for locating victims under ruins and in disaster areas by accurate location of their cellular phones.

-HiRiseTech (Petah Tikva, Israel) and Allstate Sprinkler Corp. (Bronx, NY) will develop a first responders emergency radio repeater system for existing high-rise buildings.

The BIRD Foundation promotes collaboration between U.S. and Israeli companies in various technological fields for the purpose of joint product development.  The program funds technology collaborations between U.S. and Israeli partners that have significant commercial potential to meet the most pressing requirements of first responders. This joint research effort supports the development of Next Generation First Responder (NGFR) technology capabilities that will increase the safety and efficiency of all first responders (law enforcement, firefighters and emergency medical services).  (BIRD 31.07)

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2.2  PepsiCo to Purchase SodaStream for $3.2 Billion

PepsiCo and SodaStream International announced that they have entered into an agreement under which PepsiCo has agreed to acquire all outstanding shares of SodaStream for $144 per share in cash, which represents a 32% premium to the 30-day volume weighted average price.  PepsiCo’s strong distribution capabilities, global reach, R&D, design and marketing expertise, combined with SodaStream’s differentiated and unique product range will position SodaStream for further expansion and breakthrough innovation.

Under the terms of the agreement between PepsiCo and SodaStream, PepsiCo has agreed to acquire all of the outstanding shares of SodaStream International for $144 per share, in a transaction valued at $3.2 billion.  The transaction will be funded with PepsiCo’s cash on hand.  The acquisition has been unanimously approved by the Boards of Directors of both companies.  The transaction is subject to a SodaStream shareholder vote, certain regulatory approvals and other customary conditions and closing is expected by January 2019.  Goldman Sachs acted as financial advisor to PepsiCo in this transaction.

Airport City’s SodaStream is the #1 sparkling water brand in volume in the world and the leading manufacturer and distributor of Sparkling Water Makers.  It enables consumers to easily transform ordinary tap water into sparkling water and flavored sparkling water in seconds.  By making ordinary water fun and exciting to drink, SodaStream helps consumers drink more water.  Sparkling Water Makers offer a highly differentiated and innovative solution to consumers of bottled and canned carbonated soft drinks. Their products promote health and wellness, are environmentally friendly, cost effective, customizable and fun to use.  (PepsiCo 20.08)

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2.3  Pitchbook Names OurCrowd Most Active Venture Investor in Israel

OurCrowd, a leading global equity crowdfunding platform has been named the most active venture capital investor in Israel in a ranking published by Seattle-based market research company PitchBook Data.  PitchBook examined the number of deals in Israel in which each venture capital firm took part in since the beginning of 2016. OurCrowd took part in over 30 deals during that period.

Other Israeli venture funds on the PitchBook list, many of which OurCrowd has invested alongside in include Magma Venture Partners, Pitango Venture Capital, and Vertex Ventures Israel, who all shared second place with 17 investments each.  Next on the list were Jerusalem Venture Partners and San Francisco-based angel group Keiretsu Forum with 16 deals, Maniv Mobility Fund, in which OurCrowd partnered as a significant LP, life sciences-focused fund Pontifax, and Tel Aviv-based crowdfunding platform iAngels with 14 deals, Menlo Park-headquartered Bessemer Venture Partners, Israel-based StageOne Ventures and Tel Aviv-based Aleph Venture Capital with 13 deals. New York-headquartered venture capital firm OrbiMed Advisors LLC closed the list with 12 investments.

So far in 2018, Israeli startups have raised approximately $1.4 Billion Dollars in nearly 200 deals, which amount to about 68% of the total capital raised last year, according to PitchBook data.  Among the largest investments made in Israel since the beginning of the year are Landa Digital Printing’s $300 million deal and Trax Image Recognition’s $125 million deal, both announced in June, and eToro Group Ltd.’s $100 million announced in March.  (OurCrowd 06.08)

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2.4  Indegy Raises $18 Million to Accelerate Go-to-Market for its Industrial Cyber Security Portfolio

Indegy has closed an $18 million Series B round of financing led by Liberty Technology Venture Capital, a subsidiary of Liberty Media with participation from international energy and services firm Centrica plc, O.G. Tech Ventures and existing investors Shlomo Kramer, Magma Venture Partners, Vertex Ventures and Aspect Ventures.  The funds will be used to accelerate growth and expand global go-to-market initiatives for the Indegy industrial cybersecurity suite which helps protect systems used in manufacturing, energy, water, pharmaceuticals, and other critical infrastructures from cyber-attacks.  In conjunction with the financing, Indegy also announced the appointment of two new executives to its management team.

Tel Aviv’s Indegy, a leader in industrial cyber security, protects industrial control system (ICS) networks from cyber threats, malicious insiders and human error by providing visibility and control.  The Indegy Industrial Cyber Security Suite arms security and operations teams with full visibility into ICS activity and threats by combining hybrid, policy-based monitoring and network anomaly detection with unique device integrity checks.  The Indegy ICS Suite is deployed by manufacturing, pharmaceutical, energy, water and other industrial organizations around the world.  (Indegy 28.08)

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2.5  Sichuan Airlines Begins Tel Aviv – Chengdu Flights in September

 Sichuan Airlines is inaugurating a direct line between Tel Aviv and Chengdu, the capital of Sichuan Province in China, on 26 September.  The airline, which will run two flights weekly, is making an interesting offer, whereby passengers can continue on a connecting flight from Chengdu to Beijing, Shanghai or Guangzhou at no extra cost.  Ticket prices will start at $600 for tourist class and $1,400 for business class.  The company is represented in Israel by TAL Aviation.

The flights will use Airbus 330A airliners and later Airbus A350s.  Some of the company’s planes are colorfully designed, including decoration with the company’s panda bear logo.  The flight time will be eight hours and 20 minutes.  Flights will take off from Tel Aviv at 3:25 PM and land in Chengdu at 6:00 AM on the following day.  The return flight from Chengdu will take off at 2:15 AM and land in Tel Aviv at 7:35 AM on the same day.  The flights will have 277 tourist class seats and 24 business class seats.

There will now be three airlines operating direct flights between Tel Aviv and China: El Al Israel Airlines, Hainan Airlines and now Sichuan Airlines.  Sichuan Airlines, founded in 1986, has a network of flights with over 270 Chinese and international destinations.  The company’s fleet contains 130 airplanes, and it plans to add 50 more by the end of 2020.  (Sichuan Airlines 28.08)

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2.6  Manikay Partners & Others Assume Control of the Tel Aviv Stock Exchange

In a deal closed on 28 August, the newly privatized Tel Aviv Stock Exchange (TASE) sold nearly 20% of the exchange to investment fund Manikay Partners and another 19% to four other foreign investors.  The sale, announced in April, puts a value of $151 million on Israel’s stock exchange, which has struggled with declining trading volumes.  The securities regulator said the deal would enable TASE to become a public company with a more diversified control of ownership and greater transparency of operations.

Specifically under the deal, Manikay will acquire 19.99% of the exchange while 18.8% will be sold to Sunsuper PTY, Moelis Australia Asset Management, Dalton Investments and Novo Nordisk Foundation.  These four will hold 4.69% each.  The Israel Security Authority said a trustee had been appointed for 32.9% of TASE’s shares, of which 31.7% will be sold through an initial public offering that is expected in 2019.  Current TASE members — local and foreign banks — will keep 22.3% of the bourse’s ownership.

TASE, with 456 traded companies at a market value of $201 billion, demutualized last September and became a for-profit bourse and offered to buy out its shareholders.  The Tel Aviv bourse aims to become competitive, cheaper and more efficient after around 200 de-listings over the past decade and a trading volume slump.  In 2017, stock trading averaged $400 million a day, up slightly from 2016 on a rise in IPOs.  Volume remained steady at an average of $407 million a day in the first half of 2018, according to TASE.

Manikay, a U.S. hedge fund with operations in London and Sydney, has been involved in a number of exchange-related transactions, including with the New York Stock Exchange, Chicago Board of Trade and the Sydney Future Exchange.  The TASE Clearing House, the MAOF Clearing House and the TASE Nominee Company are fully owned by the TASE.  (Various 27.08)

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2.7  Spotinst Raises $35 Million and Continues to be a Market Leader

Spotinst announced its $35 million raise as part of a Series-B funding round led by Highland.  All existing investors including Intel Capital, Vertex Ventures, and Leaders Fund have participated, to support their AI based cloud workload management platform.  Spotinst has raised approximately $52 million since its launch.  Founded in 2015, Spotinst helps businesses to manage their compute infrastructure across different cloud providers, while also achieving savings of 80% on average on regular cloud computing costs.

Tel Aviv’s Spotinst allows companies to reliably run their mission-critical applications with a significant cost reduction (60-80% less).  Spotinst provides high availability in the Amazon Spot Market, Microsoft low priority VMs, Google Preemptible VMs and Packet Bare.  Spotinst is a SaaS optimization platform that delivers significant cost reduction while maintaining high availability and performance. Spotinst is a virtual cloud agnostic layer that functions as a multi-cloud enabler.  They intelligently facilitate the balance between different infrastructure purchase options and offer line of smart infrastructure products that bring the public cloud experience to any hardware or facility.  (Spotinst 28.08)

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2.8  Pagaya Raises $14 Million in Series B Funding

Pagaya announced a $14 million Series B funding round co-led by Oak HC/FT (a premier venture capital fund) and Harvey Golub, former Chairman and CEO of American Express.  A diverse group of world-class investors participated in the round, including GF Investments, Siam Commercial Bank, Clal Insurance and Pagaya’s seed investor, Viola Ventures.  Pagaya has successfully opened new investment markets for sophisticated institutional investors with its AI-based asset management.  This funding fuels Pagaya’s scalable, tech-driven approach to asset management and will help further the development of its proprietary algorithm to enter new data-rich asset classes.  Pagaya will also use the funding to grow its 20-person-strong investment team of high-caliber data scientists and AI specialists, build a global sales force and launch new investment strategies in the coming year.

With its technology, Pagaya manages institutional money by investing in market opportunities previously inaccessible to the asset management industry.  The company has a diverse client base that spans banks, insurance companies, pension funds, asset managers and high net worth investors.  Pagaya’s algorithm analyzes millions of data points to assess risk in different financial instruments, identify emerging alternative asset classes and generate an excess return in those sectors (such as the multitrillion-dollar consumer credit lending market) for institutional investors.

Founded in 2016, Tel Aviv’s Pagaya is a financial technology company reshaping the asset management space using machine learning and big data analytics to manage institutional money.  With a focus on fixed income and alternative credit, Pagaya offers a variety of discretionary funds to institutional investors, including pension funds, insurance companies and banks.  Pagaya’s unique technology platform, Pagaya Pulse, runs on a suite of artificial intelligence technologies and state-of-the-art algorithms to consistently deliver a high and scalable performance edge.  (Pagaya 30.08)

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2.9  Tokyo Opens Israeli Startup Accelerator

Economic cooperation between Japan and Israel is being stepped up as the Japanese External Trade Organization (JETRO), a Japanese governmental agency, is opening a business center and accelerator program for Israeli startups.  The center will support Israeli startups and mediate business cooperation between Japanese and Israeli companies.  The JETRO center is focusing on support for Israeli companies in the founding stages and the expansion of their business to Japan.

The JETRO program is designed for Israeli startups interested in finding fruitful ground for cooperation with Japanese companies.  The center’s personnel will assist with information about the Japanese market and in finding suitable companies for cooperation.  In cases in which such a company is found, the center is likely to obtain support in establishing a presence for the Israeli company in Japan.  The program will be operated by Jakore, which represents Japanese investors and companies, while also supporting Israeli startups in the Japanese market.  (Globes 29.08)

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2.10  prooV Named a Global Leader in Cloud Computing

prooV has been named a 2018 Stratus Award winner by the Business Intelligence Group in their annual business award program.  The organization sought to identify the companies, products and people that are offering unique solutions that take advantage of cloud technologies.  prooV facilitates and streamlines the proof-of-concept (PoC) process for startups and enterprises, allowing them to configure, connect, and compare PoCs through remote and secure testing environments in the cloud.  prooV compresses the often tedious and time-consuming practice of finding, testing and evaluating new solutions into mere weeks.  With hundreds of startup technologies on its platform, in areas such as artificial intelligence, big data, cybersecurity and Internet of Things, prooV provides enterprises with a comprehensive view into the ideal technologies and related benchmarks to meet their business goals.

Herzliya Pituah’s prooV is the first PoC-as-a-Service platform that brings together global enterprises and startups/independent software vendors to discover, connect, execute and evaluate Proof-of-Concepts (PoCs) through remote, secure and data-rich testing environments.  Founded by serial entrepreneurs who recognized the inefficiencies in the modern PoC process, prooV offers a radical new approach to testing, tracking and analyzing vendor solutions, accelerating the journey from RFP to PoC.  (prooV 29.08)

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2.11  Sky Invests $4 Million in Israeli VC Fund Remagine

London based TV company Sky plc announced a $4 million commitment to Israeli venture capital fund Remagine Ventures, a newly launched fund based in Tel Aviv.  The venture capital fund will focus on technology startups within tech, entertainment, data and commerce.  Sky said that partnering with Remagine will give it more access into Israel’s dynamic and fast growing technology companies, which includes a strong pool of talent in computer vision and machine learning.  Sky invests in companies to accelerate innovation, identify growth and achieve cost efficiencies through the adoption of new operating models.

Tel Aviv’s Remagine Ventures is a venture capital fund focused on technology investments at the intersection of entertainment, commerce & data, and is backed by some of the leading corporates in the media industry.  The fund invests in early-stage startups, helps them refine product-market fit and accelerates time-to-market.  Remagine Ventures covers the full spectrum of opportunity within the Israeli market – from nascent technologies to later-stage opportunities to facilitating commercial relationships between startups and its investors.  (Sky 02.09)

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3.1  Egypt’s Sisi at Signing of $18 Billion in Contracts with Chinese Companies

Egyptian President Abdel-Fattah El-Sisi was in Beijing on 2 September at the signing of a number of contracts with Chinese companies to implement development projects in Egypt with an investment worth of $18.3 billion.  The contracts signed include the construction of the world’s biggest power plants in Al-Hamrawein region on Egypt’s Red Sea coast, which will be powered by clean coal technology, and with a production capacity of 6000 MW.  The contracts include stage two of central operations in the new Administrative Capital, the construction of a petrochemical refinery plant in the Suez Canal zone, and a pumping and storage plant in Ataqa Mountain.  They also include the construction of Shaodong Roi textile complex, and a Tai Chan plant for gypsum panels.

President El-Sisi is on a three-day official visit to China, heading a top level official delegation to attend The Forum on China–Africa Cooperation FOCAC 2018, which was held in Beijing on 3 September.  Earlier on 2 September, the Egyptian President held a meeting with the CEO’s of major Chinese companies working in Egypt.  Sis also told students at the Chinese Communist Party Academy that Egypt highly commends China for its success in construction and development, calling for the use of China’s expertise to achieve desired development in Egypt.  (Ahram Online 02.09)

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4.1  GAM Installs Solar-Powered USB Phone-Charging Bus Stops in Amman

The Greater Amman Municipality (GAM) announced on 27 August the conclusion of the pilot phase of the solar-powered USB phone-charging bus stop project, coined in Arabic as “The Green Umbrellas” project.  The pilot entails fitting four bus stops in the Zahran area in Amman with solar panels to power lighting and USB ports for commuters to charge their phones, GAM Mayor Shawarbeh said, adding that the project will expand to cover wider parts of the capital.  The project, according to Shawarbeh, is also part of a wider development effort known as the “Smart City” agenda, which aims to enhance the quality of the services facilitated to residents of the capital.  The off-grid phone charging bus stops were developed by the King Abdullah II Fund for Development in cooperation with the Inspirational Development Group (IDG).

IDG is a UK-based company that promotes conscious business and local development initiatives.  Since 2009, IDG has been running summer courses for private and state school students through its Youth Leadership Development Program as well as training platforms for senior civil servants.  In 2015, IDG declared its intentions to go launch a full-fledged service operation in Jordan.  The group also operates regionally out of Dubai and Oman, among other places, and has been operating internationally out of their headquarters in London.  (JT 28.08)

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4.2  Cairo Reportedly the Most Polluted City on Earth

Cairo ranked as the most polluted city on earth, according to a recent study by Eco Experts.  The study classified world cities based on various types of obstruction, including air, light and noise pollution.  According to the study, Cairo is the most toxic city, scoring in the bottom three for air, light and noise pollution, followed by Delhi, Beijing, Moscow, Istanbul, Guangzhou, Shanghai, Buenos Aires, Paris and Los Angeles.  Zurich is the cleanest city in the world.

Egypt faces the black clouds annually following the harvesting rice season, in summer months.  The black cloud is a result of burning huge amounts of rice straw in the cultivated land in the Nile Delta.  Egypt’s Ministry of Environment also warned in a recent report that the percentage of air pollution has increased in Egypt over permitted limits, reaching 81% particularly from 2014 to 2017.

According to the WHO’s report, air pollution was responsible for the death of over 43,000 people in Egypt in 2012.  A recent report from the United Nations Environment program in December, pointed out that rates of respiratory disease have increased, adding to the burden on the state’s already-ailing hospitals.  Citing the World Bank, the report indicates that the Egyptian economy is taking a pummeling, with poor air quality knocking off at least 1% of the GDP annually.  (DNE 02.09)

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4.3  Greek Island Will Be Mediterranean’s First to Run on Renewable Energy

A tiny Greek island is set to become the Mediterranean’s first to be powered by 100% sustainable solutions.  At Tilos, technicians are finishing a summer project that will soon allow the isle to run exclusively off renewable energy.  Scheduled to take effect later this year, the new system will power the entire island using high-tech batteries recharged with wind and solar power.  During winter months only around 400 people live on the island, but during summer that number climbs to an upwards of 3,000, causing issues for its limited power supply.  Tilos depends on other nearby islands for energy, which it gets from an underwater cable running from Kos and Nisiros.

The current system has been especially troublesome for summer tourism — Tilos’ main revenue source — as businesses regularly deal with long blackouts.  Without electricity, hotel tenants must endure scorching temperatures without air conditioning, while restaurants have to discard spoiled food from warm refrigerators.  Such blackouts have long forced Tilos’ businesses to use diesel generators, but now a massive 800-kilowatt wind turbine and a solar park will serve as consistent sources of energy for island residents.

Project TILOS — Technology Innovation for the Local Scale Optimum Integration of Battery Energy Storage — was mostly paid for by the European Union, which covered €11 million of the €13.7 million cost.  Dozens of small islands across the EU continue struggling with limited power connections to the mainland, and the European Commission said it will use the Greek island’s new model as an example to replicate.  (03.09 Pappas Post)

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5.1  Average Lebanese Inflation Rose by an Annual 6.23% by July 2018

According to the Central Administration of Statistics (CAS), Lebanon’s average inflation rate rose by 6.23% by July 2018 compared to the same period last year.   The average costs of Housing and utilities (water, electricity, gas and other fuels) constituting a combined 28.4% of the Consumer Price Index or CPI, rose by 6.59% year-on-year (y-o-y) by July 2018.  In details, Owner-occupied rental costs, which grasped 13.6% of this category, rose by 4.07% y-o-y.  As for the average prices of Water, electricity, gas, and other fuels (11.8% of the Housing & utilities component), they increased by an annual 9.76% by July 2018. In turn, the average prices for Food and non-alcoholic beverages (constituting 20% of the CPI), Transportation (comprising 13.1% of the CPI), and Education costs (6.6% of CPI) registered yearly upticks of 4.68%, 8.39%, and 4.06% by July 2018.  (CAS 24.08)

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5.2  Jordanian Unemployment Slightly Up, But Drops Among Women

The unemployment rate during the Q2/18 was 18.7%, according to the Department of Statistics (DoS) quarterly report on the unemployment rate in the Hashemite Kingdom.  The figure entails a slight rise from the same period last year.  The report pointed out that the unemployment rate for females during Q2/18 was 26.8%, constituting a decline of 7.1% compared with Q2/17.  The progress was attributed to the programs implemented by the Ministry of Labour in cooperation with partners through intensive employment projects, especially in the productive sectors, in addition to increasing the integration of women in the local labor market, improving the work environment and increasing the number of nurseries in public and private sector institutions.

Labour Minister Murad said that the labor force survey, in its new approach, included a sample of about 16,000 families distributed across all the governorates of the Kingdom, representing urban and rural segments.  The labor force survey is conducted in the middle of each quarter and provides data that reflects the reality of the entire quarter (April, May, June), where the respondent is asked whether he or she has had a job during the four weeks prior to the interview, according to the international recommendations adopted by Jordan, the minister added.  He explained that the slight rise in the rate is linked to seasonal unemployment, as a result of changes in the labor market during the time span of the field survey, such as the change of economic activities and the entry of new graduates into the local market.  (JT 04.09)

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►►Arabian Gulf

5.3  Kuwait Said to Begin Work on 111 Kilometer Railway Project

Work has reportedly started on a 111 km. railway project to connect Kuwait with the rest of the Gulf region.  The first phase of the project will create a new line to Nuwaiseb on the Saudi border and a 153 km line linking Kuwait City with Boubyan Port.  Phase one will cost an estimated $3 billion.  The 2,100 km passenger and cargo network stretching through all six Gulf states from Kuwait to Oman has faced technical and bureaucratic obstacles, and stalled as state budgets tightened because of low oil prices.  Bahrain has said it would not connect its network to a neighboring state, Saudi Arabia, until at least 2023.  (AB 27.08)

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5.4  UAE Online Spending Forecast to Reach $9.8 Billion by End of 2018

Overall online spending continues to grow in the UAE and is forecast to reach AED36 billion ($9.8 billion) by the end of 2018, according to a joint report issued by PayPal and Ipsos.  The Fourth Annual Cross-border Commerce report, which tracks online domestic and cross-border shopping habits of approximately 34,000 consumers in 31 countries, also revealed that 81% of adults in UAE shopped online in the past 12 months, up from 68% in 2016.  According to the report, the increase in online spending is also forecast to continue, with almost half of online adults surveyed in the UAE stating they will increase their online spending in the next 12 months.

The report also revealed that cross-border online shopping is on the rise in the UAE with 61% of UAE online shoppers saying that they shopped online from websites in another country in the past 12 months – a growth of 33% from the previous year.  In fact, 12% of online shoppers surveyed stated that they only shop online in stores and marketplaces located outside the UAE.  Cross-border shopping has grown by an estimated AED1.6 billion since 2016, accounting for an estimated AED12.5 billion of all online spend in 2017.

With high rates of mobile penetration in the UAE, online shoppers are increasingly opting to make purchases on their mobile devices.  Mobile spend is forecast to grow 26% between 2018 and 2019 to reach close to AED20 billion, with momentum expected to continue into 2020 with a further 25% growth.  The report said clothing, footwear and apparel was the most common cross-border purchase category in the UAE in the past 12 months, followed by cosmetics and beauty products.  (AB 01.09)

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5.5  First Emirati-Built Satellite to Launch into Space on 29 October

KhalifaSat, the first satellite fully built in the UAE by a team of Emirati engineers, will be launched into orbit on 29 October.  Dubai Crown Prince Sheikh Hamdan said that the satellite will be launched from the Tanigashima Space Centre in Japan.  Dr Mohamed Nasser Al Ahbabi, director-general of the UAE Space Agency, said last month that once the launch has taken place, the UAE will have 10 multi-purpose satellites, raising the UAE investment in the space sector to AED22 billion.  (WAM 29.08)

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►►North Africa

5.6  Egypt & Ethiopia Agree to Overcome Obstacles During Grand Renaissance Dam Negotiations

Egypt and Ethiopia have agreed during fresh talks in Addis Ababa to overcome obstacles in negotiations over a disputed dam project Addis Ababa is building on the Nile River, which Cairo fears will diminish its water supplies.  Egyptian Foreign Minister Shoukry and the country’s intelligence chief Kamel met with Ethiopia’s Prime Minister Ahmed in the Ethiopian capital on 28 August, where they delivered a message from Egyptian President El-Sisi to bolster bilateral relations and to push ahead with the decisions made by the leaders of the two nations on the Grand Renaissance Dam, Ethiopia’s $4 billion hydroelectric project.

During the talks, the officials discussed efforts to implement a 2015 agreement signed by Egypt, Ethiopia and Sudan over Nile water rights and addressed decisions made by the ministers of the three countries during talks in May, which broke months of deadlock.  These decisions include setting up a scientific study group to consult the nations on the process of filling the reservoir of the 6,000-megawatt dam and that the leaders of the three nations will meet every six months for consultations.  The two sides also stressed they aim to take steps to set up a proposed fund to invest in development projects in the three African nations and agreed to boost trade exchange and Egyptian investment in Addis Ababa.  The two leaders are expected to meet in September on the sidelines of a China-Africa cooperation forum in Beijing.  (Ahram Online 28.08)

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5.7  Egypt Considers Putting Limits to the Budget Deficit & Borrowing

Egypt is targeting a budget deficit of 8.4% of GDP for the 2018-19 fiscal year that ends in June, compared with 9.8% in the previous year, Finance Minister Maait told a news conference on 4 September.  Egypt aims to reach an average interest rate on government debt instruments in the current 2018-2019 budget of about 14.7% compared with 18.5% in the 2017-2018 fiscal year.

On 3 September, Egypt cancelled three and seven-year treasury bond sales, an auction that had a total value of EGP 3.5 billion ($196 million), saying that the interest rates required were “not within the logical limits.”   The economy has been battered by years of turmoil that began after mass protests in 2011 which forced President Mubarak to step down.  But the country has shown signs of recovery in recent months amid tough reforms including cuts to energy subsidies implemented by the government of President Abdel Fattah al-Sisi as part of a $12 billion International Monetary Fund loan agreement.  Speaking on the sidelines of the Euromoney conference in Cairo, Maait said that the government had not set a date for the issuance of Euro bonds, or even the size of the expected offering.  (Reuters 04.09)

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5.8  Egypt’s Non-Oil Private Sector Grows for the Second Month in a Row

Egypt’s non-oil private sector business activity grew for a second straight month in August, driven partly by new orders, a new survey showed.  The Emirates NBD Egypt Purchasing Manager’s Index (PMI) for the private sector excluding the oil industry rose to 50.5 from 50.3 in July.  A reading below 50 indicates a contraction; above, an expansion. Egypt’s PMI has rarely risen above 50 in the last three years.  The survey reported a rise in new orders, linked to strong demand from domestic and foreign markets.

The non-oil private sector was “beginning to see the protracted recovery we had projected would take hold in the new fiscal year,” it said.  The economy has been struggling to recover since a 2011 uprising that scared away tourists and investors, two big sources of foreign currency.  Egypt has enacted tough IMF-backed austerity measures aimed at increasing foreign investment and reviving its economy, including devaluing the Egyptian pound in November 2016.  (Reuters 04.09)

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5.9  Egypt – EU Trade Reaches $13.4 Billion Over First 6 Months of 2018

Bilateral trade between Egypt and the European Union recorded $13.4 billion during the first six months of 2018, the Egyptian trade and industry minister Nassar stated.  European investments in the Egyptian markets have reached $15.1 billion.  The UK leads European investors in Egypt, with total investments of $5.3 billion, followed by Netherlands, Italy and France with investments amounting to $2.5 billion, $1.48 billion and $1.3 billion, respectively, Nassar announced.

By May 2017, EU financial assistance to Egypt amounted to over €1.3 billion in grants, with 45% of the figure targeting economic and social development, according to the European Commission.  Last July, Egyptian Foreign Minister Shoukry participated in the seventh EU-Egypt Association Council, which was held for the first time since April 2010.  The meeting discussed enhancing the partnership between Egypt and Europe in accordance with the association agreement signed between both parties, which details the cooperation priorities between Egypt and the EU for the coming three years.  The association agreement includes the facilitation of trade between the two markets through the establishment of a free trade area.  (Ahram Online 27.08)

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5.10  Morocco’s Year-to-Date Budget Deficit is More Than MAD 20 Billion

Morocco’s treasury faced a budget deficit of MAD 20.2 billion in the first seven months of 2018.  The treasury’s spending and income created a larger deficit than the same period last year, when it was MAD 18.2 billion, the General Treasury of the Kingdom (TGR) reported in its July 2018 bulletin of statistics of public finances.  The deficit reflected a negative balance of MAD 15.9 billion generated by the special treasury accounts (CST) and autonomously managed state institutions (SEGMA).  The bulletin also showed that the government’s regular revenue for the period stood at MAD 158.9 billion, up from MAD 133.7 billion at the end of July 2017, an increase of 18.8%.  The increase takes into account an exceptional payment of MAD 24 billion from a special trust account named “Special Account for GCC Countries Donations.”  Apart from the special payment, regular revenue rose by 0.9%, caused by the increase in non-tax revenues by 202%, customs duties by 12.8%, and indirect taxes by 5.5%.  The increase was tempered by a drop in direct taxes by 2.2% and registration and stamp duties by 1.8%.

General spending decreased by 4.7% to MAD 180.9 billion in the first seven months of 2018, due to a 27% decrease in the budgeted debt burden, combined with an increase in operating costs by 2.9% and investment expenditures by 3.1%, according to TGR’s bulletin.  Spending commitments, including those not subject to prior approvals of spending approval like investments, amounted to MAD 307.5 billion in the period.  The decrease of the budgeted debt burden is due to a 42.9% decline in principal repayments (MAD 17.7 billion instead of  MAD 31 billion) and a 0.9% increase in debt interest (MAD 17.8 billion against MAD 17.7 billion), according to the same report.

Earlier this month, research group Fitch Solutions predicted Morocco’s budget deficit would decrease over the next 10 years.  The group’s 2 August report stated, “Morocco’s current account deficit will narrow gradually over the coming decade thanks to strong exports of manufactured goods and tourism services.”  At the same time, the kingdom has recently proposed measures that would increase its spending commitments.  On 20 August, a ministerial council attended by King Mohammed VI approved a draft bill to conscript young Moroccans for a year of military service.  If enacted, the bill could reduce the country’s tax base as young Moroccans leave the workforce for 12 months and would incur the cost of making payments at the completion of the year.  (MWN 28.08)

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5.11  Rising Imports Bring Morocco’s Trade Deficit up 8% Year-to-Date

According to the Directorate of Studies and Financial Forecasting (DEPF) within the Ministry of Finance, the trade deficit growth is due to rises in both exports and imports, up by 11.2% and 9.8%, respectively.  Exported goods totaled MAD 160 billion, a good performance of all sectors.

Morocco’s leading export sector, the automotive industry, achieved an export turnover of MAD 38.5 billion, up by 16.9%.  The automotive sector was followed by agriculture and agri-food exports, up by 5% to 34.5 billion.  Phosphates and derivatives exports increased by 15.1% to MAD 29.2 billion.  Aeronautics exports rose by 19.8% to MAD 7.1 billion, while the electronic sector saw a 4.7% rise to MAD 5.6 billion.  Textile and leather exports also saw an increase of 4.1% to MAD 22.9 billion.  Export of pharmaceutical products increased by 7.9% to MAD 765 million.

In the first seven months of 2018, Morocco imported goods worth MAD 278.3 billion, up by 9.8% over the same period in 2017.  Capital goods led the list of Morocco’s imports with an increase of 12.1% to MAD 68.7 billion.  The increase is primarily due to Morocco’s buying of aircraft and other air vehicles or space parts (MAD 1.5 billion), and diodes, transistors and photosensitive devices (MAD 914 million).

Imports of semi-finished products increased by 4.4% to MAD 58.8 billion.  Imports of copper wires, and bars, increased by 33.5%.  Purchases of energy increased by 16.8% to MAD 45.6 billion, due to the particular increase in purchases of gas oils and fuel oils, up by 17.8% to MAD 22.6 billion.  Purchases of food experienced a 7.5% rise to MAD 28.6 billion, covering an increase in the purchases of oilcake, corn and spices to MAD 727 million, MAD 412 million and MAD 361 million, respectively.  (MWN 31.08)

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5.12  World Bank Agrees to Help Morocco Reduce Debt to 60% GDP

Morocco has signed an agreement with the World Bank to engage youth in business, create employment and reduce the debt to GDP ratio.  The new partnership agreement, set to take effect January 2019, aims to address Morocco’s health, socio-economic and unemployment challenges.  The World Bank has pledged to give Morocco a helping hand through a five-year plan to achieve improvements that will boost Morocco’s economy.  The World Bank has completed its role in achieving the aimed results on solar power, sanitation, roads, social inclusion, and employment through its strategic relation with Morocco during the past few years.  The new agreement intends to focus on both creating value and positioning the kingdom at the forefront on the international scene.

The new partnership framework aims to reduce Morocco’s public debt to 60% of Gross Domestic Product (GDP) from its current level at 82% (MAD 871.5 billion).  Morocco’s unemployment rate is currently 10.5%, and the firm forecasted higher unemployment in the years to come.  The continued unemployment is attributed to the government’s halting hiring for government jobs in a bid to reduce the public debt.

In the health sector, Morocco’s current goal is to expand health coverage to cover not only low-income people but to cover 90% of the population by 2020.  The government is set to present a new development model, under King Mohammed VI’s high instructions, to strongly enhance, among others, health and employment opportunities.  (MWN 01.09)

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6.1  Turkey’s Foreign Trade Deficit Narrows 58% in August

Turkey’s foreign trade deficit in August fell 58% on a yearly basis, according to the trade ministry’s preliminary data on 1 September.  Trade Minister Pekcan said in a statement that the trade deficit of $2.48 billion last month was the lowest monthly figure in the last nine years.  In the same month, exports coverage ratio to imports reached 83.3%, the highest level over the past nine years.  Turkish exports amounted to $12.4 billion in August, with a yearly fall of 6.5%, while the country’s imports declined by 22.4% to $14.8 billion.  The nine-day holiday for Eid al-Adha last month played a role in the 6.5% decrease in exports due to the loss of four working days.  (AA 02.09)

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6.2  Turkey Hikes Gas, Power Prices By Up To 14% As Lira Crisis Deepens

Turkey raised natural gas prices on 1 September by as much as 14%, while the energy regulator announced a similar increase in electricity costs as a deepening currency crisis stokes inflation.  The lira has fallen 42% against the dollar this year, hit by concerns about President Erdogan’s grip on monetary policy and a worsening rift with the United States over a detained American Christian pastor.  The sell-off has increased the cost of food and petrol and raised fears about the impact on the country’s wider economy and banks.  Economists are particularly worried about the central bank’s inability to rein in inflation, which hit a 14-year high of nearly 16% in July.

Retail prices in Istanbul, Turkey’s biggest city, surged 2.23% month-on-month in August, for a year-on-year increase of 14.99%.  The latest hikes in electricity and gas prices will directly increase inflation by 35 basis points, according to Reuters calculations.

Erdogan, self-described “enemy of interest rates”, wants to see lower borrowing costs to keep credit flowing, particularly to the construction sector.  Investors, who see the economy heading for a hard landing, say decisive interest rate hikes are needed to put the brakes on inflation.  Erdogan, who has appointed his son-in-law Berat Albayrak as finance minister, casts the lira’s slide as an economic attack on Turkey by Western governments, financiers and ratings agencies.  He says high interest rates cause inflation — a stance at odds with orthodox economics.  (Reuters 01.09)

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6.3  Turkey Could Start Drilling in Eastern Mediterranean this Fall

Turkish Foreign Minister Çavuşoğlu said on 3 September that Turkey could start drilling in the Eastern Mediterranean this fall, as the country has already purchased a platform.  Çavuşoğlu said the Turkish Republic of Northern Cyprus (TRNC) has territorial waters and a continental shelf, which Turkey would take all measures to protect.  The foreign minister also mentioned that Turkey had previously prevented the start of some drilling works in the Eastern Mediterranean.  Çavuşoğlu added that he will also meet his Greek counterpart Nikos Kotzias in the Turkish province of Izmir and discuss the Cyprus issue.  He said if the Greek Cypriot side continues taking unilateral steps, Turkey will start drilling activities.

Turkey has repeatedly warned the Greek Cypriot administration about its unilateral hydrocarbon-related research in the Eastern Mediterranean, saying Turkish Cypriots also have a right to the resources around the area.  Cyprus has been divided since 1974, when a Greek Cypriot coup was followed by violence against the island’s Turks and Ankara’s intervention as a guarantor power.  After two years of negotiations, the most recent attempt to reunify the long-divided Mediterranean island ended in failure in 2017.  (AA 04.09)

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6.4  Turkish Automotive Sales Contracted 53% in August

Turkey’s passenger car and light commercial vehicle sales fell 53% from a year earlier to 34,346 vehicles in August, the Automotive Distributors Association (ODD) announced.  In a monthly sector statement, the association said that the market lagged by 43.7% behind the last decade monthly average, which is composed of 60,951 units.   While 26,976 passenger cars were sold in August by a 50.9% yearly decline, a total of 7,370 light commercial vehicles were sold by a 58.2% decrease compared to the same month of 2017.  In the January – August period, sales decreased 21% year-on-year to 440,428 vehicles, the association added, with an average 18.5% contraction in the passenger car market.  The shrinkage in the light commercial vehicle market was 28% in the first eight months of the year compared to the same period of 2017, according to ODD figures.  In the January-August period, 114 electric cars and 2,858 hybrid cars were sold across Turkey.  Turkey exports almost eight of 10 vehicles which are manufactured in the country.  (AA 04.09)

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6.5  Greece’s Supreme Court Repeals Wine Tax

Greece’s top administrative court cancelled a widely contested excise tax on wine introduced by the government in 2016, the Greek Wine Federation (GWF) announced.  The tax had been challenged at the Council of State by the Greek Wine Federation, the National Interprofessional Organization of Vine and Wine of Greece (EDOAO), and other wine associations at the start of 2016.  The special consumption tax had been in place since January 2016 and sees €0.15 added to the cost of a 750 ml bottle of wine or €0.20 euros to a 1 liter bottle.  The move was welcomed by the country’s wine industry.  The court’s ruling, which has not been made public yet, means the tax will be automatically cancelled and no decision has to be issued by the finance ministry.  (eKathimerini 04.09)

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7.1  Rosh Hashanah – the Jewish New Year

Rosh Hashanah, commonly known as the Jewish New Year, is celebrated on the first and second days of the Hebrew month of Tishrei.  This year that date falls on the afternoon of 9 September and continues until the evening of 11 September.  In Hebrew, Rosh Hashanah literally means “first of the year.”  The name Rosh Hashanah is not used in the Bible to discuss this holiday.  The Bible refers to the holiday as Yom Ha-Zikaron (the day of remembrance) or Yom Truah (the day of the sounding of the shofar).  The holiday is instituted in Leviticus 23:24 – 25.  The shofar is a ram’s horn; the sounding of the shofar in the synagogue is one of the most important observances of this holiday.  The Bible gives no specific reason for this practice, though one that has been suggested is that the shofar’s sound is a call to repentance.  No work is permitted on Rosh Hashanah.  Much of the day is spent in synagogue, where the regular daily liturgy is somewhat expanded.  In fact, there is a special prayer book called the machzor used for Rosh Hashanah and Yom Kippur because of the extensive liturgical changes for these holidays.  Religious services for the holiday focus on the concept of G-d’s sovereignty.  One popular observance during this holiday is eating apples dipped in honey, reflecting the wish for a sweet new year.

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7.2  Fast of Gedaliya Marked on 12 September

The Fast of Gedaliya (or Tzom Gedaliya, falling on 3 Tishrei), follows Rosh Hashanah.  This year it is observed on 12 September.  It marks the assassination of Gedaliya ben Achikam and the exile of the small Jewish community that remained in Israel after the Destruction.  When Nebuchadnezzar King of Babylonia, destroyed the Temple in Jerusalem in 586 BCE and exiled the Jewish people to Babylonia, he allowed an impoverished remnant to remain in the land and appointed Gedaliah Ben Achikam as their Governor.  Many Jews who had fled to Moab, Ammon, Edom, and other neighboring lands returned to the land of Judea, tended the vineyards given to them by the king of Babylonia and enjoyed a new respite after their earlier oppression.  However, political machinations led Yishmael Ben Netaniah, to assassinate Gedaliah.  Yishmael murdered Gedaliah, together with most of the Jews who had joined him and numbers of Babylonians whom the Babylonian King had left with Gedaliah.  The remaining Jews feared the vengeance of the Babylonian King and fled to Egypt.  The surviving remnant of Jews was thus dispersed and the land remained desolate, until the Jewish polity was re-established in some 70 years’ time.  The fast is observed from daybreak until the stars appear in the evening.

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7.3  Yom Kippur – Holiest Day in the Jewish Calendar – Falls on 18/19 September

On the evening of 18 September and until after sunset on 19 September, Israel and world Jewry will observe Yom Kippur, or the Day of Atonement.  The holiest day on the Jewish calendar, falling on the tenth of Tishri, it is a day marked by fasting, prayer and penitence for one’s sins against their fellow man and G-d.  Yom Kippur atones only for sins between man and G-d, not for sins against another person.  To atone for sins against another person, you must first seek reconciliation with that person, righting the wrongs you committed against them if possible.  That must all be done before Yom Kippur.

Yom Kippur is a complete Sabbath; no work can be performed on that day.  It is a complete, 25-hour fast beginning before sunset on the evening before Yom Kippur and ending after nightfall on the day of Yom Kippur.  The Talmud also specifies additional restrictions that are less well-known: washing and bathing, anointing one’s body (with cosmetics, deodorants, etc.), wearing leather shoes and engaging in sexual relations are all prohibited on Yom Kippur.  As always, any of these restrictions can be lifted where a threat to life or health is involved.  In fact, children under the age of nine and women in childbirth (from the time labor begins until three days after birth) are not permitted to fast, even if they want to.  It is customary to wear white on the holiday, which symbolizes purity and calls to mind the promise that our sins shall be made as white as snow.  The day long fast is widely observed even among Israel’s secular public and most of the country’s Jewish population attend all or part of the day’s synagogue services.  The fast is concluded with a shofar blast and rejoicing.

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7.4  Israel’s Muslim Community Grows By 2.5%, Marries Younger

As of late 2017, the Muslim population in Israel stood at 1.562 million, representing 17.8% of the country’s general population.  It was also an increase of 38,000 people in relation to the previous year, according to new census figures published by the Central Bureau of Statistics to mark the Muslim holiday Eid al-Adha (the Festival of Sacrifice).  Similar to the previous three years, the Muslim population in Israel grew at an annual rate of 2.5% in 2017.  While Muslim population growth has waned over the past two decades, it is still the fastest growing population sector in Israel.  For the sake of comparison, the Jewish population grew by 1.7% in 2017; the Christian population grew by 2.2% and the Druze population saw 1.4% growth.

About half of Israel’s Muslim population resides in the country’s north; 35.6% in the northern district and 13.8% in the Haifa district. Meanwhile, 21.8% of the country’s Muslims live in the Jerusalem district, 16.6% in the southern district and 11% in the central district – of whom 1.1% reside in the Tel Aviv district.  Among cities, the greatest concentration of Muslims is in Jerusalem (329,000 people), which is home to 21% of all Muslims in Israel, who comprise 36.5% of the city’s general population.  The Muslim population is also relatively young – 34.4% (534,000 people) is under 14 years of age. Only 4% of the Muslim population (63,000 people) is over 65 years old.

Additionally, for the first time since the early 2000s, fertility rates (the average number of babies a woman is expected to have in her lifetime) among Muslim women in Israel rose to 3.37 babies.  This increase followed a steady decline in fertility rates, from 4.74 babies in 2000 to 3.29 in 2016.  Muslim men were also getting married sooner than their counterparts from other sectors of the population.  In 2016, the average age for Muslim men marrying for the first time was 26.5 years old – compared to 27.8 among Jews, 30.1 among Christians and 28.6 among Druze.  Following that trend, Muslim women marrying for the first time were on average 22.5 years old, while Jewish women were 25.9, Christian women were 26.2 and Druze women were 24.5.  (CBS 21.08)

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7.5  Record Number of Ultra-Orthodox Schoolchildren to Study Core Curriculum

A record number of first- to eighth-grade schoolchildren from the ultra-Orthodox (Haredi) sector will be starting the 2018-2019 school year at institutions that teach core curriculum subjects in addition to Torah study.  The number of pupils in Haredi public schools for this year stands at approximately 6,000.

In 2014, the Education Ministry established a track for Haredi public education, which in addition to intensive religious studies will include instruction in math, English, science, languages and history.  Haredi public schools will be obligated to devote the same minimum number of hours to each core subject as secular or modern Orthodox public schools do.  Education Ministry policies and programs, adjusted to meet the needs of the highly observant sector, will apply to all Haredi public schools, which will also be subject to close ministry oversight to ensure that instructional criteria are met.

In 2014, the first year that Haredi public education was made available, only 1,322 pupils were registered in these public schools.  That number rose to 5,652 in the 2017-2018 school year.  Despite the dramatic uptick in the number of Haredi families seeking core curriculum education for their children, they still comprise a small minority of the Haredi population as a whole.  Some 235,000 ultra-Orthodox children currently attend Haredi institutions whose curricula do not include or devote less time to core subjects than Education Ministry regulations stipulate.  (Various 01.09)

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7.6  Technion & Hebrew University Ranked Among the World’s 100 Leading Universities

After a year of decline, Israeli universities made a strong comeback in 2018 as both the Technion – Israel Institute of Technology and Hebrew University of Jerusalem made the list of leading 100 universities in the world.  The Academic Ranking of World Universities was released by the Shanghai Ranking Consultancy firm.  The Technion climbed the Shanghai rankings to 77th place after placing 93rd in 2017.  The Hebrew University ranked in 95th place – a significant improvement to 2017 when it finished in the 100-150 range.

Since 2003, when the Shanghai index was launched, Hebrew University had ranked in the top 100 every year until 2017.  The Weizmann Institute of Science ranked in the 100-150 range, similar to last year, while Tel Aviv University was in the 151-200 grouping of leading universities.  Ben Gurion University of the Negev and Bar-Ilan University ranked in the 401-500 grouping.  Among the criteria the Shanghai index takes into account are the number of Nobel Prize and other prestigious award winners, and the number of publications in top-tier journals.  (Israel Hayom 17.08)

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7.7  Two Million Jordanian Students Head to Classrooms for Coming School Year

On 2 September, two million Jordanian students headed to schools across the Hashemite Kingdom, including 200,000 first grade pupils, marking the start of the new scholastic year 2018/19.  The Education Ministry had stepped up preparations for the new academic year despite the many challenges, notably the “large and natural rise” in the numbers of students and overcrowded classrooms, noting that over 130,000 Syrian refugee students are enrolled in the Kingdom’s schools.  These usually put huge pressure on the Ministry of Education at the beginning of each academic year, prompting the ministry to run the two-shift system in some of the schools and charter more schools.  Some 16 new schools have been built and 202 classrooms added in existing schools this year and will be ready to receive students for the new academic year.  (AMMONNEWS 01.09)

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7.8  Islamic New Year Holiday Announced for UAE Public Sector

The UAE has announced that Thursday, 13 September will be observed as a holiday for the public sector for the Islamic New Year.  Government workers will return to work on Sunday, 16 September.  No announcement has yet been made regarding the UAE’s private sector.

The new year commemorates the arrival of the Prophet Mohammed in Medina after he fled from Mecca.  Known as the Hijra, the migration from Makkah to Madinah marked the beginning of the Islamic era in 622.  (Various 03.09)

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7.9  UAE Students Start New Academic Year

About 1.1 million students returned to school on 2 September at 616 public schools across the UAE, amid extensive preparations by the Ministry of Education to launch a trouble-free academic year.  Hussain bin Ibrahim Al Hammadi, Minister of Education, confirmed that the ministry has completed all preparations to create an “attractive, encouraging learning environment”.  The ministry, in cooperation with the Ministry of Infrastructure Development, has implemented a comprehensive plan for the maintenance of 23 schools and replacement of four old schools.  Nearly 35 schools, under 15 years old, have also seen architectural, electrical, mechanical and health improvements.  The ministry has also conducted a week of technical training for 26,000 teachers before the launch of the new academic year.  (AB 02.09)

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7.10  Egypt to See New Educational System in September

Egyptian Minister of Education Shawky said that Egypt will see a new educational system on 22 September 2018 as promised by the ministry.  According to Shawky, the new system will be applied on nearly 2.5 million students starting from 22 September.  By 2030, Egypt will be seeing the graduation of a completely different generation of students.  He added that about 128,000 teachers are being trained to adjust to the new system, noting that the change will not be limited to only the form of the book or the curricula, but also the content of the educational system, relying mainly on active learning.

Regarding using the tablet, secondary level students will be using it and about 1,800 schools will be connected to the private networks for tablet operation in collaboration with the Ministry of Communications to prepare for using it with the start of the new school year.  He added that about 65 companies are working in this project.  He also added that the tablets were imported and are already on their way to Egypt. They would be handed over starting from 1 September 2018.

Shawky pointed out that once Egypt announced its new educational system, its rank improved in the education quality index, moving from position number 137 to 100.  The change in ranks is the result of the mere vision and idea.  He noted that there is a cooperation protocol between the bank and the ministry in the field of sponsoring excellent students, noting that the bank plays a significant role in this regard.  (DNE 29.08)

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8.1  FSD Pharma and SciCann Therapeutics Launch Clinical Research Program in Israel

Toronto, Ontario’s FSD Pharma announced the launch of a clinical research collaborative program in Israel, via its strategic R&D partner, SciCann Therapeutics.  This comprehensive clinical research program will be executed through SciCann’s strategic alliance and collaboration agreement with Mor Research Applications (Mor) – the technology transfer office and commercial arm of Clalit Healthcare Services, Israel’s largest medical insurer and healthcare provider, which operates a network of 14 full scale hospitals throughout Israel, employs over 9,000 physicians and serves the healthcare needs of over 50% of Israel’s population.  As announced previously, FSD Pharma has secured the exclusive licensing rights for the manufacturing and distribution of SciCann’s line of proprietary, patent-pending, cannabinoid-based and indication-specific products in Canada.

Under the strategic alliance agreement with Mor, FSD Pharma and SciCann will execute a series of rigorous, randomized, placebo-controlled clinical studies to demonstrate the safety and efficacy of these products, in order to bring to market advanced and innovative cannabinoid-based products that are backed up by solid clinical data achieved through the highest standards of rigorous and objective clinical research typical for the development process of pharmaceutical products.

SciCann Therapeutics is a Canadian-Israeli specialty pharmaceutical company, dedicated to the development and commercialization of novel and disruptive pharmaceutical products that target and modulate the endocannabinoid system.  SciCann Therapeutics is active in the fields of oncology, pain management, neurodegenerative diseases and inflammatory disorders, and develops a line of proprietary products for the treatment of chosen life-threatening conditions that present a high level of unmet need.  (FSD Pharma 16.08)

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8.2  NRGene to Offer the First Broad Soy Diversity & Haplotype Database

NRGene has constructed a comprehensive soy genome diversity-haplotype database based on results from GenoMAGIC, allowing commercial and academic researchers never-before-available insights into the genomic diversity within the soybean crop.  The database contains de novo assemblies and all-to-all comparison of 34 varieties of soybean, a set of breeding germplasm covering the full range of maturity groups.  This database is a fundamental resource for basic research, genetic resource management, and breeding of elite soy varieties.  Scientists studying gene function can now analyze every experiment in the broader view of dozens of genomes rather than a single reference genome, as it is often done today.  Breeders can now more accurately relate genetic diversity with field performance, thereby accelerating the breeding of more nutritious and hardier varieties that need fewer resources and less land to deliver higher yields.

NRGene, together with commercial partners, has chosen 31 lines relevant to global soy breeding.  Using DeNovoMAGIC, NRGene assembled those 31 soy lines, which were then processed by GenoMAGIC to construct the first-ever comprehensive diversity and haplotype database of commercial soybeans.  Using this integrated database of sequence information, NRGene has identified an unprecedented number of sequence variants across multiple genomes including structural variants, such as insertions and deletions as well as single and multiple nucleotide polymorphisms.  All variants are dynamically positioned across all reference genomes.  This is made possible through the GenoMAGIC system, which also allows for accurate and high-density sequence imputation from low density genotyping.

Ness Ziona’s NRGene is a genomic, big data company delivering cutting-edge software and algorithms to their clients to facilitate the modern genomics-based research that is revealing the function, complexity, and diversity of human, plant and animal genomes that supports the most advanced medical research and sophisticated breeding programs.  NRGene tools have already been employed by some of the leading agribiotech companies worldwide, as well as the most influential research teams in academia.  (NRGene 24.08)

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8.3  Alpha Tau in Final Stages of Raising Investment of Several Tens of Millions of Dollars

Alpha Tau Medical is in the last stages of raising an investment of several tens of millions of dollars, the company released.  The round is expected to close soon.  Alpha Tau raised $25 million to date.  Alpha Tau uses alpha radiation to treat various types of solid tumors.  The technique, called Alpha DaRT (Diffusing Alpha-emitters Radiation Therapy), targets cancer cells by inserting a seed containing Radium-224 atoms into the tumor.  Radiation particles are then released when the radioactive substance decays inside the tumor, killing the surrounding cells.

Alpha Tau also announced its technology has been approved by the Massachusetts Radiation Control Program (RCP), enabling it to initiate clinical trials in cancer centers across the U.S. The company has already conducted early stage clinical trials in Israel and Europe.  Alpha Tau is currently in the process of establishing a U.S. production facility, anticipating demand for the treatment.  In January, Alpha Tau partnered with Japanese medtech company HekaBio K.K. to form a joint venture called Alpha Tau Medical K.K.  The companies are testing the technology in Japan and planning to release radiation therapy equipment in the country as early as 2021.

Tel Aviv’s Alpha Tau Medical focuses on research, development and commercialization of Alpha DaRT (Diffusing Alpha-Emitters Radiation Therapy) for the treatment of solid cancer tumors.  Alpha DaRT technology, initially developed at Tel Aviv University, was shown to be effective and safe for treating different types of cancer in multiple animal studies.  The company is running its first clinical trial in several sites in the EU.  (Alpha Tau 22.08)

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8.4  BlueWind Announces Positive Results of Implantable Tibial Nerve Neuromodulator

BlueWind Medical, developer of the RENOVA iStim, an innovative, leadless, miniature, wireless neurostimulation platform, for the treatment of multiple clinical indications, announced the publication of long-term clinical results of OPTIMIST follow-up study.  BlueWind Medical is the only company today with long-term positive clinical data for implantable tibial stimulation for the treatment of overactive bladder (OAB).

The prospective study was conducted in four leading clinical centers in the UK and the Netherlands that evaluated the long-term performance and safety of the RENOVA iStim for the management of OverActive Bladder (OAB), including Urinary Urge Incontinence (UUI) and symptoms of Urgency Frequency (UF).

The OPTIMIST Follow-Up study is an extension of the previously published OPTIMIST six-month pilot study and included 20 of the 36 pilot study patients.  The 20 patients that were available for long-term follow-up well represent the original pilot cohort based both on demographics and on clinical response.

The study demonstrated a sustained high responder rate over a 36-month follow-up period, comparable with response rates typical to sacral neuromodulation.  Three years after implantation of the RENOVA iStim device, 75% of patients experienced at least a 50% long-term reduction in OAB symptoms.  Patients experienced durable, long-term, effect of UUI relief in “leaks” (50% of patients) and in “large leaks” (80% of patients). No severe adverse events (SAE’s) were reported throughout the follow-up study.

Herzliya’s BlueWind Medical was founded in 2010 by Rainbow Medical.  The company is developing a platform technology of miniature, wireless, neuro-stimulators that can be injected or implanted in a minimally invasive procedure to treat multiple indications.  By putting patients’ needs first, BlueWind Medical’s team of experienced and dedicated engineers and researchers are creating a versatile and effective platform that will transform neuromodulation as we know it.

Herzliya’s Rainbow Medical is a unique private operational investment company that seeds and grows start-up companies developing breakthrough medical devices, addressing significant unmet market needs in a diverse range of medical fields.  (BlueWind Medical 30.08)

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8.5  STERO Biotechs Secures Patent of CBD as Steroid Sparing Treatment

STERO Biotechs has received a notice of allowance and will be granted an official U.S. patent on October 2018, covering over 100 Autoimmune & chronic inflammatory diseases.  The patent is for steroid sparing Cannabidiol (CBD)-based treatment that has the potential of minimizing the devastating and sometimes lethal effects of steroids, an essential therapy in many diseases.  Clinical trials will begin in Q4/18 on the first indication with more indications planned in the pipeline.

There is currently an urgent clinical unmet need to lower the dosage and time of steroids administration.  STERO has discovered that CBD will allow physicians to prescribe a lower dose of steroids while retaining their therapeutic effect and, by extension, lowering unwanted side effects.  The product will also bring relief to those who are currently resistant to steroid treatment alone, known as steroid refractory.

Although steroids are one of the most commonly used treatments for a multitude of conditions, they are well known to cause a large number of mild to severe adverse effects, especially in cases of high dosage or long-term use. In a recent literature review, the most commonly reported adverse effects from long-term exposure were hypertension, cataract, sleep disturbances, cardiac conditions, fractures or osteoporosis, nausea, vomiting, and other gastrointestinal and metabolic issues such as hyperglycemia, weight gain and type 2 diabetes.

Bnei Brak’s STERO Biotechs, founded in 2017, is a clinical stage company committed to the research and development of novel and improved Cannabidiol (CBD) based treatment solutions that will potentially benefit millions of patients by reducing the side effects and the need of steroid therapy.

STERO has established an active partnership with one of its shareholders – MOR Research Applications, the tech transfer company of Clalit Health Services.  Clalit is the largest HMO in Israel, with over 4.5 million members.  Clalit operates 14 full scale hospitals specializing in all fields of medicine, as well as over 2000 community clinics with over 9000 physicians.  The MOR-STERO partnership allows the company to reach vast numbers of patients and data.  (STERO Biotechs 29.08)

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8.6  NovellusDx and Primetech Sign an Exclusive Dealer Agreement in Japan

NovellusDx and Japan’s Primetech Co. announced that Primetech will provide NovellusDx’ functional genomics assay “FACT – Functional Annotation for Cancer Treatment” as an exclusive dealer in Japan for the pre-clinical market with sales, marketing and research support / technical support in Japan.  Today, genomic sequencing plays an ever-increasing role in cancer treatment, but the functional significance of most mutations found in a patient’s DNA is unknown and so is the effect drugs have on them.  Japan is a huge, advanced market with the top research centers and pharma companies operating here. It is an honor for us to be able and help them.

Jerusalem’s NovellusDx’s mission is to provide functional information about mutations and their responses to drugs so that oncologists can treat patients with precision therapies and bio-pharmaceutical companies can develop drugs more effectively.  The NovellusDx approach is to monitor the functional effects of mutations and observe the effects of drugs, drug combinations and drug candidates on the activity level caused by the mutations.  (NovellusDx 03.09)

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8.7  Body Vision Medical Announces $8.5 Million in Funding

Body Vision Medical announced $8.5 million in funding.  The proceeds will be used to accelerate the commercialization efforts of its FDA approved LungVision system in the U.S. and to extend its product line.  The LungVision system introduces a novel real-time imaging tool to the bronchoscopy suite.  Today, in order to diagnose small peripheral lesions, the pulmonologist has to use several different imaging modalities such as computerized tomography (CT), ultrasound (US) and fluoroscopy.  Each of these modalities has advantages and disadvantages; however, even a combination of all of the above was unable to improve significantly a poor diagnostic yield of small peripheral lung lesions.  For the first time, our fusion imaging platform enables the pulmonologist to use all the existing imaging modalities together, in real time, without changing or affecting the procedural flow.  The LungVision system, together with our unique delivery device, enables the physician to plan the procedure, navigate to challenging locations and localize the lesion during biopsy.  This complete solution will facilitate early stage diagnosis of lung cancer and, in addition, will pave the way for minimally invasive transcatheter therapeutics.”

Ramat HaSharon’s Body Vision Medical is a software and medical device company specializing in augmented real-time fusion imaging, artificial intelligence and intra-body navigation.  The company was founded in 2014 to address the contemporary unfulfilled clinical need of early lung cancer diagnostics and treatment.  (Body Vision Medical 04.09)

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8.8  STK REGEV ‘Hybrid’ Fungicide, Now Registered in Argentina

STK’s ‘hybrid’ fungicide STK REGEV is now registered in Argentina for peanuts, with future label extensions on potatoes, wine grapes, tomatoes, peppers, blueberries and tobacco.  STK REGEV protects from and heals a variety of diseases, including Cercospora Arachidicola (early leaf spot), Cercosporidium Personatum (late leaf spot) for peanuts, Powdery mildew, Alternaria, Rust and Botritis for other crops.  STK REGEV is the world first foliar ‘hybrid’ fungicide, and is currently used successfully in ten countries in various regions of the world, with plans for global expansion in 2019.

STK REGEV is a ready to use fungicide, used exactly as other fungicides, but with the added benefits of reduced chemical residues and much better resistance management due to its highly complex formulation of Tea Tree Oil and Difenoconazole.  This ready to use fungicide serves as a ‘bridge,’ enabling farmers who have never used any biological product to try one, without having to mix, rotate or do anything differently, thereby expanding the use of biologicals products for sustainable agriculture.  Field test data has shown STK REGEV performs as well or better than leading chemical fungicides.  Only with REGEV, farmers will realize all the benefits of lower chemical load, reduced chemical residues and having a new tool for resistance management.

Founded in 1994, Petah Tikva’s STK is a bio-ag technology company, committed to food protection from field to fork.  Their botanical-based solutions (BBS), a synergy of cutting-edge scientific research and technology, enhance the safety, yield and quality of multiple crops. STK helps growers, food companies and supermarkets deliver healthier and safer food to market.  Their botanical and hybrid solutions are easily integrated into conventional spraying programs, helping to advance the Integrated Pest Management approach to food production.  STK’s flagship product Timorex Gold is used to control a broad spectrum of diseases in diverse crops.  (STK 04.09)

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8.9  NRGene and RCK to Develop DNA Tests for Medical Cannabis

RCK, licensed for cannabis cultivation, genetic research, and breeding in Israel, has joined forces with NRGene, the world leader in genome analysis, to develop a comprehensive set of DNA markers representing the broad diversity within commercial medicinal cannabis.  The DNA markers will be used commercially for strain identification of cannabis plants grown for medical use.  Each medical cannabis grower could obtain professional authentication of the strains grown.  The same DNA marker set will also be used by RCK and NRGene for the discovery of key traits in cannabis and be utilized for more efficient breeding.

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

Hof Ashkelon’s RCK is an Israeli medical cannabis company, licensed for cultivation, breeding and production, active in the Israeli cannabis ecosystem for more than two years.  The company owns a unique facility designated for cultivation and for R&D, as well as over 60 certified cannabis strains and a proprietary cannabis-specific technology for enhancement of cannabis breeding.  (NRGene 04.09)

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9.1  CyberArk Launches SAP Certified Privileged Access Security Solution

CyberArk announced the availability of its SAP-certified CyberArk Privileged Access Security Solution. The solution can strengthen and extend security across SAP environments, including SAP ERP systems, by protecting against privileged access-related risk and credential compromise.  The CyberArk Privileged Access Security Solution achieved SAP certification as Integrated with SAP NetWeaver technology platform. It enables organizations to improve operational efficiencies and safeguard critical assets from external attackers and malicious insiders.  With more than 90% of the Global 2000 relying on SAP applications to run their organizations, powerful credentials for these applications and systems are sought out by attackers to gain access to business-critical information and assets.  This certification extends CyberArk’s existing SAP integrations, which are available to customers on the CyberArk Marketplace. SAP is also a new member of the C3 Alliance, CyberArk’s global technology partner program.

Petah Tikva’s CyberArk is the global leader in privileged access security, a critical layer of IT security to protect data, infrastructure and assets across the enterprise, in the cloud and throughout the DevOps pipeline.  CyberArk delivers the industry’s most complete solution to reduce risk created by privileged credentials and secrets.  The company is trusted by the world’s leading organizations, including more than 50% of the Fortune 100, to protect against external attackers and malicious insiders.  (CyberArk 02.08)

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9.2  Foresight Secures Additional Sale of QuadSight Prototype

Foresight Autonomous Holdings announced the additional sale of a prototype of its breakthrough QuadSight quad-camera vision system.  The QuadSight multi-camera vision solution targets the semi-autonomous and autonomous vehicle market and is designed to allow near-100% obstacle detection with near zero false alerts under any weather and lighting conditions.  The stereoscopic technology system was ordered by the truck division of one of Europe’s largest vehicle manufacturers.  Revenue from the prototype system sale is expected to total tens of thousands of dollars.

This is the second sale of QuadSight prototype system to a leading European original equipment manufacturer (OEM) demonstrating the company’s clear strategy to cooperate with leading European OEMs.  Foresight believes that sales of QuadSight prototypes will strengthen its relations with potential customers.  Customer satisfaction at the end of the evaluation process is expected to lead to a large order of QuadSight systems by the vehicle manufacturer for mass production.

Foresight regards QuadSight as the industry’s most accurate quad-camera vision system, offering exceptional obstacle detection for semi-autonomous and autonomous vehicle safety.  Using proven, highly advanced image-processing algorithms, QuadSight uses four-camera technology that combines two pairs of stereoscopic infrared and daylight cameras.  QuadSight is designed to achieve near-100% obstacle detection with near zero false alerts under any weather or lighting conditions – including complete darkness, rain, haze, fog and glare.

Ness Ziona’s Foresight Autonomous Holdings is engaged in the design, development and commercialization of stereo/quad-camera vision systems and V2X cellular-based solutions for the automotive industry.  Foresight’s vision systems are based on 3D video analysis, advanced algorithms for image processing, and sensor fusion.  The company, through its wholly owned subsidiary Foresight Automotive, Ltd., develops advanced systems for accident prevention which are designed to provide real-time information about the vehicle’s surroundings while in motion.  (Foresight 28.08)

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9.3  Miami Dade College & Cyberbit Announce Opening of New Cyber Range Training Facility

Cyberbit and Miami Dade College (MDC) announced the opening of the MDC Cyber Range training facility at the new state-of-the-art Cybersecurity Center of the Americas at MDC.  The only one of its kind in the region and powered by the Cyberbit Range platform, this cybersecurity training center will provide hands-on cybersecurity training to students, organizations and cybersecurity professionals, to fill the ever-increasing number of open cybersecurity positions.

Hands-on cyber range simulation is becoming the de-facto approach for cyber training.  Cyberbit pioneered this approach, recently receiving a $30 million investment from Claridge Israel to accommodate the rising demand for its Cyberbit Range product.  As the leading provider of cyber ranges, Cyberbit has led the charge in partnering with innovative higher education institutions to train skilled cyber experts.  To-date, Cyberbit has partnered with dozens of higher education institutions, enterprises and service providers to open training facilities based on its Cyberbit Range technology.  These ranges, operating in the U.S., Europe, Asia and Australia, provide students, cybersecurity practitioners and organizations with the cybersecurity training and resources they need to develop the skills required to combat today’s threats.

The MDC Cyber Range will support MDC’s important initiative to grow cybersecurity competency in Florida and help fill thousands of open cybersecurity positions in the region and nationwide.  The college will expand cyber education available to students and prepare them for careers in one of the country’s fastest growing technical professions.  In addition, the facility will offer hands-on training, certification and assessment for commercial and public-sector organizations in Florida.

Ra’anana’s Cyberbit provides a consolidated detection and response platform that protects an organization’s entire attack surface across IT, OT and IoT networks.  Cyberbit products have been forged in the toughest environments on the globe and include: endpoint detection and response powered by behavioral analysis, security automation, orchestration and response (SOAR), ICS/SCADA security (OT security), and the world’s leading cyber range for simulated cyber training.  Cyberbit is a subsidiary of Elbit Systems and has offices in Israel, the US, Europe, and Asia.  (Cyberbit 22.08)

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9.4  mPrest Releases Underground Residential Distribution (URD) Cable Fleet Maintenance Optimization App

mPrest announced the release of its Underground Residential Distribution (URD) Cable Fleet Maintenance Optimization application, a new smart power system for hard to access, sensor-less URD cables that minimizes asset failure and decreases the frequency of power outages.  URD cable fleet maintenance is a daunting and critical task – utilities maintain thousands of miles of URD cables, most of which were installed decades ago.  Moreover, since these cables are sensor-less, utilities have limited visibility into their health condition.  Furthermore, in many cases these cables may be buried directly in the ground, with no ducts; thus increasing their replacement costs.  Lack of insight into cable survivability makes it difficult to prioritize maintenance and replacement activities, predict impending failures, and take proactive steps to prevent those failures.

mPrest’s new AI-driven maintenance optimization application takes a statistical approach and is based on troves of various data related to the URD cables.  Several key influencers are analyzed in order for mPrest to create a smart, big data-driven plan for the utility entity, such as cable vendor, location, and other cable characteristics, installation date, soil type, humidity and more.  mPrest’s URD Cable Fleet Maintenance Optimization system extracts URD cable segment data from platforms such as enterprise asset management, work and asset management, EAM and/or GIS.  Using a self-learning model, it discovers key factors affecting the performance and survivability of URD cables, and predicts the probability of cable segment failure.

Petah Tikva’s mPrest is a global provider of mission-critical monitoring, control and big data analytics software.  Leveraging the power of the Industrial IoT, mPrest’s integrative “system of systems” is a proven catalyst for digital business transformation.  Their innovative management solutions have been deployed in next-gen applications for carrier service providers, system integrators, smart cities as well as IoE (Internet of Energy) applications for power utilities, defense and HLS.  (mPrest 28.08)

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9.5  WhiteSource Integrates Its Open Source Security Solution With Fortify Software Security Center

WhiteSource announced the integration of its open source security solution with Fortify Software Security Center (SSC), the leading application security testing solution, providing users with full visibility and control over their software security risks.  WhiteSource’s integration with Fortify SSC allows customers to view and monitor their open source security vulnerabilities from within their Fortify SSC application, enabling them to improve security management throughout the software development lifecycle with a comprehensive view of their software vulnerabilities in both their proprietary and open source code.

Open source usage is standard practice in today’s software development ecosystem.  While organizations’ products are a combination of open source and proprietary code, application security tools like Static Analysis Security Testing (SAST) used for proprietary code cannot detect open source components with known vulnerabilities.  Only Software Composition Analysis (SCA) tools can detect vulnerable open source components in real-time and provide remediation suggestions according to the impact on a product’s security.

The combination of SAST, DAST, and Software Composition Analysis (SCA) tools will offer companies unprecedented visibility into their software code, both proprietary and open source components, in order to detect all vulnerabilities in their products and address all their application security issues.

Bnei Brak’s WhiteSource is the leader in continuous open source security and license compliance management. Its vision is to empower businesses to develop better software by harnessing the power of open source.  Industry leaders like Microsoft, IBM, and hundreds more trust WhiteSource to secure and manage the open source components in their software.  (WhiteSource 23.08)

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9.6  Gazprom Space Systems & Gilat to Provide Broadband Connectivity Across Russia

Russia’s Gazprom Space Systems (GSS), international satellite operator and Gilat Satellite Networks signed a contract with an estimated value of $18 million to provide broadband connectivity across Russia. Gilat will deliver its’ multiservice platform and user terminals to operate over the new Yamal 601 Ka satellite.  The companies also signed a Cooperation Agreement for joint development of communication projects such as IFC, and railway transport.

The Yamal 601 Ka satellite is expected to be launched in 2019 and will provide broadband coverage for both the European and Asian regions of Russia.  The satellite’s 32 beams will be lighted up by Gilat’s two SkyEdge II-c gateways to be installed in the Central and Siberian Federal Districts.  This first phase of the project consists of gateways for utilizing one-third of the satellite’s capacity and includes the delivery of tens of thousands of Gilat’s terminals with the advanced efficiency-driven DVB-S2X technology.  An expansion of the project is expected when additional capacity will be required for further service.

Gilat’s highly efficient platform, supporting a broad portfolio of VSAT solutions, will enable GSS to provide high quality affordable broadband to various market segments.  Gilat’s Scorpio VSATs will deliver consumer broadband to the most remote locations, while Gilat’s Capricorn VSATs will enable the rural regions to benefit from corporate connectivity and shared access.

Additionally, GSS and Gilat agreed to engage in further business cooperation including joint development to expand both regional and global coverage for fixed and mobile platforms, as reflected in the signed Cooperation Agreement.  The Agreement calls for IFC coverage over Russia and abroad supported by multiple Ka and Ku satellites from GSS and other satellite operators, taking advantage of Gilat’s dual-band Ku/Ka antenna.

Petah Tikva’s Gilat Satellite Networks is a leading global provider of satellite-based broadband communications.  With 30 years of experience, they design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by their innovative technology.  Delivering high value competitive solutions, our portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC).  (Gilat 29.08)

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9.7  Texas Advanced Computing Center Selects Mellanox HDR 200G InfiniBand

Mellanox Technologies announced that InfiniBand has been selected to accelerate the new large-scale supercomputer to be deployed at the Texas Advanced Computing Center (TACC).  The system, named Frontera, will leverage InfiniBand to deliver the highest application performance, scalability and efficiency.  The Frontera supercomputer will deliver approximately twice the performance compared to the current system at TACC, and is expected to be operational in early 2019.  If installed today, Frontera would be ranked among the top 5 fastest supercomputers in the world.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet smart interconnect solutions and services for servers and storage.  Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability.  (Mellanox Technologies 29.08)

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9.8  StePac Leads in Responsible Supply Chain Technology with Innovative Packaging

StePac is working closely with its partners to implement a comprehensive supply chain solution for the delivery of fresh cherries from farm-to-fork.  The company has joined forces with Tadbik Ltd., Israel, to produce the next generation of modified atmosphere resealable lidding film.  The new technology is engineered to extend the shelf life of fresh cherries in aesthetic and functional retail packaging as well as reduce waste.

In this collaboration, Tadbik created a “FreshLid” laminated film structure that is sealed to trays containing fresh produce and whose upper layer can be repeatedly peeled back for reuse.  The companies then worked together to develop suitable condensation control properties and control film permeability to deliver optimal modified atmosphere compositions (MAP) for high value fresh produce items such as cherries.  This innovative packaging will be marketed under the Xgo® line, StePac’s leading retail brand.

This packaging design incorporates multiple capabilities to effectively slow respiration and ageing processes, and to control humidity inside the packaging and extend fresh produce shelf life.  Following research and trials at StePac’s post-harvest lab, the groundbreaking film was approved for shelf life extension of cherries.

Tefen’s StePac specializes in functional packaging for fresh produce. Its brands include the globally recognized Xtend, Xgo, Xflow and Xbloom modified atmosphere / modified humidity packaging solutions.  The company is a wholly-owned subsidiary of Johnson Matthey PLC.

Petah Tikva’s Tadbik is a world leader of advanced packaging solutions including Flexible Packaging, Labels, RFID, packaging machinery and in-pack promotion for over 30 years.  Tadbik maintains facilities in the USA and Israel with highly skilled in-house design and engineering teams.  (StePac 30.08)

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9.9  Minute Launches First Real-Time AI Video Analysis Platform for Live Streams Broadcasts

Video optimization platform Minute announced a new product in their suite of video tools aimed at analyzing live broadcasts and streams in real-time.  The company uses AI technology to monitor live stream broadcasts and automatically generate video previews in real-time to increase video engagement with consumers and, ultimately, video revenue.  The company’s platform was recently used by the top broadcasters for 2018 World Cup Russia online coverage.  During the live stream of the matches, the company successfully drove engagement and hundreds of millions of game views resulting in a 13% increase of new users to the live stream.

The platform is the first on the market to showcase a user-facing technology that increases the number of video views and creates a new video-based revenue stream.  The company’s technology is currently deployed in dozens of sports, news and entertainment websites worldwide and demonstrates an increase in video profitability up to 37% based on program size.  Minute has launched several products including Smart Video Preview, which generates the most effective five-second teasers that increase click-through-rate (CTR) by an average of 300%, and Top Videos, which automatically aggregates top performing video articles and presents internal video recommendations to the consumers.

Tel Aviv’s Minute is a pioneer in the field of video optimization.  Having built creative technological innovations and providing efficient, practical tools for web-based publishers, Minute has significantly boosted profitability by enlivening video content with a breath taking and engaging user experience.  (Minute 30.08)

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9.10  IAI – DOK-ING Collaboration on Robotic System NBC Agents Without Risking Human Lives

Israel Aerospace Industries (IAI) has signed a collaboration agreement with DOK-ING D.O.O (DOK-ING) from Croatia on manufacturing, marketing and sales of a robotic system to be used in high risk areas, including ones contaminated by chemical, biological and radioactive agents.  The system comprises a unique dedicated vehicle, which features some of the world’s most advanced robotic capabilities. These capabilities allow it to perform its tasks efficiently and without risking human lives.

DOK-ING will provide to the collaboration the unique platform developed especially to withstand the extreme working environment including strong navigability and transportability in complex terrains.  IAI will provide advanced robotic capabilities, algorithms for autonomous movement, broadband communication systems and command and control systems.  In addition, special sensors for detecting and classifying contaminants will be embedded in the system including for radioactive radiation.

IAI is a world leader in both the defense and commercial markets, delivering state-of-the-art technologies and systems in all domains: air, space, land, sea, cyber, homeland security and ISR.  Drawing on over 60 years’ experience developing and supplying innovative, cutting-edge systems for customers around the world, IAI tailors optimized solutions that respond to the unique security challenges facing each customer.  (IAI 26.07)

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9.11  ColorChip to Showcase 100G-400G PAM4 Optical Transceivers for the 5G Network

ColorChip showcase a family of next generation PAM4 optical interconnects ranging from 100G to 400G, with reaches up to 40 km, at the CIOE 2018 exhibition in Shenzhen, China.  Based on the company’s proprietary SystemOnGlass technology, ColorChip delivers 100G CWDM4 2km and 4WDM-10 10km QSFP28 solutions with highly integrated photonic optical engines, benefiting from a low part count and an industrialized manufacturing approach.

To support the massive use of fiber in fronthaul and backhaul networks, the evolving 5G infrastructure will require unparalleled volumes of high speed optical modules.  ColorChip is well positioned to leverage existing 100G QSFP28 CWDM4 production lines, already proven and scaled for massive mega datacenter demand, to support the growing needs of the 5G market, with capacity ramping up to millions of units per year.

Yokneam’s ColorChip, established in 2001, is a technology innovator in the field of photonic integrated hybrids whose vision is to break open the optical interconnect bandwidth barrier with high-speed optical transceiver solutions to support the explosive bandwidth demand of the Datacom and Telecom markets.  ColorChip leverages its fully owned, industrialized optics-based FAB dedicated to the production of PLC based SystemOnGlass optical engines, whose glass platform is the ideal medium for emerging PAM4 applications.  (ColorChip 03.09)

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9.12  Fieldbit and InfinityAR to Develop Software for Augmented Reality Smart Glasses

Fieldbit and InfinityAR announced a strategic R&D alliance to jointly develop a vertically integrated solution for field service organizations that marries InfinityAR’s SLAM and Augmented Reality software engine with Fieldbit’s award-winning enterprise platform for remote assistance, collaboration and on-job knowledge capture.  In particular, the integration of InfinityAR’s software engines will enable Fieldbit to optimize the compatibility of its AR-based field services application with the next generation of optical see-through smart glasses.

Fieldbit offers a real-time AR-based collaboration and knowledge capture platform for field services.  Using Fieldbit software, service organizations can provide technicians with visual instructions or access to crucial information, including IoT data, exactly when it is needed and in the most precise and context-sensitive way.  The integrated solution will take advantage of smart glasses hardware design, AR and SLAM algorithm capabilities for interaction with augmented information, thus enabling the most accurate superimposing of digital content in the field of view with precise position tracking of AR objects related to the user’s movement.

Ramat Gan’s InfinityAR‘s vision is about creating a new digital environment that will allow people to naturally interact with augmented content in their physical surroundings, all by creating a new Mixed Reality platform that will digitally enhance every person’s physical world.  InfinityAR’s technology turns AR glasses into a powerful content augmentation platform with the most accurate inside-out Simultaneous Localization and Mapping (SLAM) solution, allowing application developers to bring unmatched mixed reality experiences.

Founded in 2014, Ra’anana’s Fieldbit is the leading provider of real-time augmented reality collaboration solutions for field service organization.  Its enterprise cloud-based platform enables on-site service engineers to collaborate seamlessly with experts in the service center and to receive all the know-how and guidance they need to solve issues quickly.  Fieldbit increases remote resolution and first-time fix rates, minimizing costly downtime and enhancing customer satisfaction.  (Fieldbit 04.09)

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9.13  My Size Partners With FIT to Provide Innovative Measurement Solutions for Students

Airport City’s My Size is partnering with the Fashion Institute of Technology (FIT), an internationally recognized college for design, fashion, art, communications, and business in New York City, to provide its innovative mobile measurement solutions to students.  Per the agreement, My Size will grant access to its Qsize and MySizeID apps for use within the institution’s fashion curriculum.  Students will use Qsize to measure garments throughout the quality control process, measure body sizes with MySizeID and build a sizing chart to sync measurements with through the technology’s platform.

The MySizeId app is a turnkey solution that helps any merchant’s customers choose the appropriate apparel size for that specific brand, based on the shopper’s real measurements.  My Size’s innovative technology enables consumers to measure themselves using their smartphone and then be matched with a brand-specific apparel item in their size.  Once launched on any given e-commerce platform, store owners will be able to add the MySizeId app to their storefronts through a simple integration and provide their shoppers with a more personalized experience.

MySizeId can increase the sales of apparel retailers by reducing or even eliminating their customers’ uncertainties regarding size and fit. Based on My Size’s estimates, the MySizeId app can increase average order values by approximately 20%.  MySizeId also addresses the industry’s $62 billion return problem by reducing return rates by approximately 30%.  Furthermore, MySizeId enhances the customer experience, leading to greater brand loyalty.  (My Size 04.09)

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10.1  Israeli Startups Raised Nearly $300 Million in August

According to IVC-ZAG, Israel’s startups have raised over $4 billion in the first eight months of 2018, well on course to beat last year’s record of $5.24 billion.  Israeli startups raised nearly $300 million in July, according to press releases issued by companies that have completed financing rounds.  The figure may be more as some companies prefer not to publicize the investments they have received.

This sum can be added to the more than $3.1 billion that Israeli startups raised in the first half of 2018, according to IVC-ZAG.  The country’s startups also raised an estimated $650 million in July, bringing the amount raised by startups in the first two months of 2018 to over $4 billion, well on course to beat last year’s record of $5.24 billion.

August began sluggishly perhaps because of the summer vacation with the $32 million raised by AI personalized software company Dynamic Yield and the $33 million raised by cloud security company Twistlock, the only major financing rounds in the first half of the month.  Public safety company Carbyne, in which former Prime Minister Barak is a major investor, raised $15 million.  There was a flurry of financing rounds completed in the finals days of the month with device repair company Puls Technologies raising $50 million, cloud optimizer Spotinst raising $35 million, storage company Zadara raising $25 million and cybersecurity company Indegy raising $18 million.  (IVC-ZAG 02.09)

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10.2  Israel Ranks 5th Worldwide in Per Capita Patents

Israel has been one of the leading countries in the past eighteen years in terms of number of international patents filed via the Patent Cooperation Treaty (PCT) in relation to population size.  The peak came in 2000, when Israel was ranked third in the world for patents filed per capita according to the country of the inventor, after Finland and Sweden.  Today, Israel ranks fifth, after Japan, Sweden, Switzerland and South Korea.  Finland has dropped to sixth.  The data are from a new report by the National Council for Research and Development in the Ministry of Science and Technology.

The report was prepared for the ministry by researchers at the Samuel Neaman Institute for National Policy Research.  It examines patents filed under the PCT, that is, patents intended to protect an invention in the international market, and it strengthens the findings of a previous report compiled by the Samuel Neaman Institute for the Ministry of Science and Technology on scientific publications.  As in patents, Israel’s standing in scientific papers published is very high, but its advantage is receding as other countries come to the fore.

Israelis are very inventive according to all of these measures, but the differences between the figures for patents with an Israeli inventor and patents with Israel ownership shows that Israelis are often inventors in the service of foreigners.  According to the report, 30% of the Israeli patents are under foreign ownership.  This is not necessarily a negative thing – foreign or international companies pay well for Israeli brains.  Israeli ownership of foreign inventions, on the other hand, amounted to 9.7% in 2015.  This figure, which has been fairly stable over the past decade, is rather low by international comparison.  Among other things, it reflects the low number of Israeli-owned multinational companies, compared with countries of similar size, such as Switzerland, Belgium, Sweden, and Ireland which own relatively many international companies.  (Globes 28.08)

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10.3  Record Ben Gurion Airport Passenger Traffic Noted

The end of August, just before the start of the school year and the major Jewish holidays, is the busiest time of year for passenger and airplane traffic at Ben Gurion Airport.  The Israel Airports Authority believes that international passenger traffic will total 2.7 million in August, an all-time record, 10% more than in August 2017.  Some 2.4 million passengers passed through the airport in July, up 10.6% from July 2017.

It is believed that the upward trend in passenger traffic will continue in September with over 2.2 million passengers on 14,000 flights, 17% more than in September 2017.  Thousands of Israelis travel to Uman in Ukraine in September.  The airlift to Ukraine will start on 5 September and continue until 9 September.  Some 30,000 Hassidim are expected to travel to Uman on 133 flights between these dates.

The preferred destinations for the rest of the passengers in September are Greece, Turkey (an interim destination for connecting flights), Italy and Russia.

Passenger traffic will come to a halt on the eve of Yom Kippur, 18 September, with the final landing being at 13:40 (by El Al Israel Airlines) and the last takeoff at 13:55, after which Israel’s airspace will be closed.  The first landing after Yom Kippur will be at 21:30 on 19 September and the first takeoff will be at 23:30 the same day.  (Globes 28.08)

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11.1  LEBANON:  Lebanon ‘B-/B’ Ratings Affirmed; Outlook Stable

On 31 August 2018, S&P Global Ratings affirmed its ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings on Lebanon.  The outlook remains stable.


The stable outlook reflects our expectation that continued deposit inflows to the financial system will remain sufficient to support the government’s borrowing requirements and the country’s external deficit over the next 12 months.

We could lower our ratings on Lebanon if:

-We saw the government was unable to access the international debt capital markets for an extended period, perhaps evidenced by further Banque du Liban (BdL) financial engineering transactions.

-The political and economic situation deteriorated, leading to deposit outflows or slower deposit growth rates and a level of foreign currency (FX) reserves that would challenge the country’s ability to meet its debt-servicing requirements.

-Confidence in the monetary financial institutions or currency peg weakened.

We could raise our ratings if Lebanon’s policymaking framework became more predictable and effective, boosting economic activity significantly more than our current forecasts, and improving the fiscal and external imbalances and the sustainability of public finances.


The Lebanese government’s debt-servicing capacity depends largely on the domestic financial sector’s willingness and ability to add to its holdings of government debt, which in turn relies on bank deposit inflows, particularly from nonresidents, and also on financing from the central bank, BdL.  This structural weakness constrains the ratings, as do Lebanon’s divided political environment and regional tensions. Institutional weaknesses have hindered economic outcomes and weakened public finances, as indicated by the consistently large fiscal deficits and the high and rising public debt levels.  Lebanon’s net general government debt, which we estimate at 124% of GDP in 2018, is the third highest among all the sovereigns we rate, after Japan and Greece.

The ratings are supported by Lebanon’s external profile.  The country’s liquid external assets (that is, FX reserves and financial sector assets held abroad) exceed total external debt. We anticipate, however, a gradually worsening profile as nonresident deposit inflows (largely from the Lebanese diaspora) continue to support the country’s large twin deficits but also add to the country’s external debt levels.

Institutional and Economic Profile: Deep sectarian divisions in the political system and high regional security risks

-We view Lebanon’s institutional and governance effectiveness as weak, reflecting both its highly divided domestic political system and the high-risk regional security environment.

-Political uncertainty emanating from delays in government formation following parliamentary elections in May, along with the prime minister’s temporary resignation in November 2017 and high geopolitical risks, will likely dampen investment and deposit flows in the near term.

-We expect growth to remain subdued, but gradually improve to 2.5% by 2021, supported by the government’s investment program and easing tensions in Syria.

We see long-term constraints on Lebanon’s institutional and economic profile, largely stemming from a divided political environment organized along confessional lines. There have been some positive developments in this area, however, including parliamentary elections in May 2018 (the first since 2009), the passing of two budgets in October 2017 and March 2018 (the first two since 2005), and presidential elections in November 2016 that ended the political vacuum of more than two years.

However, sectarian divisions and regional interference have obstructed stability and policymaking.  The surprise, temporary resignation of Prime Minister Saad Hariri from Saudi Arabia in November 2017 was, in our view, evidence of the fragile political landscape and the ability of foreign governments to influence Lebanese politics.  More recently, delays in the formation of a new government since the parliamentary elections in May reflect continued deadlock between political parties.  We expect rising tensions between Saudi Arabia and Iran and between Israel and Iran/Hezbollah, along with continued conflict in Syria, to derail any push for material policy reforms and weigh on economic growth in the near term.

We project that the economy will grow by an average of 2.1% over 2018-2021, from an estimated 1.4% in 2017, far below the real GDP growth of 9.2% seen in 2007-2010.  We believe that Lebanon’s traditional growth drivers – tourism, real estate, and construction – will remain weak as long as the Syrian conflict continues.  Furthermore, political uncertainty and recently implemented tax measures affecting consumers and several economic sectors, including real estate and construction, will likely subdue investment in 2018.  We nevertheless expect consumption growth to be partly supported by the increase in public sector wages in mid-2017.

Our growth forecasts assume some increases in public and private investment for the partial implementation of the government’s new Capital Investment Program (CIP), which was developed in conjunction with the World Bank.  The government attracted international donor funding of around $11 billion (mostly in concessional debt) from the Cedre conference in April 2018 for infrastructure investment.  As funding is contingent on structural reforms, including improving public finances, we expect disbursements to be very gradual and far lower than the pledged amounts.  We also note that scaling up of public investment would lead to higher government debt without material fiscal and structural reforms.

We could see upside pressure to our growth forecasts if the situation in Syria normalizes sooner than expected, leading to the opening of the trade route between Jordan and Syria and reconstruction projects, which would support Lebanon’s goods and services exports. The government recently signed its first oil and gas exploration and production agreements for two offshore blocks with a consortium that consists of Total, Eni and Novatek.  But we do not incorporate the effects of any potential discoveries into our economic or fiscal forecasts at this time.

While we project that real GDP will continue to increase on a headline basis, we estimate that trend growth in real GDP per capita (which we proxy by using 10-year weighted-average growth) will remain around negative 1.3% over 2012-2021, which is below that of peers with similar levels of development.  This partly reflects the heavy burden imposed on Lebanon by the influx of refugees from the Syrian civil war, estimated at around 1.5 million, or close to 25% of Lebanon’s population.

We also expect external security risks to remain high.  The Syrian crisis is in its eighth year, and Lebanon’s political, security, and economic trajectories will remain entwined with those of its larger neighbor.  There is also increasing risk of escalating tensions between Hezbollah and Israel.  Moreover, risks to Lebanese banks being impacted by possible additional U.S. sanctions against Hezbollah remain. Nevertheless, we do not expect the country’s banking industry to be destabilized or a return to civil war in our base-case scenario.

Lastly, in our view, there are substantial shortcomings and material gaps in the dissemination of macroeconomic data and reporting delays.  The availability and quality of official external data are also limited, in our opinion.

Flexibility and Performance Profile: Very high debt burden, with debt-servicing capacity dependent on deposit inflows:

-We expect rising fiscal deficits will lead to increasing general government debt through 2021.

-We believe banking sector deposit growth in Lebanon will slow but remain sufficient in the near term to support the government’s debt-servicing capacity.

-We expect Lebanon’s liquid external assets to exceed external debt through 2021, but external financing needs are high and will continue rising.

Lebanon’s public finances and fiscal flexibility remain constrained by high spending pressures, including large and rising interest payments and transfers to the electricity company, Electricite du Liban, which have increased on the back of higher oil prices.  Interest payments account for close to 50% of general government revenues in 2018, the highest ratio among our rated sovereigns.  The government introduced public sector wage hikes in 2017, which are expected to be offset by broad tax increases including a 1% increase in the value-added tax to 11%, and a 2% hike in the corporation income tax to 17%, among others.  Yet, the ratio of tax revenues to GDP remains low, at less than 15%, and tax evasion is rampant.  We also expect the government to increase capital expenditures moderately over the forecast horizon in support of the CIP.

We expect Lebanon to face rising deficits averaging around 11% of GDP over 2018-2021.  The deficit temporarily narrowed in 2017 to 7% of GDP, from 9.6% in 2016, mainly due to a one-time increase in government revenues of $775 million paid by domestic banks on revenues they accrued from the 2016 financial engineering operations of BdL.

As a result of the large financing needs, we see gross general government debt increasing to 156% of GDP by 2021, from an estimated 137% in 2017.  In our calculation of gross general government debt, we net out government debt held by public entities, such as the National Social Security Fund and the National Institute for the Guarantee of Deposits, as per our sovereign criteria.  While the proportion of FX-denominated debt to total government debt is high, at close to 40%, we note that nonresident holdings of government commercial debt are lower, at less than 15%.

Domestic banks support government debt-servicing in two ways.  First, they buy Lebanese government debt directly.  Banking-system claims on the public sector accounted for about 15% of total banking-system assets or about 40% of total government debt.  Second, Lebanese banks buy certificates of deposit (CDs) issued by BdL, which in turn buys government debt.  BdL held more than 50% of the government’s outstanding treasury bills (T-bills), which amounted to about 35% of total government debt on 31 March 2018.  We understand that banks increasingly prefer to buy BdL CDs instead of T-bills directly, because of the higher interest rates on CDs and a higher risk weight assigned to the sovereign than BdL by the Banking Control Commission of Lebanon. BdL is, in effect, subsidizing government borrowing costs and accumulating liabilities, which could create vulnerabilities for BdL’s balance sheet over time.

BdL has conducted financial engineering operations since 2016, including swapping the dollar equivalent of government local currency T-bills it held on its account with newly issued Ministry of Finance Eurobonds of $1.7 billion in November 2017 and $5.5 billion in May 2018.  We understand that these two Eurobond swap transactions were an accounting procedure and no FX flowed into Lebanon as a result of the initial transaction.

BdL has since sold $3 billion of the Eurobonds to domestic banks, with a residual unsold amount of $4.9 billion on its balance sheet, according to BdL.  In our view, the residual amount is not readily available for FX operations, including the repayment of the government’s external debt, until it is issued to investors.  It also constitutes a potential drain on gross FX reserves, should the government require FX funding.  We therefore deduct this amount from our calculation of FX reserves.  In our view, these unusual transactions underscore the challenges of meeting Lebanon’s high funding requirements and debt-servicing capacity could be threatened if investor confidence does not return.

We expect that the current account deficit will remain large, averaging about 21% of GDP over 2018-2021.  The return of some political normalcy after a new government is formed and relatively higher oil prices will likely boost remittance and tourism inflows from the large Lebanese diaspora, particularly from those expatriates residing in the Gulf Cooperation Council states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates).  However, we expect a higher import bill, arising from both the rebound in oil prices and implementation of some investment projects, to offset the forecast growth in current account receipts.

While growth in nonresident and total deposits has provided a reliable source of funding for the current account and fiscal deficits over the years, inflows are sensitive to swings in confidence.  The political crisis in November 2017 triggered deposit outflows of around $2.6 billion (1.5% of total deposits) and increased the deposit dollarization rate to more than 68%.  Total customer deposit growth has also slipped to 2.8% (inflows of $3.3 billion) in the first six months of the year, compared with 8.2% ($4.9 billion) for the same period last year.  However, we note that, similar to past episodes of volatility, such as after the 2005 assassination of Prime Minister Rafic Hariri and the 2006 war with Israel, withdrawals lasted for only a short period.  In addition, they were in the low-single-digit percentages of total bank deposits and were more than compensated by returning inflows.

Although monetary conditions have stabilized since November and local currency deposits have risen on the back of higher interest rates on Lebanese pound-denominated deposits, pressures could rise again.  We expect deposit inflows to become more volatile and susceptible to domestic and regional political events.  This is against a backdrop of rising public debt and weak growth, as well as rising U.S. Federal Reserve interest rates and increasing volatility in emerging markets.  Yet, despite our expectation of slower growth in deposits, we anticipate they will remain sufficient in the near term to meet financing needs.

BdL plays a material role in steering macroeconomic and financial policy.  It encouraged foreign inflows back to the economy and increased central bank FX reserves through financial engineering operations conducted since 2016.  Usable reserves (after deducting the monetary base and reserve requirements for resident FX deposits) stood at a comfortable nine months of current account payments as of 31 December 2017.  However, the quality of the reserves is somewhat diminished, in our view, by offsetting liabilities in the form of FX deposits placed by domestic commercial banks in BdL.  Given the high and rising level of short-term external debt, we expect Lebanon will face rising pressures on FX reserve requirements to maintain confidence in the currency peg.  (S&P 31.08)

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11.2  IRAQ:  Iraq Ratings Affirmed At ‘B-/B’; Outlook Stable

On 24 August 2018, S&P Global Ratings affirmed its ‘B-‘ long-term and ‘B’ short-term foreign and local currency sovereign credit ratings on Iraq.  The outlook is stable.


The stable outlook reflects our expectation that policy measures, within the IMF program, will contain the risks to Iraq’s fiscal performance.  We could lower the rating if the government’s net debt or debt servicing costs were to rise sharply.  This could occur if oil revenues were to fall further than expected, due to a sharper fall in oil prices and the government was unable to implement countermeasures.  We do not expect to raise the ratings over the next 12 months, but we could if Iraq’s political and security situation improves meaningfully, along with its public finances.


Our ratings on Iraq are constrained by the early stage of development of the country’s political institutions, domestic political tensions – including divisions between the Sunni, Shia and Kurdish ethnic and sectarian groups – as well as security risks associated with the presence of the Islamic State (IS).

Our ratings are underpinned by the assumption that the majority of Iraq’s oil output remains in areas firmly under the control of the federal government.  Crucially, over 85% of Iraq’s oil fields and oil output are located in the south of the country, some distance from the areas formerly held by IS.  Despite a significant hydrocarbon endowment, Iraq’s financial wealth remains low and economic activity weak, in our view.  Monetary policy is largely ineffective given the weakness of the banking system.  We expect the government’s debt stock to increase further over the period to 2021 as oil prices moderate again.  The country’s external indebtedness is quite low, reducing external risks.  However, we view external liquidity as relatively constrained, partly due to our exclusion of the monetary base from our calculation of the central bank’s usable reserves.

Institutional and Economic Profile: A volatile political environment and security risks hamper reform prospects:

Shiite cleric Muqtada al-Sadr is likely to play a central role in forming the country’s next government in the coming months.  We expect the outcome of the May 2018 elections to have little impact on the fragmentation of political power that impedes critical political and economic reforms.  Mr. al-Sadr’s electoral platform was relatively populist and his bloc’s policies may further constrain Iraq’s fiscal position.  The low voter turnout (44%) in May, plus widespread protests that have occurred in the south and east of the country in July-August 2018, reflect public anger at poor government service provision (electricity and water shortages) and the perception of high levels of corruption.

We expect lackluster economic growth over 2018-2021.

Although Mr. al-Sadr’s bloc, Sairoon, did not secure a majority in the May election, it retained the highest number of votes following the recount – 54 of the 329 seats available.  However, Mr. al-Sadr cannot be prime minister, since he did not run as a candidate.  Mr. al-Sadr’s political alliance capitalized on voter disaffection, championing issues to improve the living conditions of the poor, and has linked up with secularists to battle corruption.  He opposes both the presence of American troops and the heavy influence of Iran in the region.

The results of the vote recount were ratified by Iraq’s Supreme Federal Court on 19 August 2018, initiating a 90-day timeline for the formation of government (though this deadline has been missed in the past).  Legislators must first elect a speaker, then the president, and finally the prime minister and cabinet.  Negotiations are underway to form the government.  We expect the incumbent prime minister, Mr. Haider al-Abadi, to retain his position due to an apparent lack of plausible alternatives and the backing of external stakeholders, notably the U.S. and Iran.  Mr. al-Abadi’s Victory Alliance bloc obtained 42 seats following the elections, landing in third place behind a group of Iran-backed Shiite militia leaders (Mr. Hadi al-Ameri’s Fatah coalition), which won 48 seats. He currently heads a fragile caretaker government–after parliament failed to extend its term because of a lack of quorum in its final session–until the formation of a new one.

The threat of domestic conflict remains in Iraq.  The government has thwarted two would-be states from emerging within its borders in recent years: an IS caliphate and an independent Kurdistan.  However, risks of further political turmoil from both groups persist.  In December 2017, the Iraqi government, supported by its international partners, recaptured areas under IS control.  The Iraqi Kurdistan September 2017 referendum resulted in a 93% vote in favor of independence.  However, shortly afterward, the Iraqi government took control of territory disputed by the Kurds, including Kirkuk province.  The Kurdistan Regional Government’s (KRG’s) position has markedly weakened since the referendum, and it is highly unlikely to achieve independence.  In our opinion, the more probable scenario is a curbing of its autonomy and loss of control of its oil production in exchange for fiscal transfers from the federal budget and a lifting of sanctions.  In addition, we view the influence on Iraqi politics by external parties – including Iran, the U.S., and Turkish incursions into northern Iraq to confront the Kurdistan Workers’ Party (PKK) – as heightening the risk of war.

Furthermore, in our view, Iraq’s political and economic development is hampered by widespread corruption.  The country scores among the world’s worst in terms of corruption perceptions and governance indicators.  We believe that fighting corruption, the lingering presence of IS, and tensions with the KRG represent Iraq’s major political and security challenges in the near term.  Strengthening governance, accountability, and transparency could help unlock Iraq’s economic potential.

Iraq has the world’s fourth-largest proven crude oil reserves and is the second-largest oil exporter in the Organization of Petroleum Exporting Countries (OPEC). Oil dominates the Iraqi economy, contributing about 40% of GDP, 90% of government revenues, and more than 95% of exports.  The industry helps to support Iraq’s relatively low economic wealth levels, with per capita GDP at an estimated $5,500 in 2018.

We estimate real per capita GDP growth at 0.1% as a weighted average over 2012-2021, with population growth outstripping real GDP growth in our projections over 2017 – 2021.  This growth rate is below that of peers that have similar wealth levels.  Notwithstanding this, we expect overall GDP growth to pick up in 2019, as the November 2016 deal agreed with OPEC to reduce oil output ends, but to remain subdued at about 2% on average in 2018-2021, owing to the unstable political and security situation and weak non-oil growth.  The oil sector was the main driver of real economic growth in 2015-2017 despite the OPEC deal.  OPEC data, using secondary sources, suggest marginal increases in production to 4.53 million barrels per day (bpd) in June 2018, from 4.45 million bpd in 2017 and 4.39 million bpd in 2016.  We expect oil production to continue climbing over our forecast period, reaching about 4.9 million bpd in 2021.

Depending on the timing of disbursements, economic activity should be somewhat supported by the $30 billion (14% of 2018 GDP) in pledges, loans, and investments attracted at a donor conference for Iraq in February 2018.  The largest single pledges came from Turkey ($5 billion in credit) and the United Arab Emirates ($6 billion); Saudi Arabia, Qatar and Kuwait pledged $1.5 billion, $1 billion and $2 billion, respectively.  However, Iraq may receive much less than the total pledged amount, as is often the case following such donor conferences.  Separately, the U.S. agreed to provide more than $3 billion in loans and loan guarantees.

In our view, administrative shortcomings jeopardize the quality of Iraq’s national accounts data.  For example, output in areas under the jurisdiction of the KRG cannot always be directly measured by the federal government.

Flexibility and Performance Profile: We expect lower oil prices to result in wider fiscal deficits and emerging current account deficits over the period to 2021

We expect average Brent oil prices of $65/bbl in 2018, $60/bbl in 2019, and $55/bbl in 2020 and beyond.  The $5.4 billion IMF program has been a crucial support for Iraq’s fiscal situation and preserving the level of foreign reserves, and we expect its full disbursement over the three-year timeline.

We estimate that the general government fiscal deficit was closer to 2% of GDP in 2017, rather than our estimate of 4% in our last review.  The current estimate is due to both higher-than-expected government revenues and lower expenditures.  However, given the downward trend in our oil price assumptions, we expect revenues to decline over the period to 2021 and deficits to consequently widen.  As a result, our projections for the fiscal performance over the period to 2021 have weakened compared with our earlier forecasts.  We view the government’s revenue base as volatile due to its dependence on oil prices.

We assume the government will continue implementing fiscal consolidation measures supported by the IMF program.  We note the government’s efforts to broaden the tax base, with customs revenues and tax collection expected to increase as the government increases its control over areas formerly occupied by IS.  On the expenditure side, the government will attempt to contain non-oil primary spending, mostly by reducing the wage bill through natural attrition, controls over pension beneficiaries, and continued postponement of lower-priority non-oil investment.  Still, we expect these measures to be insufficient to offset the decline in oil revenues. We view the government’s ability to raise revenues or lower expenditures as relatively limited.  In addition, we think the country’s shortfall of basic services to the population and infrastructure will likely create lasting spending pressures.

The IMF program has been an important support to Iraq’s fiscal situation.  It unlocked further budget financing from both official and unofficial creditors.  Under its Standby Arrangement, which was approved in July 2016, the IMF has disbursed about $2.1 billion despite Iraq’s failure to meet all of the conditions under the program. We expect the full $5.4 billion will likely be disbursed over the program’s three-year timeline.

In addition, the Iraqi government successfully issued a $1 billion international bond with a 100% U.S. government guarantee in January 2017, and another $1 billion Eurobond without a guarantee in July 2017, its first independent bond since 2006. We estimate that more than 60% of government debt is in foreign currency, exposing the debt structure to exchange rate risks, should the authorities abandon the exchange rate peg.

Our estimate includes about $41 billion (20% of GDP) of unresolved external arrears to non-Paris Club creditors.  Excluding this amount would bring the ratio down to 35%.

The IMF and World Bank pledges, and support from Iraq’s international partners, among other factors, have helped reduce the risk premium on Iraqi debt.  Historically, most of the government’s domestic debt issuance has been taken up by Iraq’s commercial banks, led by the two largest state-owned banks, Rafidain Bank and Rasheed Bank.  It has been funded by incremental deposit growth and, in the past, by repurchase operations with the Central Bank of Iraq (CBI).  A large share of the banking sector’s balance sheet is exposed to the government, with 28% of banking sector assets attributed to government claims at end-2017.  We project government net debt will average about 60% of GDP over 2018-2021.  Our estimate of government liquid assets of about 9% of GDP largely comprises government deposits with domestic commercial banks.  Iraq’s debt stock benefited from an 80% haircut that the government negotiated with its Paris Club creditors in 2003-2004.

The financial stability of domestic banks is uncertain, and we view the risk stemming from the financial sector as a moderate contingent liability for the government. The state-owned banks dominate the banking sector.  Financial accounts audited to international standards are not available, but we believe that Rafidain Bank and Rasheed Bank are severely undercapitalized, with high non-performing loans across the whole sector.

Reporting on Iraq’s external data (balance of payments and international investment position data) is poor, which reduces the visibility of external risks.  The CBI data likely underreport imports by a significant margin, since imports into the region of Iraqi Kurdistan are not included and imports at other entry points into Iraq are not systematically measured.  We use the IMF’s data because we believe they provide a more accurate representation of Iraq’s external position.

We now estimate a small current account surplus of about 0.7% of GDP for 2017, compared with an estimate of a deficit of 5.6% of GDP at the time of our previous publication.  The revision relates to stronger-than-expected oil revenues.  We expect the current account deficit to widen over the period to 2021, informed by our oil price and production assumptions.  We assess the concentrated nature of Iraq’s exports as exposing the country to material volatility in terms-of-trade movements.

We expect the Iraqi dinar’s exchange-rate peg to the U.S. dollar will remain in place over the next several years.  While the peg has helped control inflation, it limits the CBI’s monetary flexibility, in our view.  We consider CBI foreign exchange reserve coverage to be an important factor in maintaining confidence in the exchange-rate link.  We have therefore deducted the monetary base from usable reserves, as we regard these reserves as to some extent encumbered by the level of the monetary base.  Alongside the deduction of required bank reserves on resident foreign-currency deposits, our estimate of gross external financing needs as a percentage of current account receipts (CARs) and usable reserves has increased to about 110% over 2018-2021, from closer to 75% at the time of our last review.

We view the monetary policy transmission mechanism as weak.  The banking sector in Iraq is still at a relatively early stage in its development, and does not fulfil the functions a banking sector normally would fulfil in more advanced economies, or to the same extent.  For this reason, the monetary policy tools that rely on the banking sector, such as the reserve requirement and the provision of standing facilities, are of limited effectiveness in Iraq.

Iraq’s foreign exchange reserves increased to about $48 billion at end-2017, from about $45 billion in 2016, supported by the government’s Eurobond issuance and higher oil prices. We expect the central bank reserves to stay around this level over 2018-2021.  We expect Iraq’s external debt to exceed external liquid assets by about 13% of CARs on average over the same period.  We do not view Iraq as having extensive foreign exchange restrictions, following the removal – a condition of the IMF program – of the requirement to pay all obligations and debts to the government before transferring the proceeds of investments of investors, salaries, and other compensation of non-Iraqi employees from Iraq.  (S&P 24.08)

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11.3  EGYPT:  Moody’s Changes Outlook on Egypt’s Rating to Positive, Affirms B3 Rating

On 28 August, Moody’s Investors Service changed the outlook on the Government of Egypt’s long-term issuer ratings to positive from stable and has affirmed the B3 issuer ratings.  At the same time, Moody’s has affirmed Egypt’s senior unsecured ratings at B3, and its senior unsecured MTN program rating at (P)B3.

Moody’s decision to change the outlook to positive reflects the continuing structural improvements in the fiscal and current account balances, resulting from the ongoing implementation of the home-grown IMF-backed reform program.  Moreover, early signs of business environment reforms offer the prospect of a sustainable, inclusive growth path capable of improving competitiveness and absorbing the country’s rapidly expanding labor force.

The decision to affirm the B3 rating balances Egypt’s longstanding strengths — flowing in particular from its large and diverse economy — against the low-probability risk of sudden political upheaval that could have implications for the direction of policy, and very pronounced fiscal weakness, reflected in a high debt burden, low debt affordability and very large annual financing needs.  In turn, such fiscal weakness creates high refinancing exposure in an increasingly turbulent global financial environment, notwithstanding a deep and stable domestic funding base in its large banking sector.

The foreign and local-currency bond and deposit ceilings remain unchanged.  Specifically, the foreign-currency bond ceiling remains at B2, the foreign-currency deposit ceiling at Caa1, and the local-currency bond and deposit ceiling at Ba2.  The short-term country ceilings for foreign-currency bonds and deposits remain unchanged at NP (Not Prime).

Ratings Rationale

Egypt’s credit profile presents a stark contrast between, on the one hand, an economy which is large and diverse in comparison to rating peers; and, on the other hand, high refinancing risk created by a high debt burden, and a very high interest burden, resulting in very large annual financing needs (although a substantial share will continue to be met by the domestic banking system).

Those latter features have dominated Moody’s assessment of Egypt’s credit profile in recent years.  The country’s refinancing risk remains a key credit challenge for the sovereign in an increasingly turbulent global financial environment created by, among other things, the prospect of rising interest rates and shocks to global trade.

However, the substantial progress made by the government in implementing reforms agreed with the IMF has imparted a degree of financial stability not present earlier in the decade.  Primary deficits have shrunk and the debt burden has begun to fall.  Foreign exchange buffers have been rebuilt.  The government is in the midst of an ambitious structural economic reform program.  A degree of political stability has been achieved and seems likely to be sustained, increasing the likelihood that the general policy direction will be maintained.

If sustained, the authorities’ commitment to reform has the potential to impart to the credit profile a degree of resilience to economic and financing shocks, which could support a higher rating notwithstanding what are likely to remain high annual refinancing requirements.

Rationale for the Positive Outlook

Sustained Fiscal Reform Implementation Supports a Lasting Shift to Primary Fiscal Surpluses and Offers the Prospect of Lower Refinancing Risk

The government of Egypt’s continued implementation of fiscal reforms offers the prospect of a return to sustained primary surpluses starting from the fiscal year ending June 2019 (FY 2018/19) after almost 20 years of persistent deficits.  The nature of the reforms is such that government expenditure should become more efficient and predictable through economic and commodity price cycles.  A resulting sustained and rapid downward trend in the debt burden would diminish Egypt’s elevated refinancing risks.

In addition to the implementation of the value added tax in 2016 and the increase in the tax rate to 14% from 13% in July 2017, the enactment of the civil service law will continue to contribute to containing the public sector wage bill.

Moreover, the government’s fiscal consolidation strategy is supported by a comprehensive energy subsidy reform agreed under the IMF program.  Moody’s expects that the energy subsidy bill will fall to below 1% of GDP by fiscal 2020 from 4.1% of GDP in fiscal 2017.  These savings will be partly offset by increased cash transfers to lower-income and more vulnerable households, which should help maintain public support for reforms and result in better controlled and more effective government spending.

In the fuel segment, the government reached cost recoveries in the range of 70-80% as of July 2018 from about 30% in 2013, after several rounds of price hikes.  The achievement of full cost recovery by the end of fiscal 2019 and the adoption of an automatic fuel price adjustment mechanism as currently planned by the government will, if implemented, further shield the budget execution from future oil price volatility.

Overall, with fiscal reforms combined with high nominal GDP growth, Moody’s projects that debt burden, while remaining elevated, will decline to around 82% of GDP by the turn of the decade, from around 86% in FY 2018/19 and a peak of 103.5% of GDP in fiscal 2017.

Structural Reforms Point to Lower External Vulnerabilities

Continued success in implementing planned economic and monetary reforms should lower Egypt’s vulnerability to a shift in external economic and financing conditions.  Egypt’s foreign exchange reserve buffer improved to 6.5 months of import cover as of March 2018.  A shift in the sources of financing of Egypt’s external payment needs towards foreign direct investment, rather than external debt, would further bolster the external position.

Following the flotation of the Egyptian pound in November 2016, the currency depreciated by 50% against the US dollar in nominal terms and by over 30% in real effective terms.  While inflation increased substantially as a result, price competitiveness has materially improved.  The central bank’s conduct of monetary policy is enhancing policy credibility and anchoring inflation expectations, as shown in the subsequent decline in inflation.  As a result, Moody’s expects Egypt to maintain significant price competitiveness gains, in turn reducing the risk of material external imbalances building up, while the flexible exchange rate acts as shock absorption mechanism against external shocks.

Combined with renewed natural gas exports from the Zohr field starting in 2019, Moody’s expects that the current account balance will hover around 2.5%-3.0% of GDP in the next few years, compared with 6% or more in the last two.  The almost complete repayment of arrears to International Oil Companies (IOCs) and new investment commitments of almost $10 billion annually over the next four years in the energy sector increase the prospect of new discoveries and contribute to fostering Egypt’s role as a regional energy hub, which would further strengthen Egypt’s external position.

Reforms Also Point to Higher, Sustainable Growth

The continued implementation of economic and fiscal reforms should sustain GDP growth at higher rates, converging toward 6%.  This level would help absorb the country’s rapidly expanding labor force, notwithstanding significant remaining structural labor market rigidities.

Measures such as the implementation of the investment and bankruptcy laws and an improved land allocation mechanism have contributed to improving Egypt’s competitiveness in the World Economic Forum’s ranking over the past year and should foster investment, including foreign direct investment, in non-energy sectors, such as tourism, agro-processing and manufacturing.  The implementation of large infrastructure projects, such as the New Administrative Capital City led by state-owned Economic Authorities, will also contribute to fostering growth and employment in the construction sector.

Rationale for the B3 Rating Affirmation

Moody’s decision to affirm the B3 ratings at this juncture balances Egypt’s credit strengths including its large and diversified economy, and robust and rising growth potential that provide a high degree of resilience to economic shocks, against persistently weak fiscal indicators in comparison with peers, in particular debt affordability.  Moody’s expects interest payments on debt to continue to absorb 30%-40% of revenue over the next few years, albeit to a declining degree, which significantly constrains fiscal flexibility.  According to Moody’s, very weak debt affordability will maintain the government’s annual gross financing needs at very high levels, of about 30%-40% of GDP.

Weak debt affordability in turn constrains the prospects of significantly lengthening the average maturity of the domestic debt stock, which is currently very short at about two years.  The combination of a high debt stock, low debt affordability and short average maturity points to heightened sensitivity of Egypt’s fiscal strength to a potential shock to borrowing costs.

However, Moody’s believes that the adjustment in the real exchange rate achieved in late 2016 and the re-establishment of the foreign exchange reserve buffer in excess of upcoming external maturities have improved Egypt’s resiliency to a possible increase in external financing costs, including via a depreciation of the exchange rate linked to capital outflows.

On the domestic financing side, Egypt benefits from a deep and stable domestic funding base in its large banking sector, with an established track record of financing support to the government, including in times of stress.

The B3 ratings also capture the risk of sudden political upheaval that would have credit negative implications for the direction of policy.  That said, Moody’s believes that a combination of factors, including the measures taken by the government to distribute the proceeds of strong growth more effectively and provide jobs to a large and fast-rising number of new entrants in the labor force, have lowered the risk of reform reversal over the next few years.

What Could Change the Rating Up

An upgrade would most likely be driven by Moody’s heightened confidence in two areas.  First, that the government’s commitment to fiscal prudence and to structural economic reform will be sustained through fluctuations in the economic environment.  Second, that the country’s susceptibility to external financing shocks will remain manageable, including through the maintenance of adequate external buffers.

To that end, over the remainder of this year and at least into the first part of 2019, Moody’s will monitor the government’s progress in achieving planned fiscal, monetary and economic reforms; its success in sustaining external investor confidence as reflected in trends in foreign reserves and foreign direct investment; and the social acceptance of the government’s reform program and the absence of pressures that could eventually halt or reverse economic and fiscal reforms.

What Could Move the Rating Down

The positive outlook signals that a downgrade is currently very unlikely.  However, a stalling or reversal in reform commitment, with negative repercussions on the pace of fiscal consolidation and debt reduction would likely prompt a change in the rating outlook to stable.  The emergence of more severe external or domestic liquidity pressures that result in significantly higher borrowing costs and in a further reduction in debt affordability would likely also put downward pressure on the rating, as would renewed and lasting social and political instability or a material deterioration in the security situation.  (Moody’s 28.08)

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11.4  TUNISIA:  IMF Reaches Staff Level Agreement on the Fourth Review

An International Monetary Fund (IMF) staff team visited Tunisia from 15 – 31 August to discuss the authorities’ policy plans under the Fourth Review of Tunisia’s economic reform program supported by a four-year IMF Extended Fund Facility (EFF) arrangement.  At the end of the visit the IMF issued the following statement:

“The Tunisian authorities and the IMF team reached a staff-level agreement on the policies needed to complete the fourth review of Tunisia’s EFF.  The Tunisian authorities emphasized their intention to continue to act decisively to contain the budget deficit, which would allow the IMF’s Executive Board to consider the Fourth Review at the end of September.  Completion of the review would make available SDR 177 million (about $257 million), bringing total disbursements under the EFF to about $1.5 billion.

“There are some encouraging signs that economic activity is picking up. The Tunisian economy grew 2.6% (year-on-year) in the first half of this year, with robust performance in agriculture, tourism and services.  The number of tourists visiting Tunisia since the start of the year is the highest since 2010.  The authorities’ commitment to reducing fiscal imbalances is also bearing fruit.  The execution of the budget in the first six months of 2018 is consistent with achieving a significant deficit reduction this year.  Containing deficits will help reduce Tunisia’s high public debt that burdens the economy and future generations.

“Although growing, the economy remains too dependent on consumption and imports. Investment has again been weak this year.  Unemployment among the young and women, especially those who are well-educated, remains very high.  Additional economic reforms, which include strengthening governance and enforcement in the government’s anti-corruption fight, are necessary to overcome investor reluctance and build confidence.  These efforts will help unleash the potential of private sector and generate more opportunity and jobs for all Tunisians.

“Long-standing economic imbalances continue to pose significant risks to the Tunisian economy.  Inflation declined marginally in July, but at 7.5%, it remains considerably higher than in previous years.  Money and credit have continued to increase rapidly and the dinar has depreciated further, which will likely create new inflationary pressures in the months ahead.  Moreover, the expected improvement in the current account deficit has been delayed: imports are still too high relative to exports and other inflows of foreign currency.  Foreign exchange reserves are therefore still below levels commonly seen in other emerging-market economies.

“In addition, Tunisia’s external environment is witnessing new challenges.  Oil prices are significantly higher than projected at the beginning of the year and international financial markets have become more volatile.  Risk premia for a broad range of emerging markets have increased.

“Staying the course on reducing the fiscal deficit this year and next is critical to stabilize debt and reduce excessive demand for imports given the recent increase in global oil prices.  It will remain particularly important to pursue reforms of untargeted energy subsidies, manage carefully the public wage bill, and put the public and private pension funds on a sustainable basis.  These steps will help to contain expenditure that disproportionately benefits the better-off.  They will also make more resources available for public investment, which will boost growth and jobs, to the benefit of the young and the unemployed.  The IMF team welcomes the government’s intention to further increase social spending, which it views as critical to protect the poor and vulnerable in the period ahead.

“The Central Bank of Tunisia is right to remain vigilant, as the recent decline in inflation could be temporary.  If inflation were to pick up again in the months ahead, additional increases in interest rates would be necessary to anchor inflation expectations and maintain economic stability.

“The IMF team met with the Minister of Finance Chalghoum, Minister of Investment Laâdhari, Minister of Major Reforms Rajhi, and Central Bank Governor El Abassi as well as their staff.  It also had discussions with representatives of the private sector, civil society, and the diplomatic community.”  (IMF 31.08)

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11.5  TURKEY:  Moody’s Downgrades Turkey’s Ratings to Ba3 and Assigns Negative Outlook

On 17 August, Moody’s Investors Service downgraded the Government of Turkey’s long-term issuer ratings to Ba3 from Ba2 and changed its rating outlook to negative, concluding the review for downgrade that was initiated on 1 June 2018.  The senior unsecured bond ratings and senior unsecured shelf ratings have also been downgraded to Ba3 and (P)Ba3 respectively.

Concurrently, Moody’s has downgraded to Ba3 from Ba2 the senior unsecured bond rating of Hazine Mustesarligi Varlik Kiralama A.S., a special purpose vehicle wholly owned by the Republic of Turkey from which the Turkish Treasury issues sukuk lease certificates, and changed its rating outlook to negative.

The key driver for today’s downgrade is the continuing weakening of Turkey’s public institutions and the related reduction in the predictability of Turkish policy making.  That weakening is exemplified by heightened concerns over the independence of the central bank, and by the lack of a clear and credible plan to address the underlying causes of the recent financial distress, notwithstanding recent statements by the government.  The tighter financial conditions and weaker exchange rate, associated with high and rising external financing risks, are likely to fuel inflation further and undermine growth, and the risk of a balance of payments crisis continues to rise.

In a related decision, Moody’s lowered Turkey’s long-term country ceilings: the foreign currency bond ceiling to Ba2 from Baa3; its foreign currency deposit ceiling to B1 from Ba3; and its local currency bond and deposit ceilings to Ba1 from Baa2.  The short-term foreign currency bond ceiling was also lowered to Not Prime (NP) from Prime-3 (P-3) and the short-term foreign currency deposit ceiling remains unchanged at Not Prime (NP).  Ceilings generally act as the maximum ratings that can be assigned to a domestic issuer in Turkey, including structured finance securities backed by Turkish receivables.  The decision to narrow the gap between the ceilings and the government bond rating is informed by Moody’s view of weakening institutional strength.

Ratings Rationale

Rationale for the Downgrade to Ba3

The key driver for the rating downgrade is the further weakening of Turkey’s public institutions and the related reduction in the predictability of Turkish policy making.  When Moody’s placed Turkey’s Ba2 rating on review for downgrade on 1 June, the rating agency stated that the outcome of the review would mainly rest on the coherence and predictability of the policies pursued by the government and the extent to which the policy framework would restore adequate financing of Turkey’s large external borrowing requirements.

Since then, financial stress has increased further, most visibly in the sharp depreciation of the Turkish Lira, which has now lost close to 40% of its value against the US dollar since the start of the year.  Consumer price inflation has reached 15.85% in July, up by more than 5% since the start of the year and the highest inflation rate since December 2003.  Domestic funding conditions have deteriorated with bond yields on the government’s domestic securities reaching above 20% in mid-August.  While Turkish banks have so far managed to maintain access to the international inter-bank markets for funding, the tightening financing conditions and the weakening Lira will further increase pressure on domestic borrowers with foreign-currency debt.

Moody’s view of a further decline in the predictability and effectiveness of economic policy making is exemplified by concerns over the central bank’s independence.  This particularly follows the centralization of powers at the presidency level following the elections in June with the president now having the sole responsibility for appointing the central bank governor, deputy governor and other members of the country’s Monetary Policy Committee.  Since the elections, the central bank has refrained from raising policy rates despite significantly increasing its inflation forecasts for this year and next.  The discrepancy between the central bank’s inflation forecasts and targets and its unwillingness to pursue an appropriate policy to achieve those targets further undermines the central bank’s credibility.  While it has provided some breathing space to the domestic banks by lowering their reserve requirements, in Moody’s view this is a short-term measure that does not address the underlying pressures the banking sector faces, nor does it address the mounting inflationary pressures.

Similarly, Moody’s considers that the lack of or delays in formulating a comprehensive and effective economic plan to address the underlying causes of the recent financial stress is a clear indication for declining policy predictability and effectiveness.  The government has outlined the broad objectives of its medium-term economic plan, including its intention to gradually slow down the over-heating economy by tightening fiscal policy, and bringing inflation back to single-digit rates.  However, so far these objectives have not been underpinned by detailed measures with clear timelines of implementation. Turkey’s external funding needs remain significant, and the risk of a balance of payments crisis continues to rise.

Rationale for Assigning Negative Outlook

In Moody’s view, the probability that the Turkish authorities will manage to engineer a “soft landing” of the economy is declining in the context of weakened institutions and increasing tensions with the US.  Therefore, the risk of continued financial stress is significant, with potentially further negative implications for Turkish banks and corporates that have large external funding needs.  Such a negative scenario would further increase the risk of a prolonged period of acute economic and financial volatility, which ultimately would weigh further on the credit risk profile of the government.

Against these significant credit risks, Moody’s will continue to balance the inherent credit strengths of the country, including a large and diversified economy and a still relatively strong fiscal position.  The government’s debt burden remains moderate by global standards. Moody’s also notes that Turkey has successfully managed previous serious economic and financial shocks.

What Could Change the Rating Down/Up

Moody’s would likely downgrade Turkey’s rating if the currency crisis deepened further and the country proved unable to pursue a combination of fiscal and monetary policies that would be effective in easing external funding pressures and in engineering a rebalancing of the economy that would ease inflationary pressures and position the country on a sustainable growth path.

Given the negative outlook, a positive rating action is currently highly unlikely.  The rating could be stabilized if the Turkish authorities presented a coherent and effective economic plan in the near term that involves a material fiscal and monetary policy tightening to induce an orderly slowdown of the economy, leading in turn to lower inflation and inflation expectations as well as a reduction in the size of the current account deficit. Significant external financial support would likely act as a supportive factor to the rating.

The conditions which led to today’s actions also weigh on the country’s structured finance transactions, financial and non-financial corporates and sub-sovereign entities.  The reviews on impacted domestic issuers, which started in June 2018, are still ongoing. In addition to assessing the impact of the sovereign action and ceiling changes on these issuers, as part of these reviews, Moody’s is analyzing their exposure to the prevalent refinancing environment, as well as to its expectation of challenging economic conditions in the country, and potential further volatility in the financial markets.  The rating conclusions of those reviews will be communicated to the market separately once these various credit aspects have been fully analyzed.  (Moody’s 17.08)

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11.6  TURKEY:  Fitch Ratings Says Turkey Faces Lower Growth, Lengthy Forced Adjustment

On 04 September 2018, Fitch Ratings said the lira’s sharp fall will force a rebalancing of Turkey’s economy through lower growth and a narrowing of the current account deficit.  We have cut our growth forecasts for 2018-2020, and see significant and widespread downside risks.

We now expect real GDP to increase by 3.8% in 2018 and 1.2% in 2019, with a quarterly contraction projected for the final three quarters of 2018.  These rates of economic growth are 0.7pp and 2.4pp lower, respectively, than our assumptions when we downgraded Turkey’s sovereign rating to ‘BB’/Negative on 13 July 2018.  We expect that growth will recover somewhat in 2020, to 3.9%, but will remain below the trend rate.  Our forecasts are subject to considerable uncertainty.  Risks to our baseline scenario are primarily to the downside and include policy missteps, heightened financial stress in the private sector, geopolitical tensions and potential capital flight.

Our revised forecasts assume that the authorities will continue taking short-term measures to support the lira and that the Central Bank of the Republic of Turkey will raise rates, but that these will be insufficient to lower the rate of inflation to single digits until at least end-2020.  The central bank said on 3 September that its “monetary stance will be adjusted” when it meets later in September, after data showed annual consumer price inflation was 17.9% in August.

We expect tougher external conditions and tighter domestic policy to underpin the near-term adjustment to the economy.  However, as we have previously stated, the absence of a more timely and complete policy response and uncertainty about the authorities’ tolerance for a prolonged period of low growth add to market concerns about the credibility of economic policy.  We continue to view capital controls or an IMF program as unlikely.

The early signs of external adjustment are emerging, such as the narrowing in the visible trade deficit in July.  We forecast the current account deficit to narrow to 3.9% of GDP this year and 1.7% in 2019, as currency weakness and the significant economic slowdown pull down imports and boost exports.  Net trade and tourism (visitor numbers rose 29% yoy in H1/18) will provide some support for growth.

Our lower growth forecasts result in some fiscal deterioration compared to our previous baseline.  We now forecast Turkey’s general government deficit to widen to 3.2% of GDP this year and 3.6% next year, before narrowing to 2.9% in 2020.  This compares with our July forecasts of 2.9% for 2018 and 2.5% for both 2019 and 2020.  The impact is almost entirely through lower government revenue.

Indeed, our GDP and deficit forecasts do not incorporate any potential attempt to cushion the impact to growth through fiscal stimulus.  Additional spending could put further pressure on Turkey’s sovereign credit profile, as low government debt and a record of relative fiscal discipline provide key support for the rating.  (Fitch 04.09)

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11.7  GREECE:  IMF Executive Board Concludes 2018 Article IV Consultation with Greece

On July 27, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Greece.

Following a deep and protracted contraction, growth has finally returned to Greece.  The large macroeconomic stabilization effort, structural reforms, and a better external environment contributed to an increase in real GDP of 1.4% in 2017, helped also by substantial support from European partners, which secured medium-term sustainability and restored market access.  However, stock legacy issues persist, as unemployment remains high and public and private balance sheets remain impaired.

The recovery is projected to strengthen in the near-term, with growth expected to reach 2% this year and 2.4% in 2019, and with unemployment declining as the output gap closes.  However, external and domestic risks are tilted to the downside, including from slower trading partner growth, tighter global financial conditions, regional instability, the domestic political calendar, and risks of reform fatigue.  Moreover, in the long term, population aging is expected to weigh down on potential growth, increasing the need to foster productivity.

Executive Board Assessment

Executive Directors commended the authorities for important reforms and policy choices in recent years that have largely eliminated fiscal and current account imbalances, stabilized the financial sector, reduced unemployment and restored growth.  These substantial efforts, along with welcome debt relief by European partners, have put Greece on a path to successfully exit the European Stability Mechanism-supported program in August 2018.

While a recovery is underway, Directors stressed that significant crisis legacies and social pressures remain, and the risks to the outlook remain on the downside.  To address these issues, they encouraged further efforts to rebalance fiscal policy, strengthen bank balance sheets, and reform product and labor markets to boost sustainable and inclusive growth.

Directors agreed that, given the significant adjustment to date, Greece does not require further fiscal consolidation, while also noting that achieving the high primary balance targets comes at a cost to growth, including through high taxes and constrained social and investment spending.  They supported a shift to a more growth-friendly and inclusive fiscal policy mix, and welcomed the authorities’ commitment to fully implement the pre-legislated fiscal package in 2019 and 2020.  Directors called for further fiscal rebalancing to reduce direct taxes and increase targeted social spending to support growth and reduce still-high poverty.

Directors urged the authorities to accelerate efforts to address high non-performing loans (NPLs) and restore lending.  In this regard, they encouraged banks to step up use of the strengthened financial sector legislative and regulatory frameworks that have created a better environment for addressing high non-performing exposures, including through the development of a secondary market for non-performing loans.  A number of Directors also encouraged the authorities to set more ambitious NPL targets.  Directors called for building-up of capital buffers, further steps to mitigate liquidity and funding risks, and stronger bank internal governance.  They supported gradual relaxation of exchange restrictions in line with the milestone-based roadmap and taking due account of banks’ liquidity.

Directors noted that in the context of limited macroeconomic policy space, further structural reform efforts are needed to boost productivity, competitiveness and social inclusion.  Despite important progress, Greece continues to score lower than peers in competitiveness indicators and lags its peers in liberalizing most service sector professions.  Directors urged the authorities to further improve the business environment, aiming to foster competition in product markets and preserving labor market flexibility – through a prudent minimum wage policy and preserving reforms to collective bargaining.  These reforms would help ensure competitiveness and preserve the momentum of employment recovery.

Directors underscored the importance of further public sector efficiency improvements and strengthened governance, noting, in particular, the shortcomings in tax enforcement.  In addition to efforts in public revenue administration, Directors encouraged the authorities to provide adequate protection from liability of public officials, to implement the Anti-Corruption Action Plan with a focus on improving data collection and transparency, and to take measures to modernize the judiciary.  They also emphasized the need to protect achieved gains in the quality of official statistics by defending the statistical agency against any efforts to undermine its credibility, guaranteeing its professional independence, and addressing remaining shortcomings in reporting.

Directors welcomed the debt relief measures granted by European partners and the improvement in debt sustainability over the medium term.  They concurred that this relief, combined with a large cash buffer, will facilitate medium-term market access.  A number of Directors considered that, over the longer term, these measures will significantly reduce gross financing needs.  Many others, however, cautioned that long-term sustainability remains uncertain and emphasized the need for realistic assumptions for primary balance targets and growth projections.  Directors welcomed the continued commitment of Greece’s European partners to support the country in the future, including through further debt relief, if needed.

Directors looked forward to close engagement between the authorities and the Fund under the post-program monitoring framework.  (IMF 31.07)

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11.8  GREECE:  Moody’s Changed Greek Banking Outlook to Positive on Improving Asset Risk

On 30 July, Moody’s Investors Service changed its outlook on the Greek banking system to positive from stable on expectations that banks’ funding and asset risk will improve over the next 12 to 18 months, amid an improving but still challenging operating environment.  Moody’s expects the Greek economy to maintain its positive momentum over the outlook period, contingent on the government remaining committed to structural reforms in order to attract more foreign investment.  The rating agency projects GDP growth of 2% this year and 2.2% in 2019, supported by a strong increase in exports and services including tourism.

“Problem loans will gradually decline from very high levels as Greek banks benefit from improved loan recovery laws,” said Nondas Nicolaides, a Vice President and Senior Credit Officer at Moody’s.  Moody’s expects problem loans to remain elevated, but banks will likely meet the targets committed to the regulator reducing their non-performing exposures (NPEs) to around 35% of gross loans by the end of 2019.

The rating agency said that Greek banks have comfortable regulatory capital levels, with a common equity Tier 1 (CET1) ratio for the system of around 15.8% in March 2018, although sizeable Deferred Tax Assets (DTAs) continue to undermine the quality of such capital.

Greek banks’ dependence on central bank funding and emergency liquidity assistance (ELA) is declining, with ELA likely to be fully eliminated in coming months, as banks regain access to the interbank repo and covered bond markets and deposits gradually increase.

Most Greek banks are likely to remain marginally profitable through 2019, as credit and operating costs remain low.  However, net interest margins will remain pressured as banks continue to deleverage and run down their loan balances through write offs and sales of NPEs.  (Moody’s 30.07)

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