TOP STORIES
- Netanyahu Reaffirms Plan To Cut Taxes
- Sears Holdings Establishes Development Center in Israel - SHC Israel Acquires Delver.com
- Pennsylvania Companies Find New Markets by Having Overseas Trade Reps Visit
- Iraq Parliament Votes To Cut Budget By $4.2 Billion
- Greek Economic Growth Slows During Fourth Quarter
- Lenovo Adopts Waves MaxxAudio Sound Enhancements
- Israel's High-Tech Exports Increase Despite Overall Drop
- LIBYA: A Defining Moment for the "King of Kings"
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Netanyahu Reaffirms Plan To Cut Taxes
1.2 Bank of Israel Plan Addresses International Financial Crisis
2: ISRAEL MARKET & BUSINESS NEWS
2.1 Sears Holdings Establishes Development Center in Israel - SHC Israel Acquires Delver.com
2.2 Capital Raised by Israeli VC Funds Totals $793 Million in 2008
2.3 Achronix Establishes Distribution in Israel to Meet Growing Demand for Its Speedster 1.5 GHz FPGAs
3: REGIONAL PRIVATE SECTOR NEWS
3.1 Pennsylvania Companies Find New Markets by Having Overseas Trade Reps Visit
3.2 Fast Food Firms Across the Persian Gulf Post Record Profits
3.3 Ernst & Young to Move Energy Business to Bahrain
3.4 Ruby Tuesday Signs Agreement for Development in Qatar
3.5 Actaris Signs Agreement with Abu Dhabi Water and Electricity Authority
3.6 Nexxus Lighting Helps Light Dubai Metro Project
3.7 Northrop Grumman Takes Delivery of First F-35 Parts from Key Turkish Supplier
4: ISRAEL MACRO-DEVELOPMENTS
4.1 Israel Publishes Thermosolar Power Plant Tenders
4.2 ILSI-Biomed Israel 2009 to Showcase Technological Innovations
5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Jordan & the US Sign Contract for Nuclear & Radioactive Material Central Storage Facility
5.2 Iraq Parliament Votes To Cut Budget By $4.2 Billion
5.3 Dubai's Strategic Plan Under Review
5.4 Oman's January Inflation Lowest In More Than A Year
5.5 Saudi Arabia's Annual Inflation Drops to 6.9% in February
6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 IMF Sends New Proposals To Turkey For Awaited Deal
6.2 Government Supports Cyprus Expansion as GDP Growth was 3.7% in 2008
6.3 Cyprus Unemployment Rises Again In February
6.4 Cyprus Tourism Arrivals Fall in February - Outbound Tourism Also Slips
6.5 Cyprus To Embark On International Campaign To Boost Economy
6.6 Greek Economic Growth Slows During Fourth Quarter
6.7 Greek Inflation Dropped To New Lows in February
6.8 Greece 24th in International Tourism Index
6.9 Bulgarian Economic Growth Drops by Half
6.10 Bulgaria Sees Economic Growth at 2% - 2.5% in 2009
7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Pope Benedict XIV to Visit Israel This Coming May
7.2 World's Largest Kosher Matzah on Display in Ashdod
7.3 Club 1948 Presents 'Subliminal' - US Tour
*REGIONAL:
7.4 Kuwait Ruler Accepts Cabinet Resignation
7.5 Woman Arrested in Saudi Arabia for Driving
8: ISRAEL LIFE SCIENCE NEWS
8.1 Kamada Finalizes Snakebite Antiserum Agreement with Israeli Ministry of Health
8.2 Lumenis Introduces LightSheer Duet for High Speed Permanent Hair Reduction
8.3 Nicast to Exhibit Results of the AVflo Clinical Trial at International Symposium in London
8.4 CorAssist Raises $5.25 Million in Private Financing
9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 ImageID & SBII Provide LDC With Advanced Automatic Identification & Verification Solution
9.2 Mellanox's 10 Gigabit Ethernet Adapters & Drivers Certified for a Wide Spectrum of Platforms
9.3 Ness Technologies Adopts WorkLight to Streamline SAP via Secure Social Media
9.4 PLYmedia Introduces ProPLY: Innovative Online Video Enrichment for Publishers
9.5 Lenovo Adopts Waves MaxxAudio Sound Enhancements
9.6 Innovid Launches In-Video Online Advertising Platform on Sympatico / MSN
9.7 Magink Joins with Denpeki to Create First-Ever Digital "Brick Wall"
9.8 CopperGate Doubles EoC Performance for MDU and Hospitality Industries
9.9 Continuity Introduces RecoverGuard v4.0 - Disaster Recovery Software
9.10 INEX/ZAMIR and VESystems to Supply Trial Red Light Enforcement System in Florida
10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Annual Inflation Rises for First Time in 4 Months
10.2 Israel's High-Tech Exports Increase Despite Overall Drop
10.3 Foreigner Investors Return to the TASE
10.4 Israel's Luxury Car Sales Rise Despite Downturn
10.5 Israel's Cafes & Restaurants Suffer As Consumers Cut Back
11: In Depth
11.1 ISRAEL: The Israeli Nanotech Survey
11.2 LEBANON: IMF Mission Conducts Article IV Discussions & Review under EPCA Program
11.3 LEBANON: Food and Drink Report 2009
11.4 JORDAN: IMF 2009 Article IV Consultation
11.5 QATAR: CI Says Country Robust To Oil Price Shocks
11.6 QATAR: Pharmaceuticals and Healthcare Report Q1 2009
11.7 SAUDI ARABIA: CI Says Outlook on Ratings Remains Stable
11.8 SAUDI ARABIA: The Benefits of Restraint
11.9 SAUDI ARABIA: Pharmaceuticals and Healthcare Report Q1 2009
11.10 EGYPT: Food & Drink Report Q1 2009
11.11 LIBYA: A Defining Moment for the "King of Kings"
11.12 BULGARIA: IMF Executive Board Concludes 2008 Article IV Consultation
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Netanyahu Reaffirms Plan to Cut Taxes
On 5 March, Prime Minister-designate Binyamin Netanyahu reiterated that he plans to lower taxes this year, despite concerns expressed by the Bank of Israel and the Finance Ministry that government revenues would adversely affected. The Jerusalem Post quoted Netanyahu as saying "The first step will be to lower income taxes for low- and medium-income earners, and corporate taxes for small businesses, in an effort to boost the private sector and encourage consumer spending. Netanyahu said he would reach agreements with the Histadrut and employers to "bear the burden of preventing dismissals." Bank of Israel Governor Stanley Fischer, who might become Netanyahu's most important economic adviser, has in recent months warned that any tax cuts intended to boost the economy would be problematic, and not a realistic option, in light of a recession, a big downturn in tax revenues and a growing budget deficit. As part of his economic plan, Netanyahu pledged to support and help factories and businesses in the Negev and the Galilee. In addition, he reiterated his commitment to increased investment in infrastructure, with a priority on roads, the railroad system, water and energy. Netanyahu also promised a comprehensive plan to cope with the credit crisis. (JP06.03)
1.2 Bank of Israel Plan Addresses International Financial Crisis
On 10 March Bank of Israel Governor Prof. Stanley Fischer held a special press conference to unveil a plan to ease the current economic and financial climate and make recommendations on measures to cope with the crisis. The Bank's plan, according to Fischer, is estimated to cost $1 billion. The program calls for increased aid for lower-income families, including a negative income tax, incentives for increased exports and industry and stimulus outlays for the labor marker. He also suggested increasing the government deficit to 5.8% of the gross domestic product (GDP), 10% higher than the current deficit and far higher than the previous maximum target of 3%. The cost of the proposal was broken down to NIS 1.5 billion for new projects, NIS 1.15 billion to stimulate exports and NIS 1.8 billion for the job market. Governor Fischer also proposed that the period of entitlement for unemployment benefits be increased, and that an agreement be reached on postponing pay rises in the public sector. According to Fischer, implementing the recommendations without cutting back on other expenses would result in increasing the government deficit by up to 6%. The stimulus program will save 15,000 families from unemployment, according to Fischer, whose term of office ends in May. He recently stated his conditions for accepting another three-year term and the Finance Ministry will likely approve despite its being upset with his demands for less ministry authority in overseeing the capital markets. (Various10.03)
2: ISRAEL MARKET & BUSINESS NEWS
2.1 Sears Holdings Establishes Development Center in Israel - SHC Israel Acquires Delver.com
On 9 March Sears Holdings announced that its newly formed subsidiary, SHC Israel, acquired the assets of Delver.com, a social search engine company based in Israel, and has established a new technology development center in Herzliya. The initial staff of the development center will consist of the associates that were previously employed by Delver. Delver CEO Liad Agmon will join Sears Holdings as vice president, New Services. The formation of the Israeli development center follows the recent announcement of ServiceLive.com, an online marketplace from Sears Holdings where homeowners and businesses can name their price for a wide variety of services, improvements and repairs. The site is designed to improve the often stressful experience of getting projects done around the home for both homeowners and service providers. Sears Holdings Corporation is the US' fourth largest broadline retailer with approximately 3,900 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. (SH09.03)
2.2 Capital Raised by Israeli VC Funds Totals $793 Million in 2008
The IVC Research Center (www.ivc-online.com) announced that vintage 2008 Israeli venture capital funds raised a total of $793m since January 2008, 30% less than the $1.14b raised in 2007. A number of funds completed their capital raising efforts, including Carmel III with $235m, Gemini V with $150m and Cedar III with a $100m fund. During 2008, a number of Israeli venture capital funds announced first closings for a total of over $300. Israeli VC veterans Giza Venture Capital and Jerusalem Venture Partners, with their fifth funds, and Genesis Partners, with its fourth fund, each announced first closings of $100m. In the past 10 years, Israeli venture capital funds attracted a total of some $11b. According to IVC, about $1b in capital is currently available for investment by Israeli venture capital funds, of which $400m is intended for first investments in high-tech companies and the remainder reserved for follow-on investments. IVC Research Center predicts Israeli venture capital funds will raise an additional $300m in 2009 for investment in Israeli high technology over the next few years. (IVC11.03)
2.3 Achronix Establishes Distribution in Israel to Meet Growing Demand for Its Speedster 1.5 GHz FPGAs
San Jose, California's Achronix Semiconductor Corp., makers of the world's fastest field-programmable gate arrays (FPGA), announced today that and Phoenix Technology Ltd. (Kfar Saba, Israel) will manage their Israeli distribution. Under the agreement, Phoenix Technology will provide design-in, technical, sales and logistical support for customers working with Achronix's 1.5 GHz Speedster devices in Israel. The Speedster family, launched in September 2008, combines traditional ASIC speeds with FPGA flexibility so system engineers can design a new level of performance and faster time-to-market into applications in networking, telecommunications, instrumentation, high-performance computing, military and aerospace, among others. The family's flagship SPD60 delivers speeds up to 1.5 GHz, which represents a three-fold increase in performance over existing FPGAs. Achronix's move to establish distribution channels in these geographies demonstrates its commitment to supporting the regions' growing need for high-speed FPGAs, ideal for the communication and networking markets. Achronix Semiconductor is a privately held fabless corporation based in San Jose, California. (Achronix 15.03)
3: REGIONAL PRIVATE SECTOR NEWS
3.1 Pennsylvania Companies Find New Markets by Having Overseas Trade Reps Visit
Pennsylvania companies that want to explore doing business overseas will soon have the opportunity to meet with overseas trade representatives without having to travel internationally when the commonwealth hosts meetings throughout the state later this month and twice in the spring. Energy and power generation will be the focus of the first series of meetings, March 23-27, in Pittsburgh, Erie, Hershey, Wilkes-Barre, Bethlehem and Exton. Companies from other business sectors interested in any of the targeted foreign markets were also welcome to meet with Pennsylvania's trade reps during these opportunities to discuss exporting opportunities for their products or services. The meetings are being organized by the Center for Trade Development, which is the export-promotion arm of DCED's Office of International Business Development. The center offers Pennsylvania businesses international market intelligence, export counseling, compliance support, business contacts and trade promotion programs to expand the reach, capacity and global competitiveness of Pennsylvania businesses. The energy and power generation series will feature the commonwealth's contracted foreign trade representatives from the Eastern Mediterranean Region. Operated for over the past 10 years by Atid, EDI (http://www.atid-edi.com), a Jerusalem based consulting firm, Pennsylvania is represented in Greece, Turkey, Egypt, Israel and Jordan, as well as in other locations including Iraq, Libya and Cyprus. (DCED 17.03)
3.2 Fast Food Firms Across the Persian Gulf Post Record Profits
Fast food firms across the Persian Gulf are posting record profits, as residents comfort eat their way through the economic downturn. McDonald's, the world's largest food chain, posted a net profit of $4.3bn for 2008, up 80% on the previous year's $2.3bn. Across the Middle East, the chain's income spiked by 33%, with same-store sales up 9% for the year. McDonald's runs 61 restaurants across the UAE. Dunkin' Donuts has also bucked the economic trend, reporting profits of $11m for its UAE, Kuwait and Oman stores. The brand saw a 22% increase in same-store sales across the Emirates last year, and plans to open another 10 outlets this year. Sales are down in 2009, but the chain still expects an annual 5% growth. The Gulf's biggest ice cream player, Baskin Robbins, generated $101m in sales last year and saw record footfall in January. Galadari Ice Cream, which holds the GCC franchise for the brand, is forecasting a minimum 22% growth this year. Despite the economic gloom, the firm plans to open 50 new stores this year and to roll out a new store concept, BR Cafe. The sit-down stores, the first of which has opened in Jeddah, will launch in the UAE later this year. Traditionally, fast food has done well in slow times. The industry's model – offering fast, filling food at a low cost – translates well to a pared-down economic climate. Value meals can be bought for $3.80 and $4.00 at McDonald's and Burger King respectively, while Taco Bell offers beef tacos for $0.80. As large employers – McDonald's has 1,000 staff in the UAE alone – fast food chains are also benefiting from the softer rents that have accompanied the downturn. (AB08.03)
3.3 Ernst & Young to Move Energy Business to Bahrain
Ernst & Young will be moving its world energy headquarters from Houston, Texas to Bahrain, and is looking to hire more people across the region, the company's CEO said on 16 March. Ernst & Young decided that they wanted a headquarters right in the region. Bahrain has been promoting itself to international companies as a business friendly, low cost destination from which to base regional operations. Inflation in the relatively energy-poor kingdom never reached the soaring heights of some of its neighboring economies during the latest oil boom, and local participation in the workforce is higher than in most other Gulf states. Ernst & Young is one of the largest privately held companies in the US. It has four main service lines: assurance, tax, transaction and advisory services, which together employ around 135,000 people. The company is one of the world's "Big Four" auditors, along with PriceWaterhouseCoopers, Deloitte and KPMG. (AB16.03)
3.4 Ruby Tuesday Signs Agreement for Development in Qatar
Maryville, Tennessee's Ruby Tuesday recently signed a new franchise agreement for Qatar. Global Brands Qatar, the company's newest international franchisee, plans to develop and operate three Ruby Tuesdays, primarily in the city of Doha, over the next five years. This agreement will bring the total number of Ruby Tuesdays to be developed in the Middle East to approximately 45 - 50 including locations in Saudi Arabia, UAE, Kuwait, Egypt, Lebanon, Bahrain, Oman and Jordan. Ruby Tuesday officials say that guests in the Arab States, a part of the world far removed from the U.S. cities and suburbs where the brand was started and where it has grown to more than 800 locations, love the handcrafted burgers, steak, seafood, and chicken entrees, shareable appetizers, and garden-fresh salad bar. In a culture where the public consumption of alcohol is traditionally a taboo, the Qatar Ruby Tuesdays, like all the others, will serve "Zero Proof" drinks that are full of flavor but devoid of alcohol. (Ruby Tuesday12.03)
3.5 Actaris Signs Agreement with Abu Dhabi Water and Electricity Authority
Liberty Lake, Washington's Itron announced that its subsidiary, Actaris, has signed a contract with Abu Dhabi Water & Electricity Authority (ADWEA) for an additional 140,000 automated meter reading (AMR) electricity meters. The contract was awarded after the successful installation of the first phase of 60,000 meters in the region and includes electricity meters with an integrated connection-disconnection breaker and AMR functionality based on IEC standardized Euridis protocol that will allow ADWEA to remotely access all of the metering and operating data and update the meter configuration data. The meters will be fully integrated in an AMR fixed network and they will be deployed across the Emirate of Abu Dhabi covering the cities of Abu Dhabi, Al Ain and many small municipalities, as well as isolated agricultural settlements. The contract is the first to be awarded to any vendor in the region, making Actaris the largest Electricity AMR meter provider in the Middle East. Utilities in the Middle East are particularly concerned about energy and water conservation and are looking for technology to efficiently measure and monitor critical electricity, water and gas resources. Actaris is uniquely positioned to provide Middle East utilities with a comprehensive portfolio of AMR and smart metering solutions and services from our large support team in the region. Itron Inc. is a leading technology provider to the global energy and water industries. (Itron16.03)
3.6 Nexxus Lighting Helps Light Dubai Metro Project
Charlotte, North Carolina's Nexxus Lighting announced that its Lumificient Corporation business unit has shipped over 1,400 meters of its Hyperion R-Lite LED lighting system to help light the Dubai Metro / JT Metro project in the United Arab Emirates. The Dubai Metro will be the longest fully automated rail system in the world and will have a total of 43 miles of line with 47 stations when completed. The massive $4.2 billion civil engineering project is being constructed by JT Metro JV (Japan Turkey Metro Joint Venture), which is a joint venture of the Obayashi Corporation and Kajima Corporations of Japan and Yapi Merkezi Turkey. Gargash Lighting Systems, Nexxus Lighting's distributor for the Middle East, supplied the product for the project, which is still under construction. The first line is scheduled to begin full operations in September 2009. Lumificient Corporation's Hyperion R-Lite is a patented, monochromatic LED strip lighting system used in a variety of lighting applications and was selected based on its ease of installation, high performance, energy efficiency and 50,000 hour design life. The Hyperion R-Lite has removable/replaceable LED modules allowing replacement of individual modules rather than entire sections making maintenance easier. (Nexxus06.030)
3.7 Northrop Grumman Takes Delivery of First F-35 Parts from Key Turkish Supplier
Turkish Aerospace Industries (TAI), a major supplier to Northrop Grumman Corporation on the F-35 Lightning II aircraft program, has produced and delivered its first composite parts for the jet. The new parts - structural composite panels used to form the outer surface of the new international, multi-role fighter - represent a critical first step in TAI's plans to eventually produce 400 center fuselages for the program. Northrop Grumman will integrate the parts into the center fuselages of the first two production F-35s. The composite panels also represent the first F-35 parts produced in a new composites manufacturing facility opened by TAI last November in Ankara, Turkey. To date, Northrop Grumman has trained nearly two dozen TAI employees in the high precision fabrication techniques being used in that facility. TAI's recent shipment included six composite panels - three for each of the two jets being produced under the first phase of low rate initial production. As part of its F-35 work share, the company will produce similar composite panels for every jet made during the production phase of the program.
Under a Letter of Intent signed with Northrop Grumman in Feb. 2007, TAI serves as a second source supplier of F-35 center fuselages to the company. Deliveries of complete TAI-produced center fuselages are scheduled to begin during the low rate initial production (LRIP) phases of the program. As a member of the F-35 global industry team, Northrop Grumman is central to the development, production and support of the F-35 Lightning II. (Northrop Grumman 05.03)
4: ISRAEL MACRO-DEVELOPMENTS
4.1 Israel Publishes Thermosolar Power Plant Tenders
The inter-ministerial tenders committee for the solar power plants at Ashelim in the Negev has published two tenders for the construction, operation, maintenance and transfer to the state of two solarthermal power plants for the production of 220 megawatts of electricity. Seven consortia that passed the prequalification stage of the tenders have been invited to submit bids for the request for proposals (RFP) stage of the tenders. Later this month, the tenders committee will publish supplementary tender documents, including the franchise agreement, license and sale of electricity to Israel Electric Corporation. Two prominent bidders in the tenders are Ormat Industries and Shikun u'Binui Holdings with Solel Solar Systems Ltd. Each of the two solarthermal power plants will generate 80 – 110MW. They will be the first plants of their kind, and will be the largest solar power plants in Israel and among the largest in the world. (Globes 16.03)
Back to Table of Contents4.2 ILSI-Biomed Israel 2009 to Showcase Technological Innovations
ILSI-Biomed Israel 2009, the annual gathering of Israel's life science community, to be held in June 2009 in Tel Aviv. This international professional conference will feature the best experts and an exhibition of the hottest bio-technological and medical equipment developments. Building on last year's tradition, this year's event will give the floor and provide initial exposure to 70 Israeli start-up companies. The conference will outline the opportunities and risks of the global biomed industry, with an emphasis on business-practical aspects of one of Israel's most advanced and successful industries. The organizers, Israel Life Science Industry Association and Kenes Congress Organizers, expect to host more than 6,000 visitors for the conference and exhibition, of which 1,000 will be from abroad. The conference audience will include general managers and executives from bio-pharma and medical equipment corporations, scientists and researchers, entrepreneurs, opinion leaders, VC funds and private investors. The event, which has become a focal point for the global industry as a result of the recognition built over several years, will be held between June 15 – 17, 2009 at the David Intercontinental and Dan Panorama hotels in Tel Aviv. Delegation from the US states of Pennsylvania, Georgia and Illinois are also scheduled to attend. (Kenes16.03)
5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Jordan & the US Sign Contract for Nuclear & Radioactive Material Central Storage Facility
In late February, Jordan and the United States signed a contract for the building and construction of a modern national Central Storage Facility (CSF) for radioactive waste at the Jordan Atomic Energy Commission in Amman. The agreement between the Jordan Atomic Energy Commission (JAEC) and the Department of Energy's Pacific Northwest National Laboratory (PNL) was signed in Washington. Under this contract agreement, the U.S. Department of Energy will provide the Jordanian energy commission with $370,000.00 for the building and construction of the advanced storage facility (CSF). The project, which is expected to be completed later this year, will comprise approximately four thousands square feet of storage facility that will, in turn, host Jordan's radioactive waste and nuclear sources in a safe and secure environment for the next five decades. All radioactive waste will be managed, stored and monitored in strict accordance with the best international standards and the International Atomic and Energy Agency (IAEA) guidelines. The Jordan Atomic Energy Commission (JAEC) is the governmental body entrusted with the development and execution of the Jordanian nuclear power program, as well as the implementation of Jordan's national nuclear strategy. The national strategy aims to transform Jordan, which imports more than 95% of its energy, into a net electricity exporter by developing a civilian nuclear power production capacity in accordance with IAEA safeguards and international standards. (EoJ06.03)
5.2 Iraq Parliament Votes To Cut Budget By $4.2 Billion
On 5 March Iraq's parliament defied government objections and voted to cut the oil-dependent country's 2009 budget by $4.2 billion, or nearly 7%, due to slumping oil prices. The drop in global oil prices from a high of $147 per barrel last summer to close to $40 now has slashed Iraq's income from oil exports, its main source of revenues. The action by parliament would reduce the proposed gap between income and spending this year to 27% of total spending from 32% previously. The government will be committed to acting in accordance with this vote and the finance ministry will have to find ways to accommodate the new budget. The new budget set spending at $58.6 billion at current exchange rates. Dependent on oil exports for more than 95% of its revenues, the Iraqi government is being starved of funds just when it desperately needs to rebuild after the years of bloodshed unleashed following the 2003 US liberation. (Reuters 05.03)
5.3 Dubai's Strategic Plan Under Review
All economic aspects of Dubai's Strategic Plan 2015 are currently under review to help stabilize the economy and safeguard jobs, chief economist at Dubai's Department of Economic Development Safadi said on 16 March. Safadi added that he expects a real growth of 2.5% in Dubai this year, down from the 11% forecast under the Strategic Plan 2015. The government is working with haste to assess all projects and capital and other economic aspects. Full details of the review will be announced soon, he said. The Dubai government launched a $20b long-term bond program at the end of February of which the UAE Central Bank subscribed $10b. Economists and finance experts welcomed the move, saying it showed increased federal support. The bonds are intended to "provide (the) Dubai government with the necessary liquidity to substitute the liquidity that has dried up globally in the last 12 months and accordingly meet all upcoming financial obligations," the government statement said. Safadi was speaking as part of a panel discussing the economic sustainability of Dubai's market. The general consensus was a positive one, with Dubai's recovery largely pinned on its location and reputation as a business and trade hub. (GN17.03)
5.4 Oman's January Inflation Lowest In More Than A Year
Annual inflation in Oman fell to 9.4% in January, its lowest level in more than a year, as food price pressures eased, the Ministry of National Economy announced on 15 March. The Omani consumer price index rose to 129.8 points at the end of January from 118.6 points a year earlier, the Ministry of National Economy announced. The food, beverages and tobacco index - which accounts for 30.4% of the total consumer price index -- eased 2.1% in January from December, the data showed. Inflation in January fell from 11.8% in December and was the slowest rate since Dec. 2007. Recent data showed Omani money supply growth slowed to 20.7% in January, its slowest pace of growth in more than two and a half years. (Various16.03)
5.5 Saudi Arabia's Annual Inflation Drops to 6.9% in February
Saudi Arabia's annual inflation fell to 6.9% in February from 7.9% in January, the kingdom's Central Department of Statistics said 11 March. Saudi Arabia's cost of living index rose to 120.6 points on Feb. 28 compared with 112.8 points a year earlier. February inflation rates in the leading oil exporter were the slowest since December 2007. (CDS11.03)
6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 IMF Sends New Proposals To Turkey For Awaited Deal
The International Monetary Fund (IMF) said on 12 March that it has made new loan proposals to Turkey, while the Turkish economy minister stated an agreement is most likely to be signed after the upcoming local elections at end-March. The Turkish lira strengthened to below 1.72 levels on the IMF announcement. Turkey and the IMF suspended face-to-face talks in February citing the "unacceptable demands of the Fund". The Turkish government had referred to the IMF's demands of handing autonomy to the Revenue Administration, pressing taxpayers to declare the source of their income, and the cancellation of a law transferring funds to municipalities, as unacceptable. The Turkish currency lira contained to rise against the dollar with the IMF announcement to below 1.72 levels, after declining to a record low above 1.80 levels at the start of the week. A program in Turkey's favor would be prepared in the case that agreement is reached with the IMF. The Turkish business community sees the IMF and its financial resources as essential for Turkey as the country's public debt is expected to be around $50b in 2009. (Hurriyet12.03)
6.2 Government Supports Cyprus Expansion as GDP Growth was 3.7% in 2008
Full national accounts data for Q4 show that Cyprus recorded a respectable real GDP growth rate of 3.7% in 2008. However, growth in the last two quarters was propped up by a government spending as household consumption and investment slowed sharply. The GDP growth rate in Q4/08 slowed to 2.9% over with the same period of 2007 (seasonally adjusted), having risen by 3.5% in the third quarter. The fastest decline was seen in household consumption, which accounts for two-thirds of GDP. Although spending still rose, the growth rate fell to 2.9% in the fourth quarter, from 7.5% in the third. The growth rate of gross fixed capital formation, which includes investment in construction, fell to 6.0% from 10.2% in the third quarter. The downturn in demand is reflected in imports, which actually fell by 3.8% in real terms over the same period of 2007, having risen by a rapid 17.5% in the previous quarter. Thus an important reason why growth did not slow further was government consumption, which grew by 16.1% in the fourth quarter, having already risen by 15.4% in the third.
The breakdown by sector shows a slowdown in all categories except agriculture, which merely managed to decline by less than in the third quarter. Given the acceleration in government consumption, it is not clear why the category of public services showed a slowdown in the fourth quarter. Perhaps government consumption has been focused elsewhere, for example on services related to public infrastructure works (infrastructure itself would show up in gross fixed capital formation). Financial services have evidently experienced a slowdown, growing by 4.1% over the year earlier in the fourth quarter compared with 4.5% in the third. However, this is a fairly mild slowdown compared with other countries across the globe and reflects the banking system's comparatively healthy liquidity position. (FM16.03)
6.3 Cyprus Unemployment Rises Again In February
Unemployment in Cyprus continues to climb, albeit from a low base. The number of unemployed persons registered at the District Labor Offices reached 16,383 persons on the last day of February, which was 3,103 higher than in February 2008. This marked the sixth consecutive month of year on year increase. Moreover, the increase, at 23.4% over the year-earlier period, was higher than in previous months. The Statistical Service reported that the increase was mainly recorded in construction (an increase of 1,117), trade (640), real estate and business activities (440), hotels and restaurants (386) and newcomers (553). Compared with the previous month, unemployment rose by 597 persons and was mainly concentrated in construction and wholesale and retail trade. (FM09.03)
6.4 Cyprus Tourism Arrivals Fall in February - Outbound Tourism Also Slips
According to the latest figures from the Passengers Survey conducted by the Cypriot Statistical Service, arrivals of tourists reached 56,626 in February 2009 compared with 70,140 in February 2008. The main reason for the large decline was the UK market, from which arrivals fell by 20.4% to 26,178, compared with 32,877 in February 2008. UK arrivals account for more than half of all tourists. However, there was also a large drop in arrivals from Greece of 27.9%, to 6,596 compared with 9,146 in February 2008. There was a 20.9% decrease in arrivals from Germany (5,466 compared with 6,910). The Russian market remained strong, however, rising by 19.4% year on year to 2,347, from 1,966 in February 2008. For the period January - February 2009 arrivals of tourists totaled 103,693 compared to 120,798 in the corresponding period of 2008, recording a decrease of 14.2%. Meanwhile, outbound tourism has also shown the first signs of slippage. On the basis of the results of the Passengers Survey, 73,550 residents of Cyprus returned from a trip abroad in January 2009 compared to 78,021 in the corresponding month last year recording a decrease of 5.7%. (SS09.03)
6.5 Cyprus To Embark On International Campaign To Boost Economy
The Cypriot Ministry of Commerce, Industry & Tourism and the Cyprus Chamber of Commerce and Industry (KEVE) are planning to hold business missions to 18 countries with a view to promote Cyprus as a regional service centre and avert the consequences of the global financial crisis. During 2009, Cyprus businesspeople and state trade officials will organize seminars in Denmark (Copenhagen), Norway (Oslo), Egypt (Cairo, Alexandria), Switzerland (Zurich), China (Hong Kong, Shanghai), Russia (Moscow, Sochi, Yekaterinburg), Czech Republic (Prague), Lebanon, Jordan, France (Paris, Marseilles) and Israel. Cyprus will also participate in exhibitions such as ''Medic Expo 2009'' in Athens, Academia Egypt in Cairo and International Business Gateway in New York. Cyprus knows that competition to attract investment and tourism amidst the global financial crisis ''will be tough,'' hence the need to press on with the seminars with a view to promote Cyprus as a regional business centre and its advantages such as its geostrategic position, its stable banking centre and its financial expertise. Cyprus is focusing mainly on Middle East countries, such as Iran as well as Eurasian countries, such as Ukraine, Belarus, Moldova and Kazakhstan, while strengthening financial and trade ties with Russia, remains a priority. (FM10.03)
6.6 Greek Economic Growth Slows During Fourth Quarter
Greek economic growth has slowed during Q4/08 to the slowest pace since the country adopted the euro in 2001, as investment declined for a fifth straight quarter. GDP increased 2.4% in Q4/08 from a year earlier, according to the National Statistics Service. The figure is lower than the 2.6% estimate made public earlier this month. Greece's economic growth is slowing as the international financial crisis weighs on the economic climate, harming business and consumer expectations. The 27-nation European Union's economy has slid into its worst recession in more than a decade. Greece's EU partners take in more than half of Greek exports and generate 60% of its tourism revenue. Exports fell 1.6% in Q4/08, while imports declined 5.2%. GDP growth for all of 2008 was 2.9%, the slowest full-year expansion since 1996, according to central bank data released on 11 March. The government expects Greece to be among a handful of countries in Europe to expand this year, forecasting a 1.1% growth rate. The European Commission, the EU's executive branch in Brussels, projects the Greek economy will expand by 0.2% this year. (Various12.03)
6.7 Greek Inflation Dropped To New Lows in February
Greek inflation marked a new 40-year low as it dropped to 1.6% year-on-year last month, the National Statistics Service (NSS) announced on 9 March. Economists had estimated the February rate to come to 1.8%, as it did in January 2009. On a monthly basis, headline inflation dropped by 0.9%. Core inflation edged lower than it was in January, dropping from 3.1% to 3%. The decline in the rate is partly due to the winter sales period, which ran from mid-January to end-February. This led to a 9.2% monthly drop in apparel prices and a 2% decline in household goods and services. Prices at hotels, cafeterias and restaurants have dropped by 1.3%, mainly because January prices were raised by the Christmas bonus levied and because hotels let their rates drop. Interestingly, communication prices also declined by 0.5%, thanks to a drop in cellular telephony charges. On the other hand, food and drink prices posted 0.6% growth due to seasonal rises in dairy products, eggs, fish and vegetables. Gasoline prices also edged higher in February. (NSS10.03)
6.8 Greece 24th in International Tourism Index
Greece ranked 24th amongst 133 countries in the global Travel and Tourism Competitiveness Index of the World Economic Forum, the Association of Greek Tourism Enterