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TOP STORIES
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Bank of Israel 2009 Report Presented to Government
1.2 Netanyahu Government Unanimously Approves 2nd Term for Fischer
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Google Acquires Labpixies
2.2 N-trig Strengthens Presence in Asia-Pacific with Japanese Office
2.3 Plurality Opens US Subsidiary in California's Silicon Valley
2.4 Samaria Wines Win Big - Victor Credits Sabbatical Year
2.5 Unilever Increases Holdings in Strauss Ice Cream to 90%
2.6 Bike Riding Flies on El Al
2.7 A. O. Smith Enters Strategic Agreement With Israel's Chromagen
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Representatives of US Firm Discuss $1.3 Billion Project in Jordan
3.2 Gold's Gym Bodybuilding Firm to Open 26 Gyms In Mideast
3.3 Persian Gulf Sees Demand Surge For Exotic Timber
3.4 Qatargas Trains 6 & 7 Start Production This Year
3.5 Qatar Selects Houston Community College for First American-Model Community College
3.6 UAE Leads Middle East/Africa Hotel Pipeline for March 2010
3.7 Crowell & Moring Announces Alliances in Egypt and Saudi Arabia
3.8 Dundee Precious Metals Discovers New Gold Deposits in Bulgaria
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 TransAlgae Presents on CICC Cleantech Showcase in California
4.2 Israel Air Force Aims For Energy Independence
4.3 Israel Plans Wind Powered Lighting For Coastal Highway
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 IMF Says Mideast Economies to Grow 4.5%
5.2 US Exports to The Arab World Rebound to $75 Billion
5.3 Jordan's GDP to Grow by 4.1% in 2010
5.4 Iraq's Gas Exports May Reach 25 Billion Cubic Meters
5.5 GCC Integrated Electricity Grid to Be Operational By End 2011
5.6 Kuwait Gives Initial Approval for Privatization Bill
5.7 France & Kuwait Sign Nuclear Power Deal
5.8 Bahrain Inflation Rises In March To 1.8%
5.9 Qatar Delays Plan To Scrap Visas On Arrival
5.10 Top Hotels Fear Impact of Qatar Visa Changes
5.11 UAE Inflation Rises For First Time In Four Months
5.12 Dubai Inflation Hits Low Of 0.8% Y/Y In March
5.13 Oman Invites Bids for 500 Kilometer Railway Project
5.14 Saudi Arabia's CPI reaches 4.7% in March 2010
5.15 Saudis Seeking Nuclear Energy?
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 IMF Raises Forecast For Turkey's Growth
6.2 Unemployment in Turkey on the Rise
6.3 Turkish Health Tourism Sector Targets $20 Billion Income
6.4 Cyprus Budget Deficit Leaps to 6.1% of GDP in 2009
6.5 Cyprus' Trade Deficit Widens In January
6.6 Cyprus Spends Less On Social Protection Than EU
6.7 Greece's Jobless Rate Continues to Rise Sharply
6.8 Greek Education Costly But Inefficient
6.9 EC Starts Procedure Against Bulgaria Over 2009 Deficit
6.10 EU Approves Bulgaria's Convergence Program
6.11 Bulgaria Makes Life Easier For Business by Slashing Bureaucracy
6.12 Bulgaria's Unemployment Growth Softens In March
6.13 Bulgaria Economy Minister Takes Business Delegation to Israel
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Israel's Population Surpasses 7.5 Million
7.2 Israel's Druze Population Reaches 125,000
7.3 Lag BaOmer Marked in Israel on 1/2 May
7.4 Yom Yerushalayim - Jerusalem Day to Be Celebrated
8: ISRAEL LIFE SCIENCE NEWS
8.1 Syneron's elure Advanced Dermal Whitening Product Line Wins International Technology Award
8.2 Significant Creation of Value by Hadasit Bio-Holdings
8.3 Magen Medical Solutions: First Worldwide Patients Treated with Anti-Adhesion SpineShield
8.4 VBL Therapeutics Demonstrates Substantial Tumor Reduction & Stable Disease Achieved
8.5 ReDent Signs Significant US & European Distribution Deal
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Yissum Licenses Cutting Edge Technology for Enhanced Digital Image Processing to Adobe Systems
9.2 Top 3 Israeli Banks Roll Out Customer Facing Voice Biometrics Technology by PerSay
9.3 CTERA Networks Selected by AlwaysOn as an OnDemand Top 100 Winner
9.4 RADVISION Launches New High Definition Video Conferencing Room System – SCOPIA XT1000
9.5 Testuff Launches a Mac Version of its On-Demand Test Management Service
9.6 Mellanox Enables Breakthrough InfiniBand Performance On Dell Blade Servers
9.7 GreenRoad Wins Top Tech Innovators of 2010 From 'Mass Transit'
9.8 Syneto Enhances its Total Email Security Solution with Commtouch Technology
9.9 Mellanox Announces Industry's Lowest Latency Standards-based 10 Gigabit Ethernet Adapters
9.10 Genesis EW to Launch New Anti Terror Intelligence Solution
9.11 Plurality Announces the World's First Scalable 256 Multicore Processor for Wireless Infrastructure.
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's CPI Rises By 0.1% in March
10.2 IMF Sees Israel's GDP Growth Among Developed Markets' Best
10.3 Israel's Fourth Quarter GDP Growth Rate Confirmed
10.4 Israel Exports Grew 11,250 Times Since Independence Regained in 1948
10.5 Israel's Pharmaceutical Sector Leads Export Growth
10.6 Israel's Unemployment Rates Continues to Fall
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11: In Depth
11.1 ISRAEL: Summary of Israeli High-Tech Company Capital Raising - Q1 2010
11.2 LEBANON: Food & Drink Report for 2010
11.3 JORDAN: Coalition Presses for Electoral Reform in Jordan
11.4 KUWAIT: Going Private
11.5 UAE: Abu Dhabi's Industrial & Warehouse Market
11.6 SAUDI ARABIA: Pharmaceuticals and Healthcare Report Q2 2010
11.7 SAUDI ARABIA: Saudi Hair Salon Market Exploded Over the Last Decade with Double Digit Growth
11.8 EGYPT: IMF Board Concludes Article IV Consultation for 2010
11.9 EGYPT: Fitch Rates Egypt's $1.5 Billion Bonds 'BB+'
11.10 EGYPT: Metals Report for Q2 2010
11.11 TURKEY: Falling Into Deficit Is Turkey's Chronic & Serious Problem
11.12 GREECE: Greece Requests EU-IMF Rescue In Euro's Biggest Test
11.13 GREECE: Moody's Downgrades Greece's Sovereign Ratings to A3
11.14 GREECE: Greece Activates Financial Aid Package
11.15 GREECE: Agribusiness Report for Q2/10 Looks Effects of the Economic Crisis
11.16 BULGARIA: Moody's Says Bulgaria Sovereign Upgrade Still Possible Despite Wider Deficits
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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Bank of Israel 2009 Report Presented to Government
On 21 April, Governor Fischer presented the Bank of Israel Annual Report for 2009 to Minister of Finance Steinitz. Fischer added that the Israeli economy emerged from the crisis in an extraordinary fashion compared with other countries and that the Ministry of Finance was an important reason for this. The 2009 Annual Report states that there was no housing bubble last year, despite the sharp rise in prices. However, if housing prices continue to rise in 2010, they will separate from levels in line with market fundamentals (the cost of housing services, demand and supply, the interest rate, etc.). In other words, there will be a bubble. The Bank of Israel calculates that between the mid-1990s and 2007, housing prices fell 25% in real terms, but between December 2007 and November 2009, they rose 25%. The Bank of Israel considers this rise in prices as a correction to the prior drop, and concludes that there was no bubble. It nonetheless cautions that if the present trend continues, "this conclusion will be in doubt". The Bank of Israel raised its 2010 GDP growth forecast to 3.7% from 3.5%, and predicts 4% growth in 2011. (Globes 21.04)
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1.2 Netanyahu Government Unanimously Approves 2nd Term for Fischer
On 18 April the Netanyahu government unanimously approved a second five-year term for Governor of the Bank of Israel Prof. Stanley Fischer. A month ago, in the presence of Prime Minister Netanyahu and Minister of Finance Steinitz, Prof. Fischer announced that he intended to remain at the Bank of Israel. A few days before Fischer announced his intention to stay on, the Knesset Finance Committee approved the new Bank of Israel Law, which redefines the Bank of Israel's authority. The new Bank of Israel Law was reportedly Fischer's condition for serving a second term, a condition that Netanyahu and Steinitz took care to fulfill. Fischer is now working hard to prepare the Bank of Israel for implementation of the new law, including the composition of the monetary forum, which will set the interest rate and other monetary policies. The Bank of Israel will also establish a new administrative council, under a chairman, which will approve the central bank's budget and salaries. (Globes 18.04)
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Google Acquires Labpixies
On 26 April Google Inc. announced that it has made its first ever acquisition in Israel - LabPixies, a developer of personalized website gadgets for Google's personalized search page iGoogle, as well as for mobile devices. The companies did not disclose the size of the deal, but sources estimate it at $25 million. The acquisition is a strategic move for Google in Israel, in contrast to the numerous Israeli start-ups acquired by Microsoft Corporation, Yahoo! and eBay. Google launched activity in Israel in 2005, but until now, it has not made any acquisitions here. LabPixies, which has 12 employees, will be absorbed by Google Israel. Tel Aviv's LabPixies' (http://www.labpixies.com) gadgets provide user information, such as news and weather reports, games and quick access to e-mailboxes. Google says that it acquired LabPixies because it specializes in the development of cloud-based applications enables thousands of developers to create applications for users worldwide, which will strengthen the iGoogle product. (Various26.04)
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2.2 N-trig Strengthens Presence in Asia-Pacific with Japanese Office
N-trig announced the expansion of their APAC presence into Japan. N-trig's new office will focus on locally serving OEM and ODM partners, and is part of expanding the company's presence in the APAC region. Kfar Saba's N-trig (http://www.n-trig.com) is revolutionizing the way people interact with computers by providing the industry's first dual-mode pen and touch input device. N-trig's DuoSense technology is the only combined pen, touch, and multi-touch interface for today's advanced computing world. N-trig's DuoSense dual-mode digitizer uses both pen and zero-pressure capacitive touch to provide a true Hands-on computing experience for mobile computers and other digital input products over a single device. DuoSense enables greater mobility and usability in the next generation of computing devices and notebook PCs, enabling new market opportunities for OEMs and ODMs to introduce computer products which offer a more intuitive and interactive experience. N-trig's digitizers are easily integratable, support any type of LCD, and keep devices slim and light. N-trig's technology can be implemented in a broad range of products from small notebooks to large format LCDs and can support a variety of applications including mobile, notebooks, convertible and all-in-one computing, gaming, entertainment, multimedia and more. (N-trig 22.04)
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2.3 Plurality Opens US Subsidiary in California's Silicon Valley
Plurality announced the opening of Plurality USA. Plurality's HyperCore IP is a general-purpose multiprocessor of a fundamentally new paradigm. This architecture delivers order-of-magnitude performance advances over today's general purpose multicore processors in SoC applications, while significantly reducing power consumption, and providing a simple programming model for porting serial C/C++ code for efficient parallel programming. Plurality offers HyperCore IP products for embedded system SoCs in wireless, networking and multimedia markets, as well as chip and board products for high-performance (cloud) computing. In support of HyperCore design activity, Plurality has also seeded the HyperCore Platform Ecosystem, a growing cooperative community of customers, design services providers, software and EDA companies. Netanya's Plurality (http://www.plurality.com) develops advanced silicon Intellectual Property, chips and acceleration boards for ManyCore processing. Plurality's IP is based on a unique, scalable, easily-programmable ManyCore architecture that is positioned as a general-purpose accelerator. The processor delivers the highest performance per watt per square millimeter at the lowest cost of any currently available shared-memory processor. (Plurality 22.04)
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2.4 Samaria Wines Win Big - Victor Credits Sabbatical Year
Wineries in Judea and Samaria shone at Israel's annual Eshkol Hazahav wine competition this year, taking a total of seven awards. A total of 251 wines were submitted to the competition, and were judged by dozens of experts in a blind taste test. The Hararei Kedem winery in Yitzhar was particularly successful, taking two gold medals and one silver. Hararei Kedem's winning wines were a Merlot, a Cabernet Sauvignon and a Cabernet-Merlot blend. Hararei Kedem is a unique winery for several reasons. Not only does the owner avoid hiring foreign workers as many do, but the wines created are entirely organic. In addition, the grower observes the shemittah (Sabbatical) year, allowing his fields to lie fallow once every seven years.
The grapes that created his winning wines were grown in the year before the shemittah year, after he had decided to let the land lay fallow the next year despite agricultural experts' attempts to dissuade him. In that year, 2007, the year before the shemittah year, his vineyard produced three times the usual quantity of grapes. The grapes were special in terms of quality as well as quantity, he added, as indicated by the prize-winning wines they produced. The Pesagot winery won three medals as well, and Yekev Gevaot of Givat Harel won a single medal, which join the two gold medals it won last year. The wine industry in Judea and Samaria has flourished in recent years. Wineries in the region have won awards in Israel and abroad, and have drawn tourists from around the world. (IsraelNN 24.04)
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2.5 Unilever Increases Holdings in Strauss Ice Cream to 90%
The Strauss family has sold an additional 39% of Strauss Ice Cream to Unilever NV, reducing its stake in the firm to 10%. The sale increases Unilever's stake in the company from 51% to 90%. Strauss Ice Cream is Israel's largest ice cream maker, with a 47% market share. Anglo-Dutch Unilever is the world's largest producer of food and household consumer products, operating in 150 countries worldwide, including Israel. (Globes 26.04)
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2.6 Bike Riding Flies on El Al
Bike riders can be said to like El Al as the Israeli airline is the only known international carrier to allow passengers to travel with their bicycles free of charge. In order to encourage bicycling, El Al has hooked up with a mountain biking club to offer a discount on bike rentals for the airline's passengers. Tours include cycle paths in Judea and Samaria and an “Israel Heritage" charity bike trek. Israel has invested in bicycle paths in major cities, while the “Nature Trail” extending from the northern to southern border has attracted thousands of hikers, although many of the paths are not suitable for bicycles. Taglit-Birthright Israel offers 10-day “Israel by Bike” tours that include the Western Wall, Tel Aviv, the Golan Heights, Masada, the Dead Sea, camel riding and rafting down the Jordan River. Unlike other Middle East countries, women are free to bicycle in Israel without fear of restrictions on dress when appearing in public. (IsraelNN 27.04)
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2.7 A. O. Smith Enters Strategic Agreement With Israel's Chromagen
Milwaukee's A. O. Smith Corporation, a global leader applying innovative technology and energy-efficient solutions, has entered into a strategic cooperative agreement with Chromagen to develop advanced solar technology for water heating applications. Under the terms of the agreement, Chromagen will offer A. O. Smith exclusive marketing and distribution rights of its solar collectors for use in residential and commercial solar water heating systems in the United States and Canada. The two companies also agreed to work cooperatively to design, develop and market energy-efficient solar products. Sha'ar Ha'amakim's Chromagen (http://www.chromagen.biz), with estimated 2009 sales of $50 million, has two manufacturing operations in Israel and distributes products in more than 35 countries worldwide. The company provides solar products designed for domestic use as well as complex central systems for commercial applications. Chromagen solar collectors are certified by the Solar Rating and Certification Corporation (SRCC) in the U.S., International Standard ISO 9806 and a number of other certifications worldwide. (A. O. Smith 13.04)
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Representatives of US Firm Discuss $1.3 Billion Project in Jordan
A US delegation representing MIMCo NRG, which is specialized in solid waste management systems, began negotiations with the Greater Amman Municipality (GAM) to invest $1.3 billion in the Hashemite Kingdom. MIMCo NRG has already submitted proposal to the GAM, according to the company's local representative, Ataa Jordan, a firms undertaking consulting and feasibility studies. Last month, GAM has extended an invitation for the company's team to visit Jordan and start further discussions on the project. The system is fully automated, integrated and efficient municipal solid waste to energy processing plant. The project is expected to solve major problems facing Amman. GAM received proposals from 15 interested international firms. MIMCo submitted a proposal that includes technical and financial details. Recently GAM started operations of Ghabawi landfill project to strengthen its waste management capabilities. With future plans to develop it, such a project will serve Amman needs for waste management and treatment until 2030, he added. (JT 22.04)
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3.2 Gold's Gym Bodybuilding Firm to Open 26 Gyms In Mideast
Texas-based Gold's Gym is planning to expand into the Middle East and has signed a franchise deal to open 26 gyms in the Persian Gulf region. The Abu Dhabi-based Al Ahli Holding Group (AAHG) has signed a deal with Gold's Gym bodybuilding chain to open 26 gyms in the UAE, Oman, Qatar and Bahrain. The agreement also gives AAHG the option to open a further 66 gyms in Africa and the rest of the Middle Eastern region. Gold's Gym was founded in 1965 as a weightlifting shop in Venice, California and quickly became popular with celebrities. It now has 700 gyms in 28 countries. AAHG is a family owned company with interests in sectors from plastic manufacturing to printing and publishing, transportation, engineering and real estate and the Dubai Outlet Mall. The deal is described as the biggest franchise agreement in Gold's Gym's 45 years history, but neither AAHG nor Gild's Gym released details of the financial agreement. (Gold's Gym 13.04)
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3.3 Persian Gulf Sees Demand Surge For Exotic Timber
The demand for exotic timber in the Middle East region is likely to increase over the next few years, said Green Resources SL, a leading company in the international wood import industry. Green Resources said that despite the current global economic down turn, the overall Arabian Gulf's construction and development sector remains the least unaffected - thereby creating a constant demand for key construction materials like wood and timber. Green Resources, which is known for its specialization in international wood and wood product trading with West Africa, showcased a wide product display of exotic timber including iroko, sapelli, ayous, samba, tali, okan, ako, amazokoue, badi, mansonia and embero, among others. Green Resources also highlighted the increasing quality tropical timber based products like timber, laminated boards, rotary cut veneer, flooring, plywood and 3-ply profiles. (TradeArabia 17.04)
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3.4 Qatargas Trains 6 & 7 Start Production This Year
The first cargo from Qatargas train six should be loaded by November 2010, with the first shipment from train seven possible by year end, according to Qatargas. With capacity to chill enough natural gas to produce 7.8 million tonnes of LNG per year for export, the trains are the largest in the world. Train six is a joint venture between Qatar Petroleum, US-based ConocoPhillips and Japan's Mitsui, while train seven is being developed with Royal Dutch Shell. Demand for imported gas has waned in the US and Europe over the past year, but other buyers on Qatar's side of the Suez Canal, the key transit route for Qatari tankers heading to west, were making up for it. Despite the boom in US shale gas output, Qatargas has not written off the North American market and has been asked to help build new terminals there. Qatar Petroleum already has a stake in Golden Pass on the US east coast which is due online in late 2010. The head of commercial operations at Qatar's two LNG exporting groups said total Qatari LNG exports could reach 450 - 500 cargoes in 2010, with higher sales in 2011. (Beltone21.04)
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3.5 Qatar Selects Houston Community College for First American-Model Community College
The Community College of Qatar (CCQ), under the auspices of the Supreme Education Council (SEC), selected Houston Community College (HCC) to develop the community college model to meet the educational needs of Qatar under the educational reform initiatives of the Qatari government. HCC was chosen from among eight U.S. community colleges to develop a custom curriculum and institute a fully operational community college by the fall of 2010. The Qatari SEC chose HCC for the CCQ partnership because of its highly-motivated leadership, performance-driven programming and high international standards. The five-year CCQ-HCC partnership, part of Qatar's national educational reform, is the largest international service partnership with an American community college to date. HCC will initially provide qualified staff and faculty while the Qatari community college is in development. In addition, HCC and the CCQ will work together to create the operating procedures, student policies and hiring practices for the community college. The partners will develop a curriculum designed specifically for Qatari students. Students attending the CCQ will have dual enrollment in HCC for Associate in Arts, Associate in Sciences and Associate in Applied Sciences Degrees. Credits at CCQ will transfer to major universities throughout the world. CCQ will accept student registrations for testing and orientation for classes at the new campus building in Doha beginning June 2010 for September 2010 enrollment. (HCC 20.04)
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3.6 UAE Leads Middle East/Africa Hotel Pipeline for March 2010
The Middle East/Africa hotel development pipeline includes 473 hotels comprising 127,952 rooms, according to the March 2010 STR Global Construction Pipeline Report released in mid-April. Among the countries in the region, the UAE ended the month with the most rooms in the total active pipeline (53,477) and in the “In Construction” phase (26,868). Four other countries reported more than 5,000 rooms in the total active pipeline: Saudi Arabia (15,958 rooms); Egypt (6,397 rooms); and Qatar (6,123 rooms). Among the key markets in the region, Dubai, UAE, reported the largest number of rooms in the total active pipeline and in the In Construction phase (31,142 and 14,637, respectively). Abu Dhabi, UAE, followed Dubai with 14,071 rooms in the total active pipeline and 7,354 rooms in the In Construction phase. The two markets accounted for more than 80% of UAE's rooms in the total active pipeline. Among the Chain Scale segments, three of the seven segments each accounted for at least 20% rooms in the total active pipeline. The Upper Upscale segment made up the largest portion of the total active pipeline with 27.5% and 35,168, followed by the Unaffiliated segment (24.3% with 31,107 rooms) and the Luxury segment (21.5% with 27,456 rooms). (BI-ME 20.04)
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3.7 Crowell & Moring Announces Alliances in Egypt and Saudi Arabia
The international law firm of Crowell & Moring LLP opened an affiliate office in Cairo, Egypt under the sponsorship of Hegazy & Associates, a Cairo-based law firm, and, concurrently, entered into a strategic alliance with Al Enizy & Associates, one of Saudi Arabia's leading law firms. The Cairo office will operate under the name Hegazy & Associates in Association with Crowell & Moring. The alliances have been formed in continuation of Crowell & Moring's long-term efforts to better serve North American, European and Latin American clients with business interests in the Middle East and North Africa (MENA) region. They will serve needs ranging from public procurement and government contracting to mergers & acquisitions, corporate and commercial financings, Islamic finance transactions, and international disputes. By forming these alliances, Crowell & Moring, Hegazy & Associates and Al Enizy & Associates will also be better positioned to provide Middle Eastern and North African companies with an integrated approach to servicing their legal needs as they expand their business and operations in the United States, Europe and throughout the MENA region.
Cairo-based Hegazy & Associates advises regional and international clients on domestic and cross-border corporate transactions, conventional and Islamic banking finance, government contracts, and international litigation and arbitration. Headquartered in Riyadh with an additional office in Jeddah, Al Enizy & Associates offers clients significant experience in corporate transactions, regulatory and capital markets matters, Islamic banking and finance, insurance, government contracts, litigation, arbitration, and dispute resolution. (Crowell & Moring 20.04)
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3.8 Dundee Precious Metals Discovers New Gold Deposits in Bulgaria
Toronto-based Dundee Precious Metals has discovered two new high-grade targets of gold deposits near the Chelopech Mine in Bulgaria. The new mineralized zones can easily be accessed from current development. Further drilling and interpretation will continue during 2010 to fully evaluate the size and characteristics of these new zones. The blocks are characterized by low sulphur contents (less than 10%), which are associated with high recoveries during processing, the mining company said. Dundee Precious Metals announced in January this year that it has abandoned plans to develop a plant in Bulgaria, buying a smelter in Namibia instead. Bulgaria's Economy Ministry confirmed that the company has informed them of the acquisition of a plant in Namibia and the freezing of its plans to build a metallurgy plant near Chelopech, about 60km east of Sofia, using cyanide to extract the gold. The decision came in the wake of a ruling of the supreme Bulgarian court from the end of last year, which revoked a 2008 environmental impact assessment resolution, which gave the green light to its gold and copper mine in Chelopech. The company has failed to secure all necessary permits from Bulgarian institutions for five years and has faced strong opposition from environmentalists. In Bulgaria Dundee Precious Metals also hopes to secure a concession at Krumovgrad gold project, a mining development project. (SMN 14.04)
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 TransAlgae Presents on CICC Cleantech Showcase in California
TransAlgae was one the ten Israeli Clean Technology companies to be chosen to participate in the California Israel Chamber of Commerce (CICC) delegation to meet with industry leaders, investment firms, policymakers and utility giants from April 26-28 in Silicon Valley, California. TransAlgae, established in 2008, is building the framework for the profitable production of algal biofuel, animal feed and fine chemicals. The company has completed its first generation of transgenic algae and has established a field research site at a 400MW gas-fired power station in collaboration with the Israeli Electric Company. Prof. Jonathan Gressel, a world-renowned expert in plant genetic engineering and physiology and the recipient of the 2010Israel Prize for Agriculture,(the Israeli Government top scientific award) leads TransAlgae R&D. TransAlgae has applied for nine patents on its gene modifications and harvesting processes. This powerful patent portfolio will increase the yields of the desired products, prevent contamination of the algal production systems and protect the environment from inadvertent release of transgenic organisms.
Tel Aviv's TransAlgae (http://www.transalgae.com) is building the framework for producing algal biofuel and animal feed, using genetic engineering combined with practical agricultural, industrial and economic approaches. The company's scientific team has completed its first generation of transgenic algae, and a field research site has been established at a 400MW natural gas power station. In addition to greater productivity, the genetic approach enables rapid growth, generates multiple high-quality products, while ensuring resistance to contamination and bio-safety against inadvertent release. (TransAlgae 22.04)
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4.2 Israel Air Force Aims For Energy Independence
Globes has reported that the Israel Air Force plans to set up solar energy installations at all its bases. Some bases will be able to meet all their electricity needs and even sell the surplus to the national grid, which will give the IAF what it calls energy independence. Within two months, the IAF will publish a tender for small photovoltaic systems (up to 50 kilowatts) for electricity production at its bases. The tender is for the supply and installation of the systems, and their maintenance for 15 years, with an option to extend for five years. Later this year, the IAF is due to publish a similar tender for mid-sized photovoltaic systems (between 50 kilowatts and 5 megawatts) to be installed at larger bases. The highlight of the IAF's solar power project is an initiative to build a large power plant at the Nabatim Air Force Base in the Negev. This project is now in the feasibility review stage. The IAF wants to build a 50 MW thermo-solar power plant, using technology developed in Israel, at an estimated cost of NIS 250 million. The photovoltaic systems and the thermo-solar plant are part of an IAF initiative to install solar power systems at all its bases. The plan is part of a broader plan to reduce electricity consumption by 10% by the end of the year. (Globes 21.04)
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4.3 Israel Plans Wind Powered Lighting For Coastal Highway
Globes reported that Israel National Roads Company is set to publish tenders for the installation of wind turbines to produce electricity for street lighting. The company believes that the progress recently achieved in contacts with the Ministry of Interior's National Planning and Building Commission will enable the publication of the tenders this year. The tenders will be for supply, installation and maintenance of wind electricity production turbines for 20 years. The tenders will be published after a survey is undertaken to check the economic feasibility of potential sites. National Roads Co. CFO Yiftach said that small wind turbines could be placed on street lighting poles on the coastal highway to take advantage of the sea winds. (Globes 27.04)
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 IMF Says Mideast Economies to Grow 4.5%
Middle East and North African economies are recovering at a good speed with projected growth of 4.5% in 2010 and fiscal stimulus should stay in place to cement the rebound, the International Monetary Fund said on 21 April. However, the pace of recovery in advanced economies and the impact from Dubai's debt crisis were key downside risks and the outlook substantially uncertain. "Government investment programs, especially in infrastructure, will continue to boost domestic demand in the near term in many Mena economies," the Fund said. "These measures should remain in place to help cement the recovery. High debt levels, however, constrain the scope for fiscal stimulus in some oil-importing economies," it added. Monetary policy should also continue to be used to help support growth in countries with non-pegged exchange rate regimes such as Egypt, if feasible, given subdued inflation pressures.
"For other economies in the region that have hard pegs to the dollar (Saudi Arabia, United Arab Emirates), monetary policy mirrors US policy and is appropriately stimulative," the IMF said. Egypt's central bank said in March that inflation remained within its comfort zone and kept interest rates on hold, saying they were supportive for economic growth. Qatar will be the strongest performer among the region's oil exporters this year with gross domestic product growth expected at 18.5% due to continued expansion of natural gas production and government infrastructure spending. Saudi Arabia, the largest Arab economy, should grow by 3.7% this year, after anemic 0.15% growth in 2009 with fiscal spending remaining the key driver.
The IMF also raised its GDP growth forecast for the United Arab Emirates, the second biggest Arab economy, to 1.3% this year, from 0.6% it had forecast following its January consultations with the Gulf oil exporter. It said, however, a vulnerable financial sector and weak property market were holding back economies such as the UAE, which contracted by 0.7% in 2009, as well as Kuwait. Among oil importers, Lebanon should outperform the rest with 6% expansion this year, while Egypt and Syria would follow with 5% growth. The IMF also said the economic impact of Dubai World debt restructuring, one of the main downside risks, has been relatively limited so far but its full impact may not be felt for some time. (IMF 21.04)
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5.2 US Exports to The Arab World Rebound to $75 Billion
At a high-level conference in Doha, Qatar , the National US-Arab Chamber of Commerce (NUSACC) revealed that 2010 will be a record-breaking year for sales of US goods and services to the Arab world. American exports to the region are expected to rebound to nearly $75 billion in 2010, up from $63 billion in 2009. This is an increase of almost 20% over last year, propelling U.S. exports to the Middle East and North Africa (MENA) to an all-time high. Total market demand in the Arab world is expected to grow 12% in 2010, to $796 billion. The top five Arab export markets for the United States in 2010 are slated to be the United Arab Emirates ($22.23 billion), Saudi Arabia ($17.04 billion), Egypt ($6.13 billion), Iraq ($5.47 billion) and Qatar ($5.05 billion). The Chamber's research affirms that there are significant U.S. export opportunities across the Arab world. Infrastructure build-out will continue to be the most significant driver behind foreign investment and exports to the region, particularly in the Gulf Cooperation Council (GCC) nations. The countries of the Arabian Gulf are making huge investments in upstream and downstream energy projects, power generation, water and waste treatment, ports and airports, roads & rail, hospitals, and schools. The most upbeat consumers are in the GCC - in Qatar, the United Arab Emirates and Saudi Arabia, respectively - and this consumer confidence is translating into increased purchases of U.S. goods and services. (BI-ME 20.04)
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5.3 Jordan's GDP to Grow by 4.1% in 2010
An International Monetary Fund's report said that Jordan's Gross Domestic Product is expected to grow by 4.1% in 2010 and 4.5% in 2011. According to the IMF World Economic Outlook April 2010 report, Jordan's Consumer Price Index is projected to stand at 5.3% in the current year and 4.6% in 2011. The Kingdom's current account balance deficit is expected to reach 8.9% for this year and 9.7% for the next year, the report revealed. The global recovery is proceeding better than expected but at varying speeds tepidly in many advanced economies and solidly in most emerging and developing economies, the report added. It said that world growth is now expected to be 4.25%. Among the advanced economies, the United States is off to a better start than Europe and Japan. Among emerging and developing economies, emerging Asia is leading the recovery, while many emerging European and some Commonwealth of Independent States economies are lagging behind. (Petra21.04)
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5.4 Iraq's Gas Exports May Reach 25 Billion Cubic Meters
Iraq, holder of the world's third-largest oil reserves, may produce enough natural gas to export as much as 25 billion cubic meters in 2016. Much of the fuel will be produced at oil deposits that the government auctioned off last year, Deputy Oil Minister al-Shamma told reporters on 14 April. Iraq, dependent on oil revenue for most of its income, is seeking to boost output and rebuild infrastructure after six years of conflict and prior economic sanctions. It awarded service contracts to develop 10 oil projects auctioned last year. The country has been named as a source for the Nabucco gas pipe that's meant to reduce Europe's dependence on Russian fuel. The planned $10.7 billion, 3,000 kilometer Nabucco pipeline aims to diversify gas supplies to Europe by bringing as much as 31 billion cubic meters of Caspian and Middle East fuel a year to Austria through Turkey. The venture, led by Vienna-based OMV, is vying with Asian and Russian projects for access to Azeri, Turkmen, Iranian and Iraqi gas. Exporting gas would require the expansion of an existing pipeline with a capacity of 8 billion cubic meters a year and the construction of new ones. Iraq has provisions to reimburse companies already working in the area to encourage them to expand pipelines. (15.04)
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5.5 GCC Integrated Electricity Grid to Be Operational By End 2011
The GCC integrated electricity grid will be fully operational by later next year or early 2012 linking all the Gulf countries, according to the GCC Interconnection Authority (GCCIA). The $1.2 billion project linking Bahrain, Qatar, Saudi Arabia and Kuwait, will make more than 1,200 MW of additional power available. Bahrain will be included in the first phase of the network, called the Northern Grid while the UAE and Oman, who are yet to be linked, will be included in the Southern Grid. While the UAE will be linked in Q1/11, Oman will follow a few months afterwards. The two grids will then be connected, possibly by the end of 2011 or early 2012. Electricity from the GCC power grid could be shared with Europe to help it cope with freezing winters, as the region only needs the spare power during the hot summer months and it would remain idle in winter. Power demand is growing more than 10% annually in the GCC, one of the highest rates in the world. The power grid project was launched nearly 8 years after being approved by GCC heads of state in the mid-1990s. It was overseen by the GCCIA based in Dammam, Saudi Arabia. The interconnection project is being undertaken by Italian-Norwegian joint venture Prysmian-Nexan. (Various 15.04)
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5.6 Kuwait Gives Initial Approval for Privatization Bill
On 16 April, the Kuwaiti Parliament approved the first draft of the delayed privatization bill aimed at allowing the sale of some government-owned assets. It was not clear in the bill which assets are to be included in the privatization scheme; yet, it was noted that it was to include downstream energy sector assets. However, no foreign investments are to be allowed in Kuwait's energy sector. Moreover, the bill would exclude sectors such as health and education. According to the draft of the bill, half of the shares are to be owned by Kuwaiti nationals. The bill is to preserve Kuwaitis' rights by maintaining the same number of Kuwaiti workers at to-be privatized entities. A Supreme Privatization Council, which will be headed by the prime minister, is to be set up to oversee the privatization processes. The draft outlined that "40% will be offered in an initial public offering to Kuwaiti nationals. At least 35% of the shares will be offered in a public auction open to local listed shareholding companies, and other companies that the (supreme privatization) council approves." The government would have the right to intervene if any of the privatized companies had “irregular financial activities.” Some feel that the new law will help create jobs for 8,000 new Kuwaiti university graduates every year, reducing the burden on the government's budget which pays wages equal to 89% of the country's oil revenues. Privatization revenues are to be placed in the state budget's revenues, with at least 50% deposited into the Future Generation Fund that is constructed by the Kuwait Investment Authority for when oil reserves run out. (Beltone 19.04)
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5.7 France & Kuwait Sign Nuclear Power Deal
France and Kuwait signed an agreement to develop nuclear energy in the Gulf country, a comeback for the French nuclear industry after it lost a key reactor deal in the United Arab Emirates. After talks with French President Sarkozy, Kuwait's Prime Minister Sheik al-Ahmad al-Sabah and French officials signed an agreement to develop a civil nuclear energy project. The French has lost a $20 billion deal to supply four reactors to United Arab Emirates to a South Korean firm. (UPI 16.04)
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5.8 Bahrain Inflation Rises In March To 1.8%
The Bahraini Central Informatics Organization announced on 27 April that Bahraini inflation inched up to a y-o-y increase of 1.8% in March 2010, compared to a y-o-y increase of 1.7% in February 2010 and 4.3% increase in March 2009. All sub-indices registered increases on a monthly basis, with the exception of the housing, water and energy sub-index which declined by 1.5% m-o-m. On the other hand, healthcare services, transportations, clothing and footwear, miscellaneous goods and services, furnishing, alcoholic beverages and tobacco, food and non-alcoholic beverages, restaurants, and recreation sub-indexes went up by 1.8%, 1.8%, 1.0%, 0.9%, 0.5%, 0.4% and 0.3%, respectively. The communication and transportation sub-indexes saw no change in their monthly levels. As a result, the overall index edged up m-o-m by 0.1% in March 2010, compared to a m-o-m increase of 0.2% a month earlier, declining for the third month in a row. From a y-o-y perspective, all sectors saw year-on-year positive growths except for the housing, water and energy sub-index and the communications sub-index which stepped down by -1.4% and -5.1%, respectively. Alcoholic beverages and tobacco sub-index saw the largest y-o-y increase in prices, going up by 10.5%, followed by the education sub-index, up by 7.8%. Restaurants, transportation, healthcare services, food and non-alcoholic beverages, furnishing, clothing and footwear, and recreation sub-indices came after, increasing by 6.5%, 4.1%, 3.9%, 3.6%, 2.4%, 1.3% and 0.1%, respectively. Inflation levels across the GCC declined strongly in H2/09 and onwards, compared to the comparative period of 2008, due to the drop in international energy and food prices, and the rise in the US dollar, which kept imported prices down. (Various 27.04)
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5.9 Qatar Delays Plan To Scrap Visas On Arrival
Qatar's plans to scrap its visa-on-arrival facility for nationals of 33 countries have been delayed. The old system will remain in place despite the Gulf state announcing new rules earlier this month which were set to be introduced on May 1. Under the regulations, the nationals of 33 countries, including the US, UK and expat residents of the GCC, would have to apply for a visa prior to arrival in Qatar. But media in Qatar reported that the move had been delayed after Qatar's Foreign Ministry received requests from some countries to continue with the old system and allow their nationals time before the new entry visa rules are enforced. According to Qatar News Agency (QNA), a source at the Consular Affairs Section of the Foreign Ministry said that the requests of these countries were being studied. The regulations would have meant that all passengers wishing to travel to Qatar for business purposes will need to have their visas arranged by a local sponsor, via the Ministry of Interior. (Various 20.04)
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5.10 Top Hotels Fear Impact of Qatar Visa Changes
In early April, Qatar announced that British and American citizens will have to apply for both tourist and business visas prior to arrival in the Gulf state. At the present time, local hotels are now waiting for more information from the Ministry of the Interior as to how the process would work. Overall, this move came as a surprise to the hotel community. The requirement was supposed to come into effect on 1 May. It was also understood that GCC residents would be able to apply for the visas in their country of residency, rather than having to return to their home states to apply to the Qatari embassy there. (Various 13.04)
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5.11 UAE Inflation Rises For First Time In Four Months
The National Bureau of Statistics reported on 25 April that in March the UAE's annual inflation rose for the first time in four months, led by higher prices for food, beverages and education. Inflation rose 0.68% in March from a year earlier and 0.1% compared with the previous month, after the UAE registered annual deflation in February, January and December. Consumer prices were 0.68% higher in March than a year earlier, after falling 0.27% in February on a yearly basis. Food and beverage prices jumped 2.9% in the 12 months through March, education costs rose 10.5% and prices for furniture and other items increased 7.2%. While still negative on an annual basis at -0.2% in March 2010, inflation rose from -1.5% in February 2010, as food prices and housing costs rose by higher increments in March 2010 compared to March 2009, reflecting the gradual rebound in the economy. Annual inflation averaged -1.1% in 1Q2010. With the recovery in the economy's services sectors, rise in gasoline prices and rebound in international commodity prices, it is expected that inflation will average 3.5% in the UAE in 2010, up from 1.6% in 2009. (Various 25.04)
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5.12 Dubai Inflation Hits Low Of 0.8% Y/Y In March
The Dubai Statistics Centre announced on 20 April that Dubai's inflation slowed to 0.83% on an annual basis in March, its lowest level in at least two years, as housing and food prices fell. The global downturn slashed consumer price growth across the Gulf oil producing region from record peaks in 2008, with some countries such as the UAE and Qatar experiencing deflation last year. The consumer price index of Dubai, a member of the UAE federation, showed inflation decelerated for the third month in a row in March. It stood at 0.89% in February, well below a peak of 10.8% for the full year of 2008. On the month, consumer prices fell for a fifth month in a row in March, posting a decrease of 0.12% after a 0.22% decline in February. However, inflation should stay in low single digits across the Gulf due to an absence of demand driven pressures as the banking sector recovers from the impact of the global credit crunch and debt restructuring in Saudi Arabia and Dubai. Dubai, which lacks the oil wealth of its neighbor Abu Dhabi, took a big hit from the global credit crunch last year after its real estate bubble burst, dragging down the UAE economy. Prices in the key housing and energy component, which has a 44% weight in the Dubai basket, edged down by 0.23% month on month in March, after a 0.86% fall in the previous month. Food prices, which account for 11% of the index, have been volatile, falling by 0.67% in March after jumping 1.26% in the previous month, the data showed. (DSC 20.04)
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5.13 Oman Invites Bids for 500 Kilometer Railway Project
Oman has invited two separate bids for the project management and design work for its 500km long railway project. The railway system will connect all the ports, airports and free zones in the country and expected to generate a revenue of about $250 million in its first year operation, a finance ministry official said. The project is expected to be completed in 2017 and the government is seeking to award the construction of the projects in three phases. The plan is to award the tenders in 2012 and all three construction phases scheduled to complete in 2017. The project will build a slow passenger and freight services as well as an express passenger railway lines. The trains in Oman will be part of the GCC's $20 billion 1,900 kilometer long network. Every GCC state member will build their own railway lines for the common regional link. (Various 18.04)
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5.14 Saudi Arabia's CPI reaches 4.7% in March 2010
Inflation in Saudi Arabia moved up for the second month in a row to 4.7% y-o-y in March 2010, compared to 4.6% in February 2010, reaching a 9-month high after hitting its bottom in October 2009 at 3.5%. The cost of living index registered 126.7 points, up from 126.1 points recorded a month earlier, going up by 0.5%, m-o-m. The increase was mainly attributed to the food sub-indexes which jumped y-o-y by 5% in March, compared to y-o-y increase of 4% in February. On the other hand, the renovation, home rents, water and fuel sub-index eased and grew y-o-y by 10.1% in March compared to a y-o-y increase of 10.6% recorded a month earlier. Beltone said the global financial crisis had a strong impact on the GCC, bringing inflation down to single digits, and deflation in the UAE and Qatar. In Saudi Arabia, inflation peaked in July 2008 at 11.1%, on the back of imported inflation. (Beltone 15.04)
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5.15 Saudis Seeking Nuclear Energy?
Saudi Arabia may look to civilian nuclear energy to help shift to alternative sources of energy, the Saudi oil minister suggested. Officials at the King Abdullah City for Nuclear and Renewable Energy in Riyadh announced recently that they would draft a policy outlining civilian nuclear power projects in the country, the Emirati newspaper The National reports. Saudi Arabia uses oil to meet the bulk of its national energy demands. The reliance on oil, however, has reduced the amount available for exports while contributing to increased levels of carbon emissions. Ali al-Naimi, the Saudi oil minister, said a shift to alternative energy sources would help sustain the oil sector for his country. The UAE has pushed for nuclear power to save oil for exports. The oil minister said his country "is witnessing sustained growth in demand for power and desalinated water due to high population growth and subsidized prices of water and power," suggesting Riyadh may follow suit. (UPI 19.04)
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 IMF Raises Forecast For Turkey's Growth
Turkey's economy may expand 5.2% this year, the International Monetary Fund (IMF) said in its October issue of the World Economic Outlook, raising its forecast as domestic demand helps the country recover from recession. The IMF prediction exceeds the government's estimate of 3.5% growth and is higher than the 3.7% the fund forecast in. The IMF expects Turkish growth to slow to 3.4% in 2011. The economy expanded an annual 6% in the last three months of 2009. Turkey is rebounding from the global financial crisis faster than many peers in eastern Europe because domestic confidence “has already recovered from the initial external shock” and capital flows and trade are returning to normal, the IMF report said. Inflation will average 9.7% over 2010, compared with 6.3% last year, the IMF said. The average rate in 2011 will be 5.7%. The current-account deficit will widen to 4% of gross domestic product this year from 2.3% in 2009, the IMF said. The previous forecast for the 2010 deficit was 3.7% of GDP. (Hurriyet 21.04)
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6.2 Unemployment in Turkey on the Rise
On 15 April, Turkish Statistical Institute (Turkstat) announced that unemployment stood at 14.5% in January 2010 compared to 13.1% in November 2009 and 13.5% in December 2009. However, the unemployment rate was down 1% from 15.5% in January 2009. According to the TurkStat's Household Labor Force Survey for January, the number of unemployed decreased 59,000 to 3,591,000 when compared with January 2009. It was 3,650,000 in January 2009. The number of unemployed was 3.3 million in December 2009. The number of employed rose to 21,162,000 in January 2010 from January 2009. TurkStat indicated the number of employed people was up by 1,289,000 in January 2010. The unemployment rate is determined through household surveys across Turkey that are used to project nationwide unemployment for three months. Experts say the figures fail to reflect the overall picture because of widespread undeclared or hidden unemployment, or the employment of educated or qualified people in menial jobs.. (TDN 15.04)
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6.3 Turkish Health Tourism Sector Targets $20 Billion Income
The Turkish Health Tourism Association (TUHETO) is promoting health tourism to Turkey at a number of events in Ukraine, Dubai, Switzerland, Azerbaijan and Kazakhstan during April, May and June. The association aims to attract an income of $20 billion from health tourism to Turkey in the long-term. People from Kazakhstan have been traveling overseas for health treatments and operations for many years now, with top destinations including Israel, India, Spain, the United States and Hungary. Turkish businesses active in the sector are planning packages in a very careful way to preserve the good reputation Turkey's private health care sector enjoys. The scenes shot at private hospitals for Turkish soap operas broadcast in Arab countries have also notably contributed to the growth of health tourism to Turkey. Private hospitals are attracting more health tourism from Arab countries, where people have seen the hospitals on the soaps. (Hurriyet 14.04)
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6.4 Cyprus Budget Deficit Leaps to 6.1% of GDP in 2009
Official figures confirm that the Cyprus' budget deficit ballooned in 2009, reaching €1.0287b, or 6.1% of GDP, from less than 1% of GDP in 2008. Expenditure in 2009 increased by 5.5% while revenues dropped by 10.2%. In the fourth quarter alone, total revenue fell by 15% to €1.772b, while total expenditure decreased by 2.8% to €2.346b. The deficit in the fourth quarter was €574.1m, compared with €325.9m in the corresponding period of the previous year. Taxes on production and imports in the fourth quarter dropped by 29.7% to €534m. Within this category, VAT receipts fell by 22.7% to €387m.. Taxes on income and wealth dropped by 20.4% to €530.5m. Revenue from sales of goods and services fell by 31.4% compared with the corresponding period of the previous year. On the expenditure side, compensation of employees in the fourth quarter rose by 12.4% to €803.5m and social transfers by 9.2% to €689.5m. There was a big increase in capital investment (38%), while intermediate consumption decreased by 7%. (FM 20.04)
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6.5 Cyprus' Trade Deficit Widens In January
The Cyprus trade deficit widened at the turn of the year, rising to €378.3mln in January 2010 compared with €373.8mln in January 2009. Total imports/arrivals (covering total imports from third countries and arrivals from other Member States) in January 2010 amounted to €451.1mln compared with €444.8mln in January 2009. Total exports/dispatches (covering total exports to third countries and dispatches to other Member States) in January 2010 amounted to €72.7mln compared with €71.0m in January 2009. During January 2010 total imports/arrivals (covering total imports from third countries and arrivals from other Member States) were valued at €451.1mln. Total exports/dispatches (covering total exports to third countries and dispatches to other Member States), including stores and provisions, in January 2010 amounted to €72.7mln. Exports/dispatches of domestically produced goods, including stores and provisions, were €37.2mln whilst exports/dispatches of foreign goods, including stores and provisions, were €35.5mln. (FM 20.4)
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6.6 Cyprus Spends Less On Social Protection Than EU
Cyprus spent less on social protection than the EU average in 2007, according to a newly published report entitled Social Protection in Cyprus 2007. Social Protection expenditure includes old age, sickness, disability, unemployment. housing and other categories of benefits. In 2007 social protection expenditure amounted to € 2.9b compared with €2.650b in 2006, recording an increase of 8.7%. This was equivalent to 18.1% of GDP, compared with an EU27 average of 26.2%. It is possible that the reason for lower expenditure in Cyprus is the comparatively lower unemployment rate. Nevertheless, old age (41%) and sickness (25%) benefits in Cyprus were the major components of all social benefits. The overwhelming majority of the benefits originated from public sources, which accounted for 81.3% of the total. (FM 20.04)
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6.7 Greece's Jobless Rate Continues to Rise Sharply
On 21 April the Hellenic Statistical Authority (ELSTAT) announced that unemployment in Greece rose to 11.3% in January, from 10.2% a month earlier and 9.4% in January 2009. On an annual basis, the jobless numbers increased 21.8%, reaching 567,132 people, with unemployment for women climbing to 14.9% from 13.3% a year earlier. Among men, unemployment came to 8.7% from 6.7% in January 2009. The age group with the highest jobless rate remains those aged between 15 and 24, of whom 30.4% were without a job in January. Nevertheless, the General Confederation of Greek Labor (GSEE) countered that the real level of unemployment in Greece stands at around 17.5%, i.e. 800,000 people who don't have jobs. (Various 22.04)
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6.8 Greek Education Costly But Inefficient
Greece is among the European Union member states that spend the most on state tertiary education but has one of the EU's least efficient systems, according to a report by an economic committee of the European Commission. Greece puts 1.4% of its gross domestic product into state universities and colleges, above the EU average of 1.2% and not so far behind top spender Finland, with 1.7% of GDP, followed by Denmark, Sweden and Britain. But unlike these northern European countries, Greece's investment is not paying off. The report ranks Greece 13th in the EU as regards the effectiveness of its spending on tertiary education and third from last in human resources management in this sector. Greece also ranked last in terms of the effectiveness of its assessment of universities – unsurprisingly, as an evaluation system was only introduced in 2005. One of the burdens on the Greek system, according to experts, is the increase in the number of students entering university education. Greece's student-to-lecturer ratio is the second largest in the EU, after Slovenia, with 31 students to every one academic. This is believed to have fueled indifference among many university undergraduates, adding to the ranks of the so-called “eternal students” who extend their studies indefinitely at the expense of the system. On 13 April, Education Minister Diamantopoulou heralded a raft of proposed reforms to the education sector, ranging from changes to the way that teachers are hired to the abolition of an entrance exam law that requires students to gain a minimum pass mark of 50% in order to matriculate at university or college. (eKathimerini17.04)
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6.9 EC Starts Procedure Against Bulgaria Over 2009 Deficit
The European Commission has announced it will start a budget discipline procedure against Bulgaria after Eurostat released data showing the country's 2009 budget deficit doubled to 3.9%. The EU statistics office has confirmed that Bulgaria's deficit for 2009 was beyond the 3.0% cap set by the EU Stability and Growth Pact. In the first of its twice-yearly reviews of government finances in the 27-member bloc, Eurostat said the Bulgarian government's budget deficit was 3.9% of GDP last year, which is up by 0.2% over the government's revised figure. Bulgaria's center-right government announced earlier in April a larger than expected 2009 deficit caused by unaccounted procurement deals, signed by the previous Socialist-led cabinet. The previously undiscovered expenses increased the 2009 gap to 3.7% of gross domestic product (GDP) from an initial 1.9% under the EU rules, the cabinet said. Experts however commented that though much better than other member states, Bulgaria's larger than expected 2009 deficit will worsen its chances for application to join the bloc's exchange-rate mechanism ERM II. They stressed that it is still very early to say whether the swelling deficit is due to the global crisis or the policy of the government, which has vowed to do its best to keep the deficit for 2010 under 3% in line with the Maastricht criteria. (SMN 23.04)
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6.10 EU Approves Bulgaria's Convergence Program
On 26 April, the European Union General Affairs Council formally approved Bulgaria's convergence program. The council has upheld without any debates the assessment of the European Commission of the Bulgarian government's efforts to maintain strict and predictable fiscal policy. In March the European Commission described as “adequate” the government's macroeconomic policy and recommended that it continues to press on with the structural reforms. The Council's statement notes the need for speeding up reforms in healthcare, pension system, education, state administration and business environment. Thanks to its tight fiscal policy measures in 2009 the government has managed to make up for the considerable loss in revenues in the wake of the unexpectedly sharp recession and the changes in the structures of GDP, the assessment says. It points out that cuts in administration expenses and implemented measures to improve the collection of taxes have made possible a comparatively low budget deficit for 2009. The council recommends that Bulgaria's budget strategy assigns top priority to maintaining a balanced budget. The Bulgarian center-right government submitted to the European Commission at the end of January its convergence program until 2012, which outlines the preparations for joining the ERM II mechanism and the adoption of the euro. (SMN 27.04)
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6.11 Bulgaria Makes Life Easier For Business by Slashing Bureaucracy
The Bulgarian government has adopted 136 measures to reduce and simplify bureaucratic procedures for communicating with the business sector. The measures were announced ON 21 April by Bulgarian Economy Minister Traikov, who explained they will be implemented gradually by 2012. Some 80% of the measures in question provide for allowing firms to submit information to the Bulgarian state administration electronically or over the internet instead of queuing for hours and days in front of crowded state offices. What is more, companies will no longer be required to collect and submit to the state administration a number of certificates and documents from various institutions – the matter will have be taken care of among the respective administrative units. (SMN 22.02)
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6.12 Bulgaria's Unemployment Growth Softens In March
Bulgaria's unemployment rate decreased negligibly in March 2010, largely due to the hiring of seasonal workers. According to the Bulgarian Employment Agency, the March unemployment rate was 10.14%, down by 0.12% from February 2010. However, it has increased significantly year-on-year compared to March 2009 when it stood at 6.88%. Thus, the total number of unemployed in Bulgaria dropped by 4 637 people down to about 375 000. However, a total of 35 000 Bulgarians lost their jobs in March. Most of these (21%) were in the processing industry, 19% in trade, 8.6% in construction, 5.5% in state administration and 4.1% in transport. (SMN 22.02)
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6.13 Bulgaria Economy Minister Takes Business Delegation to Israel
Bulgaria's Minister of Economy, Energy and Tourism Traikov arrived in 27 April on a formal visit is Israel. Traikov has been invited to Tel Aviv by his counterpart, Israel's Minister of Industry, Trade & Labor Ben-Eliezer. He is accompanied by representatives of Bulgarian firms dealing with energy, IT, food production, tourism, marketing consulting and infrastructure engineering. In Tel Aviv, Traikov is going to open a joint business forum with the participation of 20 Bulgarian and 50 Israeli companies organized by the Federation of Israeli Commerce Chambers and the Executive Agency for encouraging small and medium-sized enterprises. According to data of the Bulgarian Economy Ministry, Bulgarian-Israeli trade amounted to $124.6 M, with a positive $14.6 M balance for Israel; this is the first time in ten years the bilateral trade balance was negative for Bulgaria. Israeli investments in Bulgaria amounted to €29.4m in 2008 and €4.7m in H1/09. In 2009, Bulgaria was visited by 106 356 Israeli tourists, while 8 568 Bulgarians visited Israel. (SMN 28.04)
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Israel's Population Surpasses 7.5 Million
On the eve of its 62nd Independence Day, Israel has nearly 7.59 million people and is growing at a rate of 1.8% per year, according to figures released by the Central Bureau of Statistics (CBS) on 18 April. Some 75.5% of the total population, 5,726,000 people, is Jewish, while the Arab population has reached 1,548,000 (20.4%) and those not identified as either make up 4.1% of the population, or 313,000 people. Since Independence Day last year, 159,000 babies were born in Israel while 37,000 people passed away. Close to 16,000 new immigrants arrived over the past year, with an additional 9,000 ex-pat Israelis returning home. The majority of the population (70%) is Israeli-born and most are them are the second generation in Israel. This is compared to 1948, when only 35% of Israelis had been in the country. While in 1948 only one city, Tel Aviv, boasted 100,000 residents, in 2010 some 14 cities have that many and six cities have more than 200,000: Jerusalem, Tel Aviv, Haifa, Rishon LeZion, Ashdod and Petah Tikva. (CBS 18.04)
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7.2 Israel's Druze Population Reaches 125,000
Israel's Central Statistics Bureau has announced that as of December 2009, there were 125,000 Druze living in Israel,. The figures were released in honor of the Druze holiday celebrating the prophet Yitro (Jethro), a central figure in their religion and known in Druze tradition as Nabi Shuaib. The Druze make pilgrimages to what is believed to be his tomb near Tiberias during this holiday period, from 25 to 28 April. Druze make up 1.7% of Israel's total population and 8.1% of the Arab population. The Druze population is growing at a rate of 1.8% – slightly faster than the Jewish population's growth rate of 1.7%, but more slowly than the Arab Muslim population, who have a growth rate of 2.8%. The vast majority of Israeli Druze (98%) live in 18 villages. Seventeen of those 18 villages are in northern Israel while the eighteenth, Ir Carmel, formerly the separate towns of Daliat el Carmel and Usifiya, is in the Carmel mountains near Haifa. In 12 of those villages, at least 94% of the village population is Druze, while in the remaining six, 100% of the population is Druze. Although Druze speak Arabic, they are recognized as having a separate religion and have their own religious court system.
Many Druze Israelis serve in the IDF, including high ranking officers. Many have received awards and have lost their lives in battle. A Druze soldier, Magdl Halaby, has been missing since 2005 when he was 19. Druze politicians serve as MKs in each of Israel's three largest Knesset factions: Kadima, Likud and Yisrael Beiteinu (Israel Our Home). In 2004 Druze religious leader Sheikh Tarif signed a declaration urging non-Jews to keep the seven Noachide Commandments espoused by Judaism. (IsraelNN 23.04)
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7.3 Lag BaOmer Marked in Israel on 1/2 May
The minor holiday of Lag BaOmer will be celebrated in Israel on 1/2 May. is the traditional anniversary of the death of the “Divine Tannaitic Sage” Rabbi Shimon bar [son of] Yochai, who is buried in the Galilee town of Meron, just west of Tzfat (Safed). Rabbi Shimon is considered to be the author of the main work of the Kabbalah, the Zohar. The day's name comes from the fact that it is day number 33 (lag, in Hebrew numerology) of the Omer counting period between Passover and Pentecost (Shavuot). The date also marks the end of a plague that struck down some 24,000 students of Rabbi Akiva, as well as the heroic but failed attempt by military leader Shimon Bar Kokhba, Rabbi Akiva's protégé, to throw off the Roman yoke in 135 C.E. All-night bonfires, klezmer music, singing, dancing, prayers and the traditional first-time haircuts for three-year-old boys are part of the Lag BaOmer observances, particularly in Meron. Hundreds of thousands of people generally visit Meron on or before Lag BaOmer to take part in the spiritually joyous celebrations, some flying in from abroad. (IsraelNN 27.04)
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7.4 Yom Yerushalayim - Jerusalem Day to Be Celebrated
On 10/11 May, Israel and the world will celebrate Jerusalem Day (Hebrew: Yom Yerushalayim), an Israeli national holiday commemorating the reunification and liberation of Jerusalem's Old City in June 1967. The day is marked by state ceremonies, memorial services for soldiers who died in the battle for Jerusalem, parades through downtown Jerusalem, reciting the Hallel prayer in synagogues, lectures on Jerusalem-related topics, singing and dancing, and special television programming. Schoolchildren throughout the country learn about significance of Jerusalem, and schools in Jerusalem hold festive assemblies. The day is also marked in Jewish schools around the world. Religious Zionists in Israel regard Yom Yerushalayim as even more important than Israel Independence Day. In Jerusalem, a public reception by the mayor of Jerusalem, state ceremonies and memorial services for those who died in the Six-Day War are also held. In Israel, some people mark the occasion by traveling or even hiking to Jerusalem.
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Syneron's elure Advanced Dermal Whitening Product Line Wins International Technology Award
Syneron Medical won first place in Cosmetics & Toiletries (C&T) magazine's 5th International Technology Award presented at the In-Cosmetic show in Paris, France. This prestigious award recognized the launch of Syneron's elure Advanced Dermal Whitening product and its significance within the cosmetic R&D industry. The elure Advanced Dermal Whitening product line is the first scientifically proven enzymatic skin whitening treatment that utilizes a unique scientific discovery of a naturally occurring bio-active substance called Melanozyme. Melanozyme acts to immediately target and disintegrate the melanin to diminish dark colored pigment in the skin safely, with virtually no side effects. Unlike many other whitening products on the market, the elure product line does not contain Hydroquinone, which has been reported to cause side effects such as skin redness and burning sensations. In addition, while other skin whitening products inhibit the formation of melanin, elure acts to target and disintegrate melanin resulting in a much faster whitening effect. Once elure was applied, the melanin decomposed "on the spot".
Yokneam's Syneron Medical (http://www.syneron.com) is the leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint. The Company's technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, rejuvenation of the skin's appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite. (Syneron Medical 16.04)
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8.2 Significant Creation of Value by Hadasit Bio-Holdings
Hadasit Bio-Holdings announced that ProtAb, its wholly owned portfolio company, has raised $3 million from two of the leading biotechnology investment groups in Israel - Pontifax Fund and Clal Biotechnology Industries, whom will invest $1.5 million each. Hadasit Bio-Holdings itself will invest an additional $1 million in the company, and convert loans that were granted to the company into stock. In addition, the investment will be leveraged through grant funding to the company from the Office of the Chief Scientist in Israel. As part of the transaction, the investors will receive an option to invest additional funding, in a similar amount, and the right to appoint members to the company's board of directors. ProtAb will use the funding from the current investment for continued development of its lead antibody for the treatment of rheumatoid arthritis and other autoimmune diseases, notably inflammatory bowel diseases such as Crohn's Disease and ulcerative colitis. The company is initiating advanced stages of production of the antibody in preparation for toxicological studies, applications to regulatory agencies, and the commencement of clinical trials with its lead antibody.
ProtAb is developing an innovative new approach for the treatment of autoimmune diseases, based on biologic drugs that activate natural anti-inflammatory pathways in the body - as opposed to the standard approach today of suppressing inflammatory pathways, which is associated with severe side effects and has only limited effectiveness. The company's first product, Proximab, is a “humanized” monoclonal antibody directed against a segment of the HSP (Heat Shock Protein), which is being developed for the treatment of rheumatoid arthritis and other autoimmune diseases, including inflammatory bowel diseases (IBD).
Jerusalem's Hadasit Bio-Holdings (http://www.hbl.co.il) was set up and issued on the Tel Aviv Stock Exchange by Hadasit (the technology-transfer company of the Hadassah–Hebrew University Medical Center) in 2006 to exploit the knowledge and experience accumulated by the institution's research laboratories. Hadasit Bio-Holdings currently includes eight biotech firms, all of which have already demonstrated the feasibility of their concepts and effectiveness of their drugs in animal models; four of them have begun human clinical trials. The HBL portfolio companies are developing drugs with blockbuster potential (markets that exceed one billion dollars annually) for the treatment of cancer, inflammatory diseases, and tissue regeneration by means of stem cells—areas in which the Hadassah Medical Center has vast expertise and a reputation as a world leader. (Hadasit 19.04)
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8.3 Magen Medical Solutions: First Worldwide Patients Treated with Anti-Adhesion SpineShield
Magen Medical Solutions has successfully implanted its first product, the SpineShield, in three patients at a clinical site in Europe. Post-operative adhesion is considered a major cause of failed back surgery. In up to 15% of cases, patients suffer from pain due to spinal adhesion, or scar tissue formation around the spinal cord, which may require a second surgery for correction. Magen's flagship device, the SpineShield, uses Magen's proprietary technology to prevent fibrotic adhesion of the scar to the dura and the nerve root and to reduce related pain and complication risks. The SpineShield is a metal device that physically separates the scar from the delicate spine structures. After healing, the SpineShield is removed during a short minimal invasive out-patient procedure. Magen initiated its first-in-human, single-center, prospective feasibility study to assess the initial safety and efficacy of the SpineShield implantation for the prevention of epidural scar fibrosis following hemilaminectomy. To date, three SpineShield devices have been successfully implanted and removed from three patients. The removal procedure was performed through a minimal invasive 1cm incision. According to initial feedback from patients and physicians, the removal procedure was painless, easy, and took a few minutes only. No complications were reported. An additional seven patients will be enrolled in the study.
Ramat Gan's Magen Medical Solutions (http://www.magenmed.com), a medical device company founded in 2007, is aimed at developing and marketing unique anti-adhesion devices for orthopedic applications. Its first product, the SpineShield, is CE Marked and will be commercially available in H2/10. Additional products, the TendonShield and NerveShield, will be submitted for regulatory approval in EU during 2010. All products will be submitted for FDA clearance in the future. (Magen Medical 19.04)
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8.4 VBL Therapeutics Demonstrates Substantial Tumor Reduction & Stable Disease Achieved
VBL Therapeutics announced positive results from preclinical and Phase 1 studies evaluating the company's lead anti-cancer agent, VB-111 – a first-in-class, targeted biological agent shown to work via dual-action, anti-angiogenic and vascular disruptive mechanism of action – in metastatic cancer. Preclinical data evaluating VB-111 in a comprehensive set of in vivo studies employing the Lewis Lung metastasis mouse model showed the compound to be safe and specific, with a 90% reduction in tumor burden of lung metastases after only one injection. A Phase 1 study involving 27 patients with advanced stage solid tumors demonstrated that VB-111 was well-tolerated with no dose-limiting toxicities, and promising efficacy signals.
VB-111 is the first dual-action, anti-angiogenic and Vascular Disruptive Agent (VDA) to use the company's proprietary platform technology, its Vascular Targeting System (VTS), for cancer therapy. VB-111 is an IV-administered VDA that works in a manner akin to a “biological knife” to destroy tumor vasculature by cutting off the blood vessels feeding the tumor. The targeting mechanism is confined to the tumor, without damage to normal tissue blood vessels.
VB-111 was found to be safe and well tolerated in these patients. No dose-limiting toxicities were observed, and the maximal tolerated dose has yet to be reached. Viral distribution, cytokine and antibody response data supports repeat dosing at three to six-week intervals. Both stable disease (SD) and partial response (PR) were observed in the trial. On day 56 evaluation, three of the 15 patients in cohorts one to five had SD; among the 12 patients in cohort six, four had SD on day 56, and one patient (with papillary thyroid carcinoma) had a PR persisting for 12 months post dosing. VBL is expected to launch Phase 2 clinical trials in 2010 in thyroid cancer, as well as in a second indication later this year.
Tel Aviv's VBL Therapeutics (http://www.vblrx.com) is an innovative, clinical-stage biotechnology company committed to the development of novel treatments for immuno-inflammatory diseases and cancer. VBL has pioneered the Lecinoxoid class of oral anti-inflammatory agents and VB-201 is the lead candidate from this program, which has entered Phase 2 clinical development in patients with psoriasis. In addition, VBL has a proprietary Vascular Targeting System (VTS) technology platform that has yielded VB-111, the first dual-action, anti-angiogenic and vascular disruptive agent (VDA) for cancer, which is expected to enter Phase 2 clinical trials in 2010. VBL has 55 granted patents and more than 115 patents pending. (VBL 19.04)
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8.5 ReDent Signs Significant US & European Distribution Deal
Omer's Maayan Ventures' (http://www.maayanventures.com) portfolio company ReDent-Nova signed a five-year worldwide distribution deal for its dental products with Henry Schein Inc. ReDent estimates sales from the exclusive agreement, which covers North America and some European countries, will bring its total revenue to $3 million over the next 12 months. The agreement follows other distribution deals by ReDent. Henry Schein is one of the world's largest wholesalers of dentistry equipment, medical devices and services, operating in 200 countries. It will distribute ReDent's self-adjusting file (SAF) for root canal treatments and its Vatea irrigation device for the SAF. ReDent claims that the SAF is well known for its ability to clean and disinfect the root canal, as well as for its safety aspects thanks its strength and ability to withstand breaks compared with other files currently on the market. The Vatea enables efficient and effective washing of the root canal. ReDent has published a study on the SAF in the current issue of "Journal of Endodontics".
Ra'anana's ReDent (http://www.redent.co.il) develops breakthrough technologies in the field of Medical devices. ReDent's first product is the SAF – a Self Adjustable File, which is an innovative device for the dental market providing better performance and cost effectiveness in Root Canal Treatments (RCT). The objective of root canal treatment is to remove the tooth's pulp, clean, disinfect and shape the root canal. Today, Root Canal Treatments require a series of metal files varying in width, strength and diameter. The consecutive utilization of the files required for completing the treatment, their geometry and mechanical capabilities, result in a time consuming procedure that does not always guarantee the complete cleaning, disinfecting and removal of tooth's pulp, leading to RCT failure. RCT failure means recurring infection and the need to renew the RCT or even extract the tooth. Current file design presents risks of damage to the root, which might result in additional correction costs or tooth loss. The SAF concept proposes to follow the shape of the root canal, enlarging it to greater a dimension while maintaining its original shape. This concept fits any root canal shape, even the trickiest canal, with a tear shaped cross section and will maintain its original shape. The SAF is based on a state-of-the-art memory shape and super elastic technology combined with patented coating procedures. (Globes 18.04)
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Yissum Licenses Cutting Edge Technology for Enhanced Digital Image Processing to Adobe Systems
Yissum has signed a non-exclusive worldwide licensing agreement with Adobe Systems for the development and commercialization of an imaging technology that improves digital image processing. The technology, invented by Dr. Ra'anan Fattal from the School of Computer Science and Engineering at the Hebrew University of Jerusalem, is called Edge Avoiding Wavelets and it enables better and faster detail enhancement and preserves edges when sharpening digital images. In addition, Hebrew University researchers have been developing a strong and diversified portfolio of innovative imaging technologies including 3D visualization manipulations, real-time pattern matching, colorization of still images and movies and animation techniques, all of which are available for licensing. Image processing applications invest considerable computing power in attempts to enhance details in digital images, and to enable users to accurately demarcate a specific object within the image. Current state-of-the art technologies for enabling such image processing functions are overly sophisticated and suffer from various limitations. The new Edge Avoiding Wavelets technology is fast and uses explicit computations to obtain results traditionally obtained by implicit formulations requiring sophisticated linear solvers. The new technology avoids pixels from both sides of an edge, thus achieving a sharper, halo-free image. Its fast performance accelerates various computational photography applications by a factor of more than one order of magnitude.
Yissum Research Development Company of the Hebrew University of Jerusalem (http://www.yissum.co.il) was founded in 1964 to protect and commercialize the Hebrew University's intellectual property. Ranked among the top technology transfer companies in the world, Yissum has registered over 6,100 patents covering 1,750 inventions; has licensed out 480 technologies and has spun-off 65 companies. Yissum's business partners span the globe and include companies such as Novartis, Johnson & Johnson, Roche, Merck, Teva, Intel, IBM, Phillips, Syngenta, Vilmorin, Monsanto and many more. (Yissum 21.04)
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9.2 Top 3 Israeli Banks Roll Out Customer Facing Voice Biometrics Technology by PerSay
PerSay announced that it has successfully completed the deployment of its systems in the top three banks in Israel. Bank HaPoalim, Bank Leumi and Discount Bank have all rolled out secure Voice Biometric applications to the public. Applications include PIN reset and PIN-less access to contact centers at Bank HaPoalim, self-service eBanking password reset and Real-Time Fraudsters Detection at Bank Leumi, and multi-factor authentication for phone based high-risk transactions at Discount Bank. PerSay's cutting edge technology is gaining momentum around the world with financial services, telecom operators, healthcare service providers, large enterprises and government agencies selecting its Voice Biometrics technology following competitive analysis. PerSay's products are integrated with the leading IVR and CTI platforms such as Genesys, Cisco, Avaya and IBM and are available through a growing network of global partners, resellers and system integrators, including IBM, Dimention Data, Huawei and others. Tel Aviv's PerSay Ltd. (http://www.persay.com) is a leading provider of advanced biometric speaker verification products. PerSay's technology relies on the biometric power of voice to verify a speaker's identity. PerSay's products have been deployed by leading financial services, telecom operators, healthcare providers, enterprises and law enforcement agencies worldwide. PerSay is a spin-off of Verint Systems Inc. (PerSay 15.04)
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9.3 CTERA Networks Selected by AlwaysOn as an OnDemand Top 100 Winner
CTERA Networks has been chosen by AlwaysOn as one of the OnDemand Top 100 winners. Inclusion in the OnDemand 100 signifies leadership amongst its peers and game-changing approaches and technologies that are likely to disrupt existing markets and entrenched players. CTERA was specially selected by the AlwaysOn editorial team and industry experts spanning the globe based on a set of five criteria: innovation, market potential, commercialization, stakeholder value and media buzz. The OnDemand 100 winners were selected from among hundreds of other technology companies nominated by investors, bankers, journalists and industry insiders. The CTERA Portal is a cloud services platform that enables service providers and IT resellers to quickly deliver cloud storage, hybrid local/off-site backup and data protection as managed services to their customers. CTERA's award winning appliances, CloudPlug and C200, allow the MSP's customers to protect the data on their networks with fast local backup, while automatically keeping a secure off-site copy for disaster protection. This hybrid approach provides backup and restore in minutes, while still protecting against local disasters by storing copies in the cloud.
Petah Tikva's CTERA Networks (http://www.ctera.com) revolutionizes storage and data protection for SMBs and branch offices with Cloud Attached Storage, a hybrid solution that combines secure cloud storage services with on-premises storage appliances for a seamless user experience. CTERA provides a cloud services platform that enables service providers and IT resellers to quickly deliver cloud storage, hybrid local/offsite backup and data protection as managed services to their customers. (CTERA 19.04)
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9.4 RADVISION Launches New High Definition Video Conferencing Room System – SCOPIA XT1000
RADVISION announced the SCOPIA XT1000 high definition video conferencing room system. The SCOPIA XT1000 is the first development based on RADVISION's acquisition in February of Aethra endpoint technology. Key features of the SCOPIA XT1000 include a Dual Full HD 1080p 30fps: The SCOPIA XT1000 delivers two full HD (1080p 30fps) video streams as standard. The included high end PTZ (Pan-Tilt-Zoom) camera supports 10x optical zoom and wide angle capability for viewing details as well as an entire group. The second 1080p video stream can be used with an additional 1080p camera for complete visual coverage or with a PC for data sharing. As well, the SCOPIA XT1000 supports high resolution PC data sharing at 30fps so presentations and even video clips can be shared with zero loss of quality. The quality of the data channel does not degrade even when the main video channel is operating at full HD 1080p 30fps. RADVISION's multipoint expertise is embedded in the SCOPIA XT1000. Support for high definition, continuous presence meetings with up to nine participants are very affordable utilizing the SCOPIA XT1000's built-in MCU.
Tel Aviv's RADVISION (http://www.radvision.com) is the industry's leading provider of market-proven products and technologies for unified visual communications over IP, 3G and IMS networks. With its complete set of standards-based video communications solutions and developer toolkits for voice, video, data and wireless communications, RADVISION is driving the unified communications evolution by combining the power of video, voice, data and wireless – for high definition video conferencing systems, innovative converged mobile services, and highly scalable video-enabled desktop platforms on IP, 3G and emerging next-generation IMS networks. (RADVISION 19.04)
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9.5 Testuff Launches a Mac Version of its On-Demand Test Management Service
Testuff released a new Mac version of its test management tool. Testuff SaaS (Software as a Service) suite includes: Requirements management, test cases, test planning and execution, defect reporting, video recorder and player, time management, integration to all leading bug trackers and automation tools and much more. The new Mac version will allow OS X testers and developers to join the Testuff customer community. Testuff has been running for over 3 years and has seen much success within the software testing community. The SaaS based tool was registered by over 3,000 companies, from over 40 countries in all continents. The company sees this service as a first step towards validating its technology and creating an initial customer base, before launching additional services and products. Following a successful 2009, with twelve monthly new versions released on-schedule; Testuff (http://www.testuff.com) continues to launch monthly new versions of its on-demand software test management tool in 2010. The last new version includes a Mac OS X software support. The Mac version of Testuff test management tool comes after running the service on Windows platforms for over 3 years. It is a response to many requests by software development companies who see constant growth in Mac software and users. Tel Aviv's Testuff (http://www.testuff.com) was established in January 2007 with the purpose of creating better tools and services for the software quality assurance (QA) community. Testuff has been has selected as one of the 20 most promising start-ups in the cloud, grid, virtualization and SaaS models, by the Israeli Association of Grid Technologies (IGT) in 2009. (Testuff 19.04)
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9.6 Mellanox Enables Breakthrough InfiniBand Performance On Dell Blade Servers
Mellanox Technologies announced that its second generation ConnectX-2 I/O mezzanine adapter card is now available through Dell for the PowerEdge M-Series Blade Servers. Mellanox's ConnectX-2 provides 40Gb/s InfiniBand connectivity with CORE-Direct to enable significant improvements in application performance and scalability and increase the productivity of compute clusters, cloud and enterprise data centers. ConnectX-2 with Virtual Intelligent Queuing (Virtual-IQ) technology provides dedicated adapter resources and guaranteed isolation and protection for virtual machines (VM) within the server. I/O virtualization over InfiniBand gives data center managers better server utilization and LAN and SAN unification while reducing cost, power and cable complexity. Yokneam's Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. For the best in performance and scalability, Mellanox is the choice for Fortune 500 data centers and the world's most powerful supercomputers. (Mellanox 20.04)
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9.7 GreenRoad Wins Top Tech Innovators of 2010 From 'Mass Transit'
GreenRoad is one of 10 companies included in the 2010 Mass Transit Top Tech Innovations list. The annual list honors technologies making significant contributions to the public transit industry. The innovations are nominated by industry professionals and judged on criteria that include cost savings, improving employee and/or rider safety, improving security and creating a more sustainable operation. GreenRoad's innovative approach to driving is transforming the way the industry views safety and sustainability. Its proprietary technology-based service, GreenRoad 360, provides drivers and fleet managers with real-time, comprehensive feedback, analysis, reporting and coaching on drivers' abilities, maneuvers and patterns. As a result, GreenRoad 360 changes both conscious and unconscious driving behaviors - the key to creating safer and more fuel-efficient drivers. A typical GreenRoad customer averages a 50% reduction in crash costs and up to a 10% reduction in fuel consumption and emissions within the first year. Furthermore, GreenRoad saves fleets money in top vehicle expense categories (fuel, crash, insurance, wear and tear) and provides a cost-effective way to reduce emissions.
GreenRoad (http://www.greenroad.com), with its R&D center in Beit Dagan, delivers the future of driving: smarter, safer and more fuel efficient. They offer the industry's most sophisticated, customizable technology solutions and services to maximize driving safety and efficiency, generating immediate cost savings. GreenRoad 360 provides real-time feedback integrated with comprehensive online visibility. (GreenRoad 14.04)
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9.8 Syneto Enhances its Total Email Security Solution with Commtouch Technology
Commtouch and Flero, Italy's Syneto announced that Syneto, a networking security company offering email and web protection and data backup, has added Commtouch's email security suite, including Commtouch Anti-Spam, Zero-Hour Virus Outbreak Protection and GlobalView Mail Reputation Service technologies to its Total Email Security Solution, a new unified threat management (UTM) service. Syneto's Total Email Security Solution is a subscription-based enterprise-level email security solution for medium and large businesses, combining advanced protection against spam, phishing and malware with powerful logging and reporting options and an easy-to-use configuration. The web-based and command-line interfaces are designed to be user friendly to enable a rapid learning curve. The Commtouch technologies replaced an array of homegrown grey listing methodologies coupled with SpamAssassin and are now helping Syneto improve spam detection rates and reduce the delivery delays inherent in their self-developed setup. Now, Commtouch's cloud-based technology detects and blocks spam, phishing and email-borne malware in real-time, protecting Syneto's clients.
Netanya's Commtouch (http://www.commtouch.com) provides proven messaging and Web security technology to more than 130 security companies and service providers for integration into their solutions. Commtouch's GlobalView and patented Recurrent Pattern Detection (RPD) technologies are founded on a unique cloud-based approach, and work together in a comprehensive feedback loop to protect effectively in all languages and formats. Commtouch technology automatically analyzes billions of Internet transactions in real-time in its global data centers to identify new threats as they are initiated, protecting email infrastructures and enabling safe, compliant browsing. (Commtouch 21.04)
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9.9 Mellanox Announces Industry's Lowest Latency Standards-based 10 Gigabit Ethernet Adapters
Mellanox Technologies announced the immediate availability of RDMA over Ethernet (RoE) as an add-on feature to its ConnectX-2 EN adapters. These adapters now can implement the recently announced RoCE specification by the InfiniBand Trade Association (IBTA) and is supported by the OpenFabrics Enterprise Distribution (OFED) and application programming interfaces (APIs). The ConnectX-2 EN with RoE adapter delivers up to 1/10th the latency, saves power consumption and delivers improved economics compared to other standards-based 10 Gigabit Ethernet adapter solutions in the market today. ConnectX-2 EN with RoE requires a lossless Ethernet fabric and utilizes the reliability of such a fabric to deliver higher quality of service while reducing hardware complexity, power and costs through the use of a purpose-built, efficient and field-proven RDMA transport technology. Low-latency in data center fabrics can benefit application performance and scalability enabling organizations to deliver higher service levels to their users. Low-latency fabrics also enable clustered server deployments to scale linearly, enabling doing more with fewer servers, thereby enhancing ROI. This is especially critical in cloud deployments where the need for elasticity in the infrastructure must be compounded with lowest cost/hour for the cloud user. ConnectX-2 EN with RoE delivers these benefits using a simple, cost and power efficient 10 Gigabit Ethernet adapter today and future-proofed for 40 Gigabit Ethernet fabrics of the future.
Yokneam's Mellanox Technologies (http://www.mellanox.com) is a leading supplier of end-to-end connectivity solutions for servers and storage that optimize data center performance. Mellanox products deliver market-leading bandwidth, performance, scalability, power conservation and cost-effectiveness while converging multiple legacy network technologies into one future-proof solution. (Mellanox 26.04)
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9.10 Genesis EW to Launch New Anti Terror Intelligence Solution
Genesis EW, a developer and supplier of off-the-shelf products for the military and civilian intelligence markets, will launch GenCOM-HLS, a new Anti Terror COMINT System at Global Security India 2010 to be held April 28-30 in New Delhi, India. GenCOM-HLS is a comprehensive, cost-effective solution providing intelligence superiority over terrorist organizations. The system supplies focused, real-time alerts which enable foiling unexpected threats. Based on data obtained from cellular, satellite or wireless/radio communications signals of hostile elements, GenCOM-HLS automatically maps and analyzes the communicational behavior of the suspects. The GenCOM-HLS system is based on Genesis EW GenCOM Suite, an innovative COTS (Commercial Off-the-Shelf) platform which allows customization and integration with any type of solution required by the intelligence consumer.
Rehovot's Genesis EW (http://www.ewgenesis.com) is a pioneer in the development of off-the-shelf products for the military and civilian intelligence markets. The company provides several product lines: GenCOM-HLS for Homeland Security solutions, GenCOM-LE for Law Enforcement solutions and GenCOM-Defense for Defense forces. Genesis EW's solutions offer superior operational capabilities, short integration time, attractive pricing and consolidation of multiple applications on a single platform. (Genesis EW 26.04)
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9.11 Plurality Announces the World's First Scalable 256 Multicore Processor for Wireless Infrastructure.
Plurality announced the world's first scalable 256 multicore processor for wireless infrastructure, the HyperCore family of low power, small footprint, ManyCore processor IP for wireless markets. HyperCore represents a new category of acceleration co-processor based on a revolutionary architecture that simplifies code compilation and a unique hardware based synchronizer-scheduler, which delivers performance that scales linearly with the number of cores. In addition, its efficiency offers power consumption that rivals hard-wired ASICs. Plurality offers its HyperCore acceleration processor IP to system-on-chip (SoC) developers and original equipment manufacturers (OEMs) as a general purposes accelerator for wireless, networking and high-performance (Cloud) computing applications. The HyperCore processor IP acts as a performance extension to the industry's most popular processor architectures (x86, PowerPC, MIPS and ARM), enabling improved SoC performance without greater power consumption or die area.
The combination of optimized high-performance multicores provides designers with the ability to make the best possible tradeoffs between size, power and programmability to meet the challenging needs of next generation multiband, multimode radios. The solution is reconfigurable and provides a platform for applications ranging from 4G macro base-stations to cost-optimized femtocells, thus offering the benefits of single scalable hardware platform design and extensive software code reuse. With a HyperCore-based design, a base-station OEM can achieve a unified platform strategy both vertically across wireless standards such as LTE, HSPA or 3G, as well as horizontally across wireless devices ranging from macro base-stations to femtocells. In addition, Plurality's development environment and task-oriented programming model, together with a growing ecosystem of system and software partners, enables rapid product development.
Netanya's Plurality (http://www.plurality.com) develops advanced silicon intellectual property, chips and acceleration boards for ManyCore processing. Plurality's IP is based on a unique, scalable, easily programmable ManyCore architecture that is positioned as a general-purpose accelerator. The processor delivers the highest performance per watt per square millimeter at the lowest cost of any currently available chip-level, shared-memory machine. (Plurality 26.04)
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's CPI Rises By 0.1% in March
On 15 April, Israel's Central Bureau of Statistics announced that the Consumer Prices Index (CPI) rose 0.1% in March to 104.3 points. The rise was in line with analysts' expectations. Since the beginning of the year (January – March) the CPI has fallen by 0.9%. This compares with inflation of 3.2% in Q1/09. After three months of falls, the housing item rose 0.7% in March. The Passover holiday meant that the vacation and recreation item rose 2.5%. Oils and fuels rose 2%. Cucumber prices jumped 22%. These rises were set off by a 4.7% fall in electricity prices. Annual inflation measured from April 2009 to March 2010 is 3.2%, at the upper limit of the government's price stability target range (1-3%). (CBS 15.04)
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10.2 IMF Sees Israel's GDP Growth Among Developed Markets' Best
According the IMF's World Economic Outlook 2010, released on 21 April, Israel's real GDP growth is forecast at 3.2% and 3.5% growth is seen for 2011. These forecasts are higher than for developed economies, but among the lowest among Middle East economies. The IMF predicts an average GDP growth of 2.3% in 2010 for developed countries, of which Israel is one. The IMF predicts an average of 4.5% GDP growth for Middle East and North African countries, including both oil exporters and oil importers. Only a few Middle East and North African countries are forecast to have GDP growth rates at around Israel's rate or lower: Morocco 3.2%; Kuwait 3.1%; Iran 3%; and the United Arab Emirates 1.3%. The same trend is apparent in the growth forecasts for 2011. The IMF expects Israel's unemployment rate to fall from 7.7% in 2009 to 7.4% in 2010, and to 7.1% in 2011. It predicts that the average unemployment rate in developed economies will be 8.4% in 2010 and 8% in 2011. The IMF also predicts that Israel's inflation rate will be 2.3% in 2010 and 2.6% in 2011. Israel's inflation was 4.6% in 2008 and 3.3% in 2009. (Globes 21.04)
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10.3 Israel's Fourth Quarter GDP Growth Rate Confirmed
The Central Bureau of Statistics announced on 18 April that Israel's GDP grew by annualized 4.8% in the fourth quarter of 2009. The figure is the same as in the estimate published a month ago. The GDP grew by an annualized rate of 3.6% in the third quarter and by 1.3% in the second quarter, after falling by an annualized 2.7% in the first quarter. Business product and private consumption both rose by an annualized 5% in the fourth quarter. Looking ahead, the consensus among macroeconomists is 3.5% GDP growth in 2010. (Various 18.04)
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10.4 Israel Exports Grew 11,250 Times Since Independence Regained in 1948
In the short 62 years since the Jewish state regained it independence, Israel's exports have multiplied 11,250 times, according to a report by the Israel Export and Cooperation Institute. The report stated that while exports totaled $6 million in 1948, they stood at $67.5 billion in 2009. The current export value has more than doubled since 1998 and is $6.5 billion less than the expected figure for 2010. The report also shows that while Europe consumed about 70% of Israeli exports in the early years of the state, it now purchases just 32%. In 2009, North America bought 37% of the exports and Asia 20%. While Israel is still an exporter of diamonds and agricultural products such as the country's popular oranges and other citrus, it now exports a tremendous amount of knowledge-based goods and services, with an emphasis on hi-tech. (IsraelNN 23.04)
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10.5 Israel's Pharmaceutical Sector Leads Export Growth
The Central Bureau of Statistics announced on 21 April that Israeli exports totaled $4.86 billion in March 2010, 32% more than in February. In the same period, imports increased by 22% to $5.13 billion. For March, Israel's overall balance of trade deficit was $270 million. Despite the deficit, the shekel appreciated by 2.2% from NIS 3.796/$ at the beginning of the month to NIS 3.713/$ at the end. Israel's balance of trade deficit was $408 million in Q1/10, during which period the shekel appreciated by 1.6% against the dollar. Some 80% of exports in March were manufactured goods, 15% were diamonds and 5% were in agricultural products. High-tech exports rose by an annualized 8.5% in Q1/10, up from the annualized 5.1% growth in Q4/09. Pharmaceutical exports rose by an annualized 30% and exports of communications, medical and scientific control equipment rose by 26%. (Globes 21.04)
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10.6 Israel's Unemployment Rates Continues to Fall
On 21 April the Central Bureau of Statistics announced that Israel's unemployment rate fell to 7.3% of the civilian labor force in February 2010, in trend figures, amounting to 218,000 persons. This is a substantial improvement in the unemployment rate from the 7.6% average in 2009, amounting to 230,000 persons. The Central Bureau of Statistics also revised downward the unemployment figures since November 2009. The new, improved, numbers clearly show that the unemployment rate rose rapidly from 6% in August 2008 to peak at 7.9% in April-May 2009, when economic activity began to recover strongly. The unemployment rate has since dropped to 7.3%. In late February, the Central Bureau of Statistics reported the full-year 2009 unemployment rate, based on its labor force survey, a much more reliable database. The survey showed that the unemployment rate was 7.6%, or 230,000 persons. (CBS 22.04)
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11: In Depth
11.1 ISRAEL: Summary of Israeli High-Tech Company Capital Raising - Q1 2010
On 21 April, IVC Quarterly Survey released its finding for the IVC Research Center, which for more than 14 years has been at the forefront of high-tech, venture capital and private equity research in Israel. This Survey reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds, foreign and other investors. The Survey is based on reports from 96 investors of which 48 are Israeli management companies and 48 are other – including foreign – investment entities.
In the first quarter of 2010, 91 Israeli high-tech companies raised $234 million from venture investors – both local and foreign. This was the lowest quarterly amount raised in the last five years, 15% below the amount raised by 124 companies in the previous quarter and 12% below that raised by 93 companies in Q1 2009 (which had been the lowest quarter in the past three years).
Koby Simana, CEO of IVC Research Center says that “figures for the first quarter of 2010 emphasize that Israel's high-tech industry is still experiencing substantial difficulty. The decrease in the number of active Israeli VC funds and a reduced amount of capital available for investments, were the main reasons for the decline in capital raising. Unfortunately, we don't expect any dramatic improvement in the next few quarters.”
Fifty-four companies attracted more than $1 million each. Of these, nine companies raised $5 million to $10 million each and five companies raised more than $10 million.
The average financing round was $2.57 million, compared to $2.22 million in the previous quarter and $2.85 million in the first quarter of 2009.
Israeli VC Fund Investment Activity
In the first quarter of 2010, Israeli VC funds invested $78 million in Israeli companies - the lowest quarterly amount in the last decade. It was 24% below the amount invested in the previous quarter, and 26% below investments made in the first quarter of 2009.
The Israeli VC fund share of the total amount invested in Israeli high-tech companies was 33%, compared to 37% ($102 million) in Q4 2009 and 40% ($106 million) in Q1 2009. The remainder of capital came from foreign investors as well as non-VC Israeli investors.
First investments by Israeli VC funds accounted for 24% of their total dollar investments in the first quarter, compared to 27% and 29% in Q4 2009 and Q1 2009, respectively. The average First investment by Israeli VCs was $1.36 million, while the average Follow-on investment was $0.82 million.
Israeli VC funds invested $3 million in foreign companies during Q1 2009 (in addition to their investments in Israeli high-tech companies), compared to $14 million in Q4 2009 and $27 million in Q1 2009. All foreign investments (seven) were Follow-ons.
Capital Raised by Sector and Stage
The Life Sciences sector led capital raising in the first quarter with $86 million or 37% of capital raised, followed by the Software sector with $32 million or 14%, and Semiconductors with $31 million or 13%.
Eleven Seed companies attracted $11 million, 5% of the total amount raised in Q1, compared to $11 million raised (4%) in the previous quarter, and $13 million (5%) in Q1 2009.
IVC Research Center (http://www.ivc-online.com) is Israel's leading research center providing business leaders with an unmatched wealth of data on Israeli high-tech, venture capital and private equity industries. IVC products and services are used regularly by high-tech companies, venture capital funds, private investors, financial investors and institutions, as well as public entities such as the Office of the Prime Minister, the Central Bureau of Statistics, the Bank of Israel and the Office of the Chief Scientist. (IVC 21.04)
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11.2 LEBANON: Food & Drink Report for 2010
Research and Markets' (http://www.researchandmarkets.com) "Lebanon Food and Drink Report 2010" states that one of the Middle East's riskiest markets, Lebanon's fast-moving-consumer-goods industries have struggled to attract significant investment. Lacking the high spending consumer base of the Arabian Gulf region and the long-term potential provided by a large population (having a population of only 4.2 million), the country is not an obvious market for diversifying regional food and drink firms. However, its alcoholic drinks industry sets it apart regionally. Lebanese consumers are among the most liberal in the Middle East. Possessing a fairly robust alcoholic drinks industry, which distinguishes it from most of the Islamic dominated region. Lebanon's wine industry is particularly well regarded. Leading the wine segment is Chteau Ksara, which makes up about 30% of the domestic market. It is a prominent exporter with Syria and the UK among its most important markets. Not possessing the scale of top-tier wine exporters like South Africa, Lebanese winemakers like Chteau Ksara position themselves at the top end of the market.
Lebanon's underdeveloped spirits industry continued to attract a steady flow of investment over the course of 2009 with the major development being US tequila producer Patron Spirits Company reaching an agreement with the domestic firm Khalil Fattal & Fils (KFF) to distribute its brands. KFF already distributes renowned brands like Jack Daniels and Remy Martin.
Although not as established as wine, the beer industry continues to show promise with per capita annual consumption estimated to be between 4-5 liters. Despite this being low for a typical emerging market it still sets the benchmark regionally. Heineken-owned Brasserie Almaza leads the industry. Over the past year, Almaza has continued to develop its promising non-alcoholic beer portfolio, which currently accounts for about 10% of annual sales. Held back somewhat by seasonality (relatively little beer is consumed in the colder months), it is believed that about 70% of Heineken's sales volumes are accounted for over the summer months. The presence of Heineken and investment by firms like Patron affirm Lebanon's unique standing. Lebanon's political risk profile notwithstanding, its macro economic outlook is fairly positive and conducive to alcoholic drinks growth. To 2018, GDP growth is expected to average 4.34% while per capita GDP is set to strengthen from $7,100 to $10,700, which should significantly bolster volume growth across the beer, spirits and wine segments. (R&M 16.04)
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11.3 JORDAN: Coalition Presses for Electoral Reform in Jordan
Oraib al-Rantawi writes in the Carnegie Arab Reform Bulletin (http://carnegieendowment.org/arb) that as Jordan heads toward parliamentary elections to be held by the end of 2010, recommendations to reform the electoral system made by the nongovernmental National Center for Human Rights (NHCR) have touched off a firestorm of debate in Jordanian political circles. Dozens of reform-minded political parties, women's organizations, and NGOs have welcomed the recommendations, joined a National Coalition to Reform the Legal Framework Governing the Electoral Process, and begun grassroots and online campaigns to rally support for the changes.
The NHCR, working in cooperation with the National Democratic Institute (NDI), last year launched a nationwide campaign for electoral reform in Jordan. The current law, amended in 1993, is seen as favoring elite and tribal candidates over political party candidates and thus is considered an obstacle to political pluralism. The campaign began by organizing a series of forums and workshops in the capital and Jordan's larger cities discussing amendments needed to guarantee free and fair elections that would meet international standards as well as Jordanians' aspirations for a parliament that is representative and able perform its legislative and oversight roles.
The NHCR initiative was not the first of its kind. Civil society organizations and think tanks had sponsored similar initiatives in previous years, with active participation from political parties and groupings as well as women's organizations. The timing of the 2009 initiative was significant in that it came shortly before King Abdullah II dissolved the 15th Lower House of Parliament in the middle of its constitutional term and called for early elections according to a new elections law.
A series of dialogues held by the NCHR and the National Coalition ended with a set of recommendations which together form a comprehensive framework for reforming electoral legislation, and, if enacted, would provide for free and fair elections. The recommendations call for a mixed electoral system to replace the one man/one vote system adopted in 1993. The proposed mixed system would give Jordanians two votes: one for a candidate at the district level and one for a list at the national level. The recommendations also include redistributing seats and redrawing districts to enhance equality. They recommend that the quota for women be increased and that each governorate have at least one seat set aside for women.
The proposed amendments included establishing an independent national commission to manage and supervise the elections instead of the ministry of interior, as is presently the case. They recommend regulating campaign spending and criminalizing the bussing of voters en masse and the buying and selling of votes. Other recommendations include, inter alia, that the voting age be lowered, Jordanian expatriates be given full suffrage, media coverage of the elections be balanced and civil society be given a watchdog role.
Contrary to the enthusiasm of civil society, traditional Jordanian political elites have been decidedly tepid in their reaction to the NCHR-National Coalition recommendations, preferring to keep the current one-vote system and rejecting proportional representation and redistricting. The government, meanwhile, has remained silent on the proposed changes and- while promising to study and take them seriously - has avoided making any kind of commitment to enact them. In particular, the government has welcomed the proposed increased quota for women and promised to make the electoral process fairer and more transparent, while ignoring recommendations that would fundamentally change the rules of the game, namely the distribution of seats and redrawing of districts.
Most observers following the electoral reform movement and the nation-wide debate over the upcoming elections are not optimistic about the chances of a breakthrough, citing hints from government sources that only marginal changes will be made to the electoral law. Many are pessimistic about the ability of activists to exert sufficient domestic pressure to put real electoral reform at the top of the government agenda. Neither the NCHR and the National Coalition, nor civil society and the political parties, have the ability to bring about tangible progress this way.
Enacting the recommendations would make a significant difference in encouraging citizens to take part in the elections. A poll conducted by the Al-Quds Center for Political Studies in cooperation with NDI in 2009 showed that 24% of those who did not vote in 2007 stayed at home due to procedural considerations such as voter lists. This subgroup amounts to a substantial 10% of the entire population. Increasing the women's quota in the next parliament is also important; the Jordanian parliament has had no more than 6% women, well below the average of 9% in Arab countries and almost 20% internationally (the level Jordanian women are demanding).
Even if some of the procedural and quota recommendations be accepted, they will not achieve the sort of reform most Jordanians want. It has been said that the main reason for dissolving the last parliament was its poor performance in legislation and oversight; most of its members were using their positions to obtain personal favors for their supporters and relatives at a heavy cost to the state treasury. If the 2010 elections are run according to the same law and roughly the same mechanisms, we can expect to see more of the same, even if some of the names and faces change.
Oraib al-Rantawi is a Jordanian writer and analyst, and director of the Al-Quds Center for Political Studies. (ARF 14.04)
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11.4 KUWAIT: Going Private
On 15 April, Kuwait's parliament approved the first draft of a privatization bill that could lead to the sale of a substantial proportion of state-held assets to the private sector. For a country in which the public sector accounts for over 70% of GDP, the Oxford Business Group observed that such a move could dramatically alter the composition of the domestic economy.
The bill, first proposed 18 year ago, will see the establishment of a higher privatization council tasked with overseeing and regulating the sale of public assets and companies. The council will be headed by the prime minister and comprise of five ministers and three non-government-appointed members.
Up to 20% of the shares of each sold-off entity will remain in the hands of the government, which - according to supporters of the bill - will ensure that it can still maintain an influence to protect the interests of the company's employees as well as the end-users of the services provided. An additional 40% of the shares will be sold to Kuwaiti citizens in the initial public offering; approximately 5% will be distributed to existing Kuwaiti employees of the concerned entity; and 35% will be auctioned off to local or foreign investors approved by the council. The law also includes a stipulation that all Kuwaiti staff employed by the entity will have the option of remaining in their positions at existing salaries for a five-year period.
Upstream oil and gas production and health and education services are excluded from the bill, but could all still be subject to privatization via separate legislation.
At present, it is estimated that over 77% of the Kuwaiti national workforce is employed in the public sector. These workers are paid high salaries and are guaranteed lifetime employment. Some analysts label the situation as "masked unemployment", citing that many of the positions held are considered unproductive and unchallenging.
A World Bank study issued in March of this year has warned the Kuwaiti government about the financial risks of continuing such a system, claiming that it is economically unsustainable in the long term. Presently, oil accounts for over 94% of national revenue, and according to the study around 84% of oil revenues are presently being allocated towards public sector salaries.
Proponents of the privatization bill believe that with a growing population and a continued reliance on oil revenue, the government cannot maintain present public sector employment levels. They argue that if privatized, formerly government-run entities will become more efficient and profitable, easing administrative and financial burdens on the government so that national revenues can be allocated to more productive areas.
Those in favor of the bill point to the benefits achieved in the country's telecommunications sector, where Kuwait was one of the first in the region to both privatize and license competing operators at the start of the decade. Since then, the sector has been reporting a compound annual growth rate of around 15%, and the two oldest operators, Zain and Wataniya, have both expanded to become highly respected global players. Wataniya has over 15m customers and operates in the Maldives, Saudi Arabia, Tunisia, Algeria and the Palestinian Authority, while Zain just recently sold off the majority of its African operations to India's Bharti Airtel in a deal estimated at around $10bn.
Market observers hope that a similar boost can be achieved for the underperforming national carrier Kuwait Airways, which is undergoing a privatization program of its own that is set for completion by year end.
Bader M Al Saad, the managing director of the Kuwait Investment Authority, the country's sovereign wealth fund that has been authorized to oversee the privatization process, told OBG, "The Kuwait Airways privatization is significant because we hope it will be the first of many that the country undertakes. It is therefore vital that the entire process is carried out in accordance with the by-laws put in place and can be termed a complete success. We want to attract a local strategic investor who is best able to reorganize and expand the company to make it a strong performer." (OBG 26.04)
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11.5 UAE: Abu Dhabi's Industrial & Warehouse Market
DTZ, the international real estate advisory firm, released a report focusing on the industrial and warehouse market in Abu Dhabi. According to the report, the economic development and diversification strategies of the UAE, and other GCC countries, has generated the need for more advanced logistics capabilities as these countries are on course to significantly increase their production and manufacturing bases. In light of this, the growth of the logistics sector will have a significant impact on the demand for warehousing space. Re-exporters as well as third party logistics supplies (3PLs) are predominantly seeking warehouse space within free zones. Additionally, the manufacturing sector in the UAE is still developing, thus has a high reliance on imported goods. Traders currently account for the majority of demand for warehousing space within the country, particularly outside of the free zones.
Historically, Abu Dhabi has suffered from a severe shortage of good quality warehouse and distribution accommodation. Despite numerous announcements of large-scale new developments, there has been a limited delivery of completed projects. Given the economic climate, this situation is likely to continue in the medium term. DTZ estimates there is approximately 9,460,383 sq m of warehouse stock (all grades of quality) in Abu Dhabi.
The majority of warehouse stock in Abu Dhabi is of low grade quality, built over the last 20 years. This is characterized by a high percentage of single storey garage type buildings with corrugated iron roofs and rudimentary loading and access provisions. DTZ considers there is currently no Grade A warehouse space in Abu Dhabi, but there is a limited amount of ‘good quality' warehousing that has emerged in the last 2-3 years. DTZ estimates there to be approximately 600,000 sq m of such space in Abu Dhabi at present which is approximately 6% of the total current stock. However, much of this is occupied space which means there is a significant undersupply of quality stock in the market.
There is about 365,000 sq m of (confirmed) development pipeline over the next 12 to 48 months. Planned pipeline is unlikely to oversupply the market at this stage in the development cycle. As the market matures, the trend is moving away from owner occupiers dominating the market to more international quality warehousing supplied by developers. The challenge for many landowners and developers is getting utilities connected, which will hinder future supply and make it difficult to lease the schemes.
Prior to the economic downturn in Q3/08, the Abu Dhabi industrial market had been characterized by strong demand levels, low vacancy rates and increasing rents. The combined arrival of more internationally recognized firms and a lack of appropriate supply pushed up rental levels. However, due to the economic climate, the last 18 months has seen an unwillingness of companies to commit to new leases. In response, rents have reduced significantly in Abu Dhabi but continue to command higher rents than in Dubai. DTZ understand that many of the warehouses in Mina Zayed were constructed under a Built Operate and Transfer (BOT) agreement and have recently been leased back to the existing occupiers on below market rates.
The oil and gas industry as well as the significant infrastructure investments Abu Dhabi is planning to deliver as part of the Abu Dhabi 2030 Plan, such as the new port, expansion of the airport and the new freight rail and highways, will drive demand. Furthermore, the general quality of warehousing is likely to improve, mirroring a similar trend that Dubai has experienced over the last 5-10 years. DTZ is the most established firm of real estate advisers in the Middle East, with its first permanent operations beginning in 1975. Today, DTZ has a presence in six GCC locations (Abu Dhabi, Dubai, Bahrain, Kuwait, Qatar and Saudi Arabia). Each DTZ office provides a full range of real estate services staffed by qualified expatriates and experienced Nationals. (BI-ME 15.04)
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11.6 SAUDI ARABIA: Pharmaceuticals and Healthcare Report Q2 2010
Research and Markets (http://www.researchandmarkets.com) announced its "Saudi Arabia Pharmaceuticals and Healthcare Report Q2 2010." In Q2/10 Business Environment Ratings, Saudi Arabia is ranked second of the 17 Middle East and African (MEA) markets. This is a rise from fifth place in Q1/10 and a return to the country's previous second place in Q4/09. The slide in Q1/10 was due to a drop in Saudi Arabia's score for limits of potential returns. Part of the reason for the country's reinstatement to second place is the drop in the scores of other countries in the region. From 2009 to 2014, the pharmaceutical market is expected to post a compound annual growth rate (CAGR) of 6.32% in both US dollar and local currency terms. Saudi Arabia and the UAE are the biggest medical spenders in the Gulf Cooperation Council (GCC), the most influential pharmaceutical markets in the MENA region. Saudi Arabia would be more capable of higher medicine spending if more rational policies were put in place to encourage domestic drug manufacturing and reduce reliance on imports. For example, joint ventures and licensing deals with multinational pharmaceutical companies would help reduce prices and improve access to medicines.
In January 2010, the Saudi Arabian Deputy Minister of Health for Planning and Development asserted that the replacement and upgrading of public hospitals will be completed by January 2013 and further that the 2010 health budget has approved the establishment of eight hospitals and 19 healthcare centers. Saudi Arabia is similar to its GCC neighbors in that there is a growing trend for lifestyle diseases such as diabetes and obesity-related problems. These will provide a long-term revenue stream for the prescription drug segment.
Strict controls imposed on over-the-counter (OTC) medicines in Saudi Arabia, limiting their advertisement and promotion, are likely to limit growth for this segment in the future there is no sign of this changing. These controls are similar to others in the region; however, the UAE are already showing signs of change.
EU countries and the US dominate the market and are major suppliers of pharmaceuticals to Saudi Arabia. However, other countries, including Japan and Ecuador, have started to gain market share by establishing joint ventures in pharmaceutical manufacturing with Saudi partners.
The largest producer of pharmaceuticals in Saudi Arabia is Glaxo Saudi Arabia (a subsidiary of UK-based drug major GlaxoSmithKline (GSK), with a 10.8% share. GSK also has a joint venture with local company Banaja Saudi Import through Glaxo Saudi Arabia, which holds a 51% stake in the venture. Local company SPIMACO is the second-largest producer of pharmaceuticals in Saudi Arabia, and holds a market share of 7.4% and currently meets 75% of Saudi Arabian private pharmaceutical demand. In January 2010 the company announced that it plans to expand into Eastern Europe and Northern Africa. SPIMACO also plans to modernize its manufacturing plant in Saudi Arabia, financing this through the issue of 18mn ordinary shares to raise capital of $209mn. While the company's decision to expand internationally is positive, there remains considerable domestic potential the OTC market is particularly underdeveloped, mainly as a result of over-regulation.
Several large Indian drug makers are attempting to penetrate the Saudi drug market. Ranbaxy which already has marketing operations in the UAE, Bahrain and Oman is leading the way, and was the first Indian drug maker registered in the country. (R&M 27.04)
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11.7 SAUDI ARABIA: Saudi Hair Salon Market Exploded Over the Last Decade with Double Digit Growth
Research and Markets' (http://www.researchandmarkets.com) "The Professional Hair Care Market Saudi Arabia 2010" report says the Saudi Arabian professional hair care market is outperforming the sector, with its impressive growth rates. Still a conservative market, it is fast becoming more demanding in terms of quality, standards and products. Saudi salons and their clients, restricted by regulations, are highly innovative in their use of client referrals and social networking sites to promote their business or communicate. Women of all ages are spending more on their personal appearance. Saudi women are entering the workforce in ever larger numbers while, even more crucially, girls are continuing at second-level and going on to third-level education. Salons in Jeddah and Riyadh report that university students and graduates now account for the largest consumer segment, second only to working women.
There is a very strict dress code for women in the kingdom. However, despite or perhaps because of those restrictions, women transforming their appearance is driving salon business in Saudi Arabia as it does elsewhere. Stylists note that their clients can change their look with a new and more modern hair color and style up to four times a year. This desire for a new image peaks seasonally (eg, Islamic festivities) or marks life-changing events such as starting college. As in most countries, hair coloring is the most cost and time effective transformation. It accounts for just under 50% of salons' revenues.
Unusually for the salon sector, hair salons in Saudi Arabia actually register as dress making businesses because no women's hair salon category as such exists for licensing purposes. The relatively small number of official salons is, in reality, dwarfed by the many unregistered or hidden salons actually doing business across the country. It can be difficult for women to get to salons - as they cannot drive or travel alone in Saudi Arabia - so many freelance hairdressers and casual stylists fill that market niche.
Different interpretations of the laws governing the taking of photographs or displaying images of women make it more challenging for hair or beauty care services and products to be promoted. Salons cannot have street windows or use images of women as promotional tools to the public. Therefore, mega salons showcase (inside the salon) photos of their foreign staff with their colored or styled hair as tangible proof of the quality hair care services offered. New media which allows for direct promotion and communication between salons and their clients plays a crucial role in the salon market. Social networking sites which cover topics such as make up and hair care and other issues can attract over a million Saudi women. Client referrals are also an effective marketing tool for Saudi Arabian salons.
The Saudi Arabian market is conservative and this is reflected in the relatively restricted range of brands and products used in salons. Stylists maintain that their clients are unwilling to take risks with new products. Brand-wise, it is a two horse race between L'Oreal and Wella. However, launches of new salon brands are doing well so the top brands' dominance of the Saudi Arabian professional channel will be challenged.
Looking ahead, all hair care experts consulted by Diagonal Reports are confident that strong growth will continue in the Saudi market. The number of women in paid employment will increase from its current low of 6% of the workforce. Saudi Arabian women's increased exposure via the internet and media to beauty trends outside of the KSA is making them more sophisticated and demanding as consumers. They now want more than the local fashions and standards. Findings are based on in-depth discussions conducted in Arabic with salon experts across Saudi Arabia (including Riyadh, Jeddah, Dammam/Al-Khobar and Abha) during January-March 2010. (R&M 23.04)
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11.8 EGYPT: IMF Board Concludes Article IV Consultation for 2010
The IMF released its article IV report on Egypt for 2010. The IMF indicated that “Egypt's economy has been resilient to the crisis. Financial contagion was contained by limited direct exposure to structured products and low levels of financial integration with world financial markets. Sustained and wide-ranging reforms since 2004 had reduced fiscal, monetary and external vulnerabilities, and improved the investment climate. These bolstered the economy's durability and provided breathing space for appropriate policy responses.” The IMF stated that “economic performance was better than expected, although headline inflation remains elevated.
Growth fell only to 4.7% in FY2008/2009 on the strength of consumption spending, and production in the construction, communications and trade sectors. The first half of FY2009/2010 provides further evidence of a pickup in growth and external demand. After falling rapidly from 24%, headline inflation has risen above 13%t in recent months, although much of the impetus appears to be idiosyncratic. Core inflation remains within the central bank's informal comfort zone. While 12-month inflation is expected to decline in the coming months, the CBE should stand ready to tighten monetary conditions if inflation does not abate. As inflation ceased declining and output growth picked up, the recent decisions to keep rates stable were appropriate. Increases in headline inflation have been driven largely by fruit and vegetable prices. Such pressures are likely to be mostly idiosyncratic and not demand-induced. But persistently high headline inflation risks generating inflationary momentum through its effect on expectations. Capital inflows, if continued, will complicate monetary policymaking.
As the CBE has done in the past, sterilized intervention is the first option for hot money inflows, although this is expensive and unlikely to be effective if inflows persist. The CBE should also continue to allow greater exchange rate variability to limit one-way bets. Egypt's real effective exchange rate is estimated to be slightly more appreciated than equilibrium, although these estimates are subject to uncertainties. The possibility that capital inflows could exert longer-lasting pressures for real appreciation reinforces the need for fiscal adjustment and productivity-enhancing reforms. As the recovery gains strength, the focus of policies can shift back toward fiscal consolidation and other growth-oriented reforms.
With growth expected to reach 5% in FY2009/2010 and 5.5% in FY2010/2011, the need for further stimulus is waning. The authorities' objective of reducing the fiscal deficit to about 3% by FY2014/2015 is critical to achieving private sector-led growth and reducing vulnerabilities. Reducing the overall deficit by about 5% of GDP over the next five years is feasible, based on the experience of other countries and would lead to a further 15% point decline in the debt-to-GDP ratio. Such adjustment will be crucial to maintain investor confidence, preserve macroeconomic stability and create scope for future countercyclical fiscal policy. While adopting major reforms could be challenging with the approaching elections - as evidenced by the delays in the property tax - staff encourages the authorities to continue taking measures such as strengthening tax compliance and reducing the cost of subsidy abuse and also to resist pressures for additional spending. Continuing the reform momentum and reducing fiscal vulnerabilities remain the key medium-term challenges. Rapid growth is crucial to tackling poverty and the high level of unemployment. In this context, reinvigorating the structural reform agenda should help raise productivity and reinforce Egypt's competitiveness. (IMF 15.04)
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11.9 EGYPT: Fitch Rates Egypt's $1.5 Billion Bonds 'BB+'
On 23 April, Fitch Ratings (http://www.fitchratings.com) assigned the Arab Republic of Egypt's two new Eurobonds, totaling $1.5bn, Long-term foreign currency ratings of 'BB+'. The ratings are in line with Egypt's LTFC Issuer Default rating (IDR) of 'BB+', which has a Stable Outlook, which was affirmed on 9 December 2009. The bonds are $1bn of 5.75% 10-year notes and $0.5bn of 6.875% 30-year notes.
"Egypt's economy has proved resilient to the global crisis and is now well into recovery mode," says Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch. "Its relatively robust performance owes much to the reforms introduced since 2004 and the investment and diversification they have encouraged."
Egypt entered the global recession in fairly good shape, with three years of 7% GDP growth, positive debt dynamics and external indicators comparing well with 'BBB' as well as 'BB' medians. As the global crisis started to affect all Egypt's main foreign currency streams: hydrocarbons, tourism, remittances and Suez Canal fees, growth slowed to 4.7% in 2008/9 but is now on track to reach more than 5% this year, supported by a revival of both domestic and external demand.
Headline inflation, though still in double digits, is declining and will be nearer the core inflation rate - currently 7.1 %- by year-end. Monetary and fiscal policies have both been supportive of growth, helped by important fiscal and monetary reforms which have given room for interest rates to fall and for a modest fiscal stimulus.
Strong external indicators are a key support for Egypt's rating. Although a current account deficit has opened up since 2008, it remains well-covered by FDI. International reserves have risen consistently over the past year.
On the downside, fiscal consolidation has come to a halt as the authorities have adopted a more growth-supportive fiscal policy. The deficit and debt burden were essentially unchanged in FY09 (year ending June) after three years which saw the debt ratio fall by 33% of GDP. The FY10 budget sees the deficit widening to 8.4% of GDP but the draft FY11 budget sees a renewed decline. Fitch projects the debt ratio to remain broadly stable. A temporary halt to fiscal consolidation is acceptable, but with gross general government debt above 70% of GDP and net debt of nearly 60%, Egypt's fiscal room for maneuver remains limited.
Other key indicators remain weaker than the peer group, demanding continuing reform efforts. The central bank is strengthening its monetary tools but its ability to control inflation remains weak. The banking system has improved, and has not required special support, but still has weaknesses compared to peers. Although the government has had important success improving the business environment, this also compares unfavorably with peers in some respects. Meanwhile, high inflation and elections later in 2010 and in 2011 present constraints on the reforms that can be made in the short-term and are increasing uncertainty. (Fitch 23.04)
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11.10 EGYPT: Metals Report for Q2 2010
Research and Markets (http://www.researchandmarkets.com) "Egypt Metals Report Q2 2010" states that although Egypt is handling the recession better than expected, key metals-consuming industries are struggling, with the construction sector hit particularly hard. Growth in the sector fell from 10.32% in 2008 to 1.73% in 2009 and is set to remain flat over the next two years.
Rising cement prices are depressing construction steel, while the automotive sector is suffering from subdued lending, depressing car sales with a knock-on impact on flats production. The chief growth area, both short-term and long-term, is appliances, packaging and containers and machine tools, which in turn will be heavily influenced by private consumption and investment. The poor performance of metals consuming industries had a knock-on effect on crude steel output which declined by 11.1% year-on-year (y-o-y) to 5.51mn tonnes. The upswing expected in Q4/09 never materialized and crude steel output in the quarter was only 3.6% above the previous quarter and 8.8% up on Q4/08. While this was above global growth of 2.4% quarter-on-quarter (q-o-q), it was disappointing in the context of emerging markets. The analyst had expected construction activity to resume sooner in the wake of government pledges of stimulus programs, but instead this looks likely to take place later in 2010.
In terms of the broader economy, we are forecasting a small-scale double dip in real GDP in 2009-11. Thereafter, we see the economy returning almost to trend, averaging 5.3% growth over 2011-2014. This implies further uncertainties in domestic demand for semi-finished and finished products in 2010, with the report forecasting modest 6.7% growth in apparent finished steel consumption to 6.3mn tonnes. This will feed into lower rates of steel production growth, with the report forecasting a 6.8% rise in hot-rolled output to 6.3mn tonnes.
Despite declining global and domestic demand for flat steel, mainly used in consumer products, rebar output in Egypt has shown relative resilience, fuelled by the robust construction sector. We expect this tendency to continue over the next year as demand for residential units keeps growing. Another factor likely to support this trend is the government's new stimulus package, with EGP11bn announced in January 2010 following injections of EGP15bn in October 2008 and EGP8bn when the budget was announced in June. However, its effect on the steel sector is dependent on the time span between the allocation of money to an infrastructure project and the commencement of work on it.
A recovery in flats from 2011 should assist the steel industry's recovery over the rest of the forecast period, with crude output reaching 10.83mn tonnes in 2014. Although this represents a 97% increase over 2009 estimates, it will still not be enough to cover domestic demand, which is set to grow by 77% to just under 12mn tonnes in 2014. Growth in demand may not necessarily lead to concurrent growth in output. Domestic producers are struggling to keep up competition with cheaper imports and their market share is set to shrink in 2009. Growth in the rebar market has largely benefited imports from Turkey. A key issue is the Egyptian industry's inability to compete in terms of price.
Trade liberalization represents a significant threat if producers do not improve production processes and achieve leverage over raw materials costs. Local producers predominantly use iron ore, mainly in pellet form, with iron ore supplies prices tied by longer-term contracts. Manufacturers whose main input was scrap, like Turkish importers, have been able to adapt their production process in shorter time periods and react faster to fluctuations in input prices, transferring cost reductions to their customers and gaining market share. (R&M 15.04)
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11.11 TURKEY: Falling Into Deficit Is Turkey's Chronic & Serious Problem
The Turkish newspaper Zaman (http://www.todayszaman.com) writes that Turkey's current account deficit has skyrocketed as the economy returns to its growth trajectory, but the more than sevenfold increase in this vital figure reveals deep-rooted problems and rifts in the country's manufacturing industry that can only be mended with a restructuring of how Turkey produces goods.
Although the Turkish economy is showing many signs that it has left the 2009 economic crisis behind, it will not be a carefree period for Turkey, as it falls into the same problems that it has always had with its balance of payments. In the span of the first two months of the year, the current account deficit grew by nearly 600% compared to the same period last year. In February alone, the deficit grew by 744% to reach $2.6 billion.
The current account deficit, a measure of the nature of foreign trade in a country, was predominantly due to a serious trade imbalance in February as imports ramped up and the economy got going again. According to data from the central bank, Turkey had a foreign trade deficit of $2.21 billion, which made up more than 80% of the total current account deficit. The foreign trade deficit was a staggering $4.87 billion in the first two months of 2010, up from $36 million in the same period in 2009. Moreover, the central bank attributed these high rises in the foreign trade deficit to a 26.2% rise in spending on imports, which reached $23.16 billion for the first two months of the year - a figure that exports could not hope to make up for.
According to experts, these figures are a chronic reminder of Turkey's skewed economic structure and the lack of maturity of its industry. In addition to this, crude oil prices had a significant effect on the current account deficit, since a barrel of crude oil has nearly doubled in price since the beginning of 2009, thereby increasing the cost of imports. The import of intermediate goods for production and Turkey's inability to have a domestic industry that can source most, if not all, inputs domestically is further fueling this chronic problem.
Competition needed
Prof. Seyfettin Gorsel of Bahcesehir University stressed that Turkey has always seen a serious rise in imports when the economy starts to recover from crises and slumps and that this time the cost of these imports, despite the fact that exports increased by 34% in March, was not balanced by Turkey sending its goods abroad.
According Gorsel, the only solution to such a current account deficit, which can suck up a country's foreign exchange reserves and generally create imbalances that can lead to instability in the economy, is for Turkey's economy to become more competitive in the global field. “We can start from the exchange rate and go on to myriad other issues to solve this,” Gorsel added. According to Gorsel, however, if the inflow of financial capital - or “hot money” - can cover this imbalance in the balance of payments, then Turkey can sustain this deficit for a long period of time. But just as liquid money can come into Turkey at any time, “it can also leave at anytime.”
Retired scholar Sudi Apak stated that Turkey's chronic problem with its current account deficit was rooted in the fact that Turkey imports intermediate goods for production, so any recovery in its economy automatically means a serious increase in imports. Apak noted that even when putting aside natural resource imports, Turkey's addiction to foreign intermediate goods for its production meant that it couldn't bring its deficit down to a manageable level unless it was exporting high-value added goods.
Apak noted that if high-tech sectors were subsidized and exports from these sectors were supported, then Turkey would be in a much different position where it could sell high-priced goods that would bring foreign exchange to Turkey while also developing a native high-tech industry.
Austerity before growth
Ibrahim Ozturk, a professor of economics at Marmara University, said these chronic current account deficits revealed a serious problem in the Turkish economy, especially during the current recovery period. He added that even before Turkey could totally shake off the effects of the global financial crisis, the current account deficit soared due to a large influx of imports that may lead to policies that would hinder growth when it is needed most. “It hasn't even been a year yet, and we've already hit double-digit inflation,” Ozturk stated. Pointing out that Turkey falling into deficit is a chronic problem, he noted that these developments have historically resulted in a restrictive monetary and fiscal policy by the government. These austerity policies may therefore stamp out any kind of recovery and limit the growth of the Turkish economy.
Ozturk added that unless Turkey can reduce its reliance on intermediary goods from foreign sources and start producing them itself, it will always be limited by its own policies. “How does Turkey control its current account deficit? By applying restrictive economic policies to slow down the economy. This will not help us overcome our economic difficulties.”
He added that with these large current account deficits, the government pushes and pulls to implement policies that will balance its economy and prevent it from overheating, which in the end limits its growth. Ozturk stressed that the lack of a domestic intermediary goods industry meant that Turkey was doomed to live through these imbalances and the government's handbrakes that limit growth.
Ozturk noted that although the government has put forward a stimulus plan for industry to try to overcome these problems and develop a mature production system, “none of these will work unless the government focuses their efforts more specifically.” He called on the government to implement projects that take advantage of their stimulus plans for industrialists, but focus more on specific problems in Turkey's production backbone. (Sunday's Zaman 18.04)
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11.12 GREECE: Greece Requests EU-IMF Rescue In Euro's Biggest Test
On 23 April, Greece called for activation of a financial lifeline of as much as €45 billion ($60 billion) this year in an unprecedented test of the euro's stability and European political cohesion. With the blue waters of the Aegean and the white houses of Kastelorizo in the background, Prime Minister George Papandreou warned Greeks that far-from-idyllic times lie ahead as he announced the government was requesting activation of the emergency loan mechanism it agreed with the European Union and the International Monetary Fund. Papandreou took many people by surprise, including some of his ministers who only found out by text message the previous morning, when he chose his visit to the Dodecanese island as the time to announce that Greece would be asking for up to €45 billion euros in financial assistance.
Speculation had been mounting that the government would ask for the money as the spread on Greek bonds widened to record levels, making it virtually impossible to borrow on international markets.
The appeal for help from the European Union and International Monetary Fund follows a surge in borrowing costs to what Greek Prime Minister Papandreou called unsustainable levels that undermine efforts to cut a budget deficit of more than four times the EU limit. Greek bonds and stocks rallied after the announcement.
“There was no response from the markets, either because they didn't believe in the political will of the EU or because they decided to go on with speculation,” Papandreou said on 23 April. “The situation threatens to demolish not only the sacrifices of the people but also the regular course of the economy. All the efforts by the Greek people are in danger of being in vain.”
With national debt of almost €300 billion and investors demanding almost triple what they charge Germany for its 10-year bonds, Greece faces a fiscal mess that threatened to spread to Spain and Portugal, forcing the EU to set up a standby aid facility. At stake is the future of the euro 11 years after its creators gave the European Central Bank responsibility for interest rates while leaving budget policy in national capitals.
Rating cut
The request came one day after the yield on the country's benchmark two-year note topped 11%, nearing that of Pakistan and Moody's Investors Service lowered Greece's creditworthiness by one notch to A3, saying it was considering further cuts. After Papandreou's announcement, the two-year yield declined 82 basis points to 9.41%.
The euro, which has slumped 7% this year as Greece undermined confidence in the single currency, rose from a one-year low on 22 April of $1.3261 to $1.3311 Friday. Greece's ASE stock index gained 1.7% to 1892.32. The benchmark has shed almost a third of its value in the past six months as banks, the biggest holders of Greek bonds, slumped and concerns the crisis will lead to a prolonged recession hurt the rest of the market.
Activating the aid and turning over economic policy to EU and IMF oversight was “a new Odyssey for Greece,” Papandreou said. “But we know the road to Ithaca and have charted the waters,” referring to the return of mythological hero Ulysses to his island home. Papandreou also blamed the previous New Democracy administration for leaving behind a “sinking ship.”
One roof
Economists including Harvard University Professor Martin Feldstein have said the single currency would falter because divergent economies couldn't fit under one monetary roof.
The Greek request needs approval from all 15 other euro- area countries including Germany, where surveys have shown public opposition to aiding Greece. BlackRock Inc., the world's largest money manager, has expressed concerns about a “backlash” from citizens in EU nations prepared to offer a lifeline. “We want to see the EU countries really get behind it and see that they've gelled around the idea of providing this support at the government level, at the senior policy maker level,” Curtis Arledge, chief investment officer of fixed income at BlackRock, said on 13 April. “If you see the backlash, they need to get their people on board.”
Discount loans
The aid facility for Greece offers as much as €30 billion in three-year loans from euro-area nations this year at a below-market interest rate of around 5%. Another €15 billion are available from the IMF at even lower rates, EU officials have said. Greek officials started talks on 21 April in Athens with EU and IMF officials to set the conditions on funds before the loans are disbursed.
Those talks may last for at least two weeks. With Greece facing €8.5 billion of bonds maturing May 19 and little chance of tapping financial markets, Papandreou's request could help speed distribution of the rescue funds. “We are prepared to move expeditiously on this request,” IMF Managing Director Dominique Strauss-Kahn said in a statement.
Under EU rules, governments must keep their budget deficits below 3% of gross domestic product. While the EU can penalize countries for breaching the limit, no nation has been sanctioned since the euro was introduced in 1999. Of the 16 euro region members, only Luxembourg and Finland had deficits within the limit last year.
Deficit revisions
The government's deficit-cutting goal became questionable 22 April after Eurostat, the EU's statistics agency, revised up the 2009 shortfall to 13.6% of gross domestic product and said it was considering a further revision to as much as 14.1%. The government in Athens had pledged to reduce the budget deficit by at least 4% of gross domestic product this year to 8.7%. When Greece first made that pledge, its starting point was a 2009 deficit of 12.7%.
“The aid package will buy Greece time this year,” said Colin Ellis, European economist at Daiwa Capital in London. “That's all that it has done. Greece still faces a herculean task to show that it can get its public finances in order and reduce its deficit.”
Strikes, protests
Unions have already put the government on notice that there will be more strikes if the Papandreou seeks to impose more austerity measures beyond the tax increases and wage cuts already implemented to reach the 2010 deficit goals. Civil servants held their fourth one-day strike of the year last week and other unions have regularly walked off the job since the original measures were announced, threatening to deepen the recession.
Greece's economy may contract 4% this year, twice as much as in 2009 and double the government's forecast, according to Deutsche Bank AG. After a wave of domestic protests against austerity measures, the government needs to raise almost €10 billion by the end of May to cover maturing bonds and another €20 billion by the end of the year to pay debt coupons and finance the deficit.
Greece failed to qualify for the euro area initially, joining two years later and only after understating its budget gap. With the euro, ECB interest rates that never exceeded 4.75% and EU funds to help build roads and airports, the country had economic growth of around 4% on an annual average basis - one of the fastest in Europe - until 2008 when Lehman Brothers Holdings Inc.'s collapse sparked a global financial crisis.
German resistance
German politicians have expressed reluctance to aid Greece, citing the country's manipulation of statistics to qualify for euro entry and an EU treaty clause that prohibits bailouts. Allies of Chancellor Angela Merkel, a Christian Democrat, criticized her for signing up to an 11 April European deal on the terms of any aid for Greece, saying she dropped an initial demand that subsidies be ruled out. “Germany buckled under the pressure - we shouldn't kid ourselves that such loans are anything but subsidies,” Frank Schaeffler, deputy finance spokesman for Merkel's Free Democrat junior coalition partners, said at the time.
The Greek request for help also risks provoking a European fight with the IMF over control of the process, including the conditions. The rescue package covers three years and leaves open the sums of possible funding in 2011 and 2012.
Compromise
The aid facility marked a compromise between French demands for the euro area to play the lead role and German insistence on involving the Washington-based IMF. On 30 March, in a sign of the potential for conflict over supervision, Strauss-Kahn said his organization “will define the conditionality” of any rescue package for Greece.
Papandreou had called the EU-IMF aid facility a “loaded gun” that would lower borrowing costs in the market and make an actual request for support unnecessary. Investors weren't intimidated and the rout in Greek bonds intensified after the aid package was adopted on 11 April. Greek 10-year bond yields have soared more than 125 basis points since then and topped 10% on 22 April, the highest since 1998.
The yield premium that investors demand to hold Greek 10-year bonds instead of benchmark German debt widened to more than 500 basis points, the most since before the euro's 1999 debut. (Various 24.04)
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11.13 GREECE: Moody's Downgrades Greece's Sovereign Ratings to A3
On 22 April, Moody's Investors Service (http://www.moodys.com) downgraded the government bond ratings of Greece to A3 from A2 and placed them on review for further possible downgrade. This decision is based on Moody's view that there is a significant risk that debt may only stabilize at a higher and more costly level than previously estimated.
The rating review will determine whether the ratings will remain in the A range and their likely outlook. Moody's will conclude the ratings review once it has obtained greater clarity on longer-term policy measures and Greece's macroeconomic prospects. In line with its usual practice, the rating agency expects to conclude the review at any point during the next three months.
Moody's also put Greece's Prime-1 short-term issuer rating under review for downgrade. Greece's country ceilings for bonds and bank deposits continue to be rated Aaa (in line with the Eurozone's rating) and remain unaffected by this rating action or the review.
"Although the Greek government appears to be on, or even ahead of, schedule in terms of the implementation of the actions laid out in its Stability and Growth Program, the difficult macroeconomic and financial environment has made continued adherence to the program considerably more challenging," says Sarah Carlson, VP-Senior Analyst in Moody's Sovereign Risk Group and lead analyst for Greece.
In December 2009, Moody's downgraded Greece's government bond rating to A2 with a negative outlook from A1. At the time, the A2 rating was based on three factors: (1) the realization that the Greek government's ambitious Stability and Growth Program entails significant execution risk; (2) the very limited liquidity risk faced by Greece because of the ECB's continued willingness to accept the government's debt as collateral; and (3) the assumption that conditional support from the EU and/or IMF would be forthcoming, if necessary, and confidence-enhancing.
Four months later, the government's resolve to shore up the country's fundamental creditworthiness does not seem to be weakening. In general, the government has produced a number of positive surprises, including an indication on 20 April 2010 that structural economic measures are now in the pipeline.
However, the fractious mobilization of external assistance has made it significantly more difficult for Greece to maintain its debt metrics within the A range. Moreover, the revision of Greek debt and deficit statistics on 22 April 2010 has further raised the bar for the government to achieve the goals it laid out in the Stability and Growth Program. As a result, Moody's now believes that debt stabilization will, in all likelihood, eventually occur but that it may materialize at a higher price and a level more consistent with a Baa-range rating.
Given this context, today's downgrade of Greece's rating to A3 and review for further possible downgrade is consistent with Moody's aim to move ratings in an orderly fashion, providing a medium-term assessment of creditworthiness. "It is unlikely that the rating will remain at A3, unless the government's actions can restore confidence in the markets and counteract the prevailing headwinds of high interest rates and low growth that could ultimately undermine the government's ability to sustainably cut debt levels," said Ms. Carlson.
Therefore, Moody's review will aim to assess the prospects for credible debt stabilization against the backdrop of financial market skepticism, the courageous but unpopular fiscal adjustment and the painful economic restructuring. The previous rating action on Greece was implemented on 22 December 2009, when Moody's downgraded Greece's rating to A2 with a negative outlook. (Moody's 22.04)
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11.14 GREECE: Greece Activates Financial Aid Package
On 26 April, Morgan Stanley (http://www.morganstanley.com) noted that the Greek government announced that it will request financial aid from the EU/IMF. Doing so, it has started the three-step process towards financial aid. In the next step, the European Commission and the ECB need to confirm that Greece cannot fund itself in the market any more. In the final step, euro area governments will have to take a unanimous decision to disburse funds. In some countries, e.g., Germany, this process could take time. Yet, in line with our expectation, the German government is now hinting at the possibility of the IMF disbursing funds first, followed by those countries that have already completed the legislative process. Hence, the delay in parliamentary approval in Germany should not stand in the way of disbursing the first tranches of the aid package. France for instance has already taken a cabinet decision. In the Netherlands, the parliament passed a motion last week approving potential aid to Greece (thus reversing its decision from mid-February).
Impact on Morgan Stanley's views: In our view, the IMF portion of the aid package can be decided and disbursed in a matter of days. The aid package addresses the near-term liquidity risk in Greece and should see Greece through the upcoming redemptions/coupons. The long-term sustainability issue and thus the solvency question is only marginally affected by the activation of the package through the availability of lending at more favorable rates than the market currently offers. At the end of the day, the solvency question crucially depends on the ability of the Greek government to deliver on its austerity program. Not only this year, but also in the years ahead. The aid package buys it a little more time though.
An IMF Stand-By Arrangement
IMF assistance for Greece will be provided through a Stand-By Arrangement (SBA). The SBA framework allows the Fund to respond quickly to countries' external financing needs, usually on the back of a BoP crisis. The targets under an IMF program are typically designed to address these problems and fund disbursements are made conditional on achieving these targets. When a country borrows from the IMF, it agrees to adjust its economic policies to overcome the problems that led it to seek funding in the first place. These commitments, including specific conditionality, are described in the member country's letter of intent, which needs to be approved by the IMF's Executive Board (EB). The EB usually decides by consensus. Hence, the Greek request will likely be a talking point at this weekend's G20 meeting in Washington and the upcoming IMF Spring meeting. It might have well been these events that triggered the official request being made today. That said, the recent price action also might have made an impression on policymakers.
The Amount of Borrowing from the IMF
Normal borrowing limits were recently doubled to give countries access of up to 200% of quota for any 12-month period, and 600% of total credit outstanding. Greece's quota is currently €925 million, so this would only amount to €1.85 billion per year and €5.55 billion overall. However, the IMF can lend larger amounts above normal limits on a case-by-case basis under its Exceptional Access policy, which entails enhanced scrutiny by the Fund's Executive Board. During the recent global economic crisis, countries facing acute financing needs have been able to tap exceptional access SBAs, with several CEE countries such as Hungary receiving more between 1,000 - 1,200% of their quota. In the case of Greece, press reports of the IMF adding another third to the EU package would suggest that up to €15 billion could be made available. The money can be front-loaded. But it is usually disbursed in tranches.
The IMF Borrowing Rate
The IMF lends at below market rates, hence providing some budgetary respite to the countries who tap into its programs. The IMF lending rate is tied to the IMF's market-related interest rate, known as the basic rate of charge (currently 1.25%), which is itself linked to the SDR interest rate (currently 0.25%). Large loans carry a surcharge of 200bp, paid on the amount of credit outstanding above 300% of quota. If credit remains above 300% of quota after three years, this surcharge rises to 300bp, and is designed to discourage large and prolonged use of IMF resources. Thus, initially, Greece could borrow at a rate of 3.25% (1.25% plus 200bp) plus a one-off service charge of 50bp on each amount drawn. Repayments are due within 3.25-5 years of disbursement, which means that each disbursement is repaid in eight equal quarterly installments beginning 3.25 years after the date of each disbursement.
IMF Could Ask for Additional Austerity or Adjustment Measures
There is a risk that the IMF might ask for additional fiscal or structural measures over and above the current program agreed with the EU partners. While we deem this risk low given the size of the planned fiscal tightening, we cannot entirely rule out such a response. Even if the IMF does not demand measures that go meaningfully beyond the ones that have been agreed with the EU, we cannot rule out that the Fund will make some additional demands; even if it is just to assert its role as an institution in its own right. If so, this could delay an agreement, creating market uncertainty in the meantime. In addition, disbursements of the different tranches of the IMF loan will be conditional on meeting these requirements. The failure to implement the measures in time could lead to the program being suspended.
The Timeline for IMF Lending
The Fund has emergency procedures in place to help provide financing at short notice. The Emergency Financing Mechanism was used in 1997 during the Asian crisis; in 2001 for Turkey and in 2008-09 for Armenia, Georgia, Hungary, Iceland, Latvia, Pakistan and Ukraine. It can be used when a member country faces an exceptional situation that threatens its financial stability and a rapid response is needed to contain the damage to the country or the international monetary system. In this case the Executive Board is informed about a member's request for assistance; a staff team is quickly deployed to the country (which in the case of Greece has already happened); and then as soon as the IMF staff reach an understanding with the government, the IMF Executive Board considers the request to support a program within 48-72 hours. Given the preparatory work the IMF has done already, a program can likely be drafted very quickly and a decision by the Executive Board decision could be taken over the weekend or early next week. The upcoming G20 meeting will provide an opportunity for G20 leaders to talk this over in detail.
The Actual Disbursement of the Funds
Once the IMF has decided that it will provide lending to Greece, it will likely ask the larger central banks within the ESCB (or maybe even all of them for the sake of cohesion) to provide EUR to the Greek government. In exchange for these freshly minted euros, the ESCB will receive SDRs from the IMF's. This creation of money by the IMF (a decision by Finance Minister to bump up the IMF's lending capabilities) has attracted some criticism from central bankers (notably J Stark and A Weber), and is one of the reasons why the ECB initially was against the IMF getting involved. Note that the ESCB would not take any risk as far as lending to Greece is concerned. Its lending relationship is with the IMF, who will have to bear the risk on its lending to Greece. Typically the IMF only starts to worry about this risk when a country that it has lent to is already in arrears. In the case of Greece, it is unlikely that the IMF will demand its debt to be senior to others from the outset.
Financial Market Reaction to IMF Programs
The empirical evidence on IMF programs acting as a catalyst for private sector capital flows is mixed. In a summary of the academic literature, G. Bird and D. Rowlands (1997, 2002) find that the IMF often fails to act as a catalyst. In fact, an IMF involvement can even be counterproductive. They argue that the commitment by the government to its policy agenda is more important than the involvement of the IMF. Where it exists, the catalytic effect of an IMF program is only weak and partial and depends on the country, notably its income and its debt level as well as the initial conditions in the country. Bordo, Mody and Oomes (2004) find that IMF programs catalyze capital flows into countries with bad, but not very bad fundamentals. Meanwhile, Mody and Saravia (2003) report a stronger catalytic impact for precautionary arrangements and for countries where the economic situation has not yet deteriorated drastically. In general, the academic findings strongly depend on samples and econometric procedures. Thus, any generalization has to be viewed with caution. There seems to be no strong evidence though that IMF involvement serves as a ‘seal of approval' to investors and lenders - even though the signal might be stronger for middle-income countries with (potential) access to global capital markets. Typically, we will see significant volatility in markets ahead of the decisions on the disbursements of different tranches of the program. (MS 26.04)
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11.15 GREECE: Agribusiness Report for Q2/10 Looks Effects of the Economic Crisis
Research and Markets(http://www.researchandmarkets.com) "Greece Agribusiness Report Q2 2010" says that with an economic crisis playing out and a program of government austerity measures underway, in January 2010 Greek farmers launched a wave of protests. Thousands of rice, corn and wheat growers blocked main roads and border crossings, demanding a freeze on debt repayments, fuel subsidies and minimum crop prices for their produce. The protests highlight the desperation felt by many Greek grains producers, who say they are unable to break even with grain prices at such low levels. BMI believes the crisis and the government's austerity program are likely to push many small producers out of business.
Reduced investment in production is expected to affect production levels of a number of key commodities. In 2009/2010, we forecast wheat production of 1.61mn tonnes, down by 12.1% year-on year (y-o-y). This figure is 63,000 tonnes less than we forecast in the previous report. Over the forecast period through to 2014, we expect production to reach just 1.29mn tonnes by 2013/2014, a fall of 29.6%. This figure is 44,000 tonnes less than in the Q1/10 report. In 2009/2010, we now expect corn production to fall to 2.31mn tonnes (156,000 tonnes less than forecast in Q1). Over the forecast period, we expect production to fall by 7.1% to 2.19mn tonnes (265,000 tonnes less than forecast in Q1).
The economic crisis will affect Greek consumers' wallets and demand for wheat, corn and barley is likely to suffer. Consequently, we have revised down our forecasts for 2010-2014. We expect wheat consumption to come in at 1.61mn tonnes this year, down slightly from our last report. Over the forecast period, we expect consumption to fall by 5.1%, to 1.54mn tonnes in 2014. This will make more wheat imports necessary and a negative trade balance is expected from 2011.
In livestock, we have revised down our forecasts for production and consumption of pork and beef over the 2009-2014 period. In 2009, we estimate pork production was 114,000 tonnes. For 2010, we expect this figure to fall to 108,000 tonnes, down slightly on Q1's forecast. By 2014, we expect pork production to have fallen to 88,000 tonnes (2,000 tonnes less than forecast last quarter), a total slump of 22.4% over the forecast period. Demand will fall too - by 2014 demand will have dropped to 292,000 tonnes, a 4.8% decrease over the forecast period.
Poultry will fare better. The economic crisis should boost demand for poultry at the expense of red meat. Chicken is cheaper than pork and beef so the industry can expect to benefit from cash-strapped consumers switching to poultry. In 2009, we estimate that Greece consumed 216,000 tonnes of poultry. In 2010, this figure should increase to 221,000 tonnes, up by 2.4% (2,000 tonnes more than forecast in Q1). By 2014, BMI predicts consumption will be 237,000 tonnes, up by 9.8% over the forecast period. (R&M 15.04)
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11.16 BULGARIA: Moody's Says Bulgaria Sovereign Upgrade Still Possible Despite Wider Deficits
On 21 April, Moody's Investors Service (http://www.moodys.com) said that a ratings upgrade for the Bulgarian government is still possible in the next 12-18 months, despite the recent announcement that the 2009 budget deficit was much higher than previous estimates. The government's rating is currently Baa3 with a positive outlook. However, a ratings upgrade is conditional upon fiscal consolidation that stabilizes the government's debt burden, as well as the re-emergence of sustainable economic growth.
The Bulgarian Ministry of Finance announced that the actual outcome for the 2009 budget deficit was 3.7% of GDP, instead of 1.9% as initially estimated. The 2010 deficit is also expected to be around 3% of GDP, rather than a small deficit. According to the authorities, the higher deficits are due to previously undiscovered expenses related to contracts signed by the previous government prior to the July 2009 election. The government says that these expenses are largely non-recurring, and it recently enacted a package of fiscal measures to contain the rise in the 2010 deficit.
"Despite the Bulgarian government's recent announcement about the 2009 and 2010 budget deficits, the rating could still be upgraded to Baa2 if the higher expenditures are indeed temporary and the shortfall is reduced significantly in 2011," says Kenneth Orchard, Vice-President/Senior Credit Officer in Moody's Sovereign Risk Group. Orchard highlights that Moody's changed the outlook on Bulgaria's Baa3 rating to positive from stable in January 2010. The change of outlook was largely driven by the government's strong fiscal performance through the economic crisis. The revised 2009 deficit still turned out below the EU and Baa medians of 5.9% and 4.9% of GDP, respectively, but the relative outperformance was much less than originally presented.
He notes that the large upward revision to the deficit has dented confidence in Bulgaria's fiscal transparency and statistical reliability. "It could take some time for the government to re-establish trust in Bulgaria's budget statistics and the institutional commitment to prudent fiscal policy," says Orchard.
The worsening economic situation in Greece could also impact the Bulgarian economy. Although only 9% of Bulgaria's exports go to Greece, there are strong economic connections through the banking sector and remittances. As a consequence, Moody's expects that Bulgaria's economic growth could remain negative in 2010, making its fiscal adjustment yet more difficult.
Orchard emphasizes, however, that the government's financial metrics remain strong. Debt/GDP is forecast to remain below 20% in 2010. Interest payments/revenues will be around 2.6%, compared to the Baa median of 9.3%. "Bulgaria has the third-lowest government debt ratios in the EU and, with an average maturity of over seven years, the structure of the debt is fairly benign," according to the analyst. The last rating action on Bulgaria was implemented on 21 January 2010, when Moody's changed the outlook on the Baa3 local and foreign currency ratings of the government to positive from stable. (Moody's 21.04)
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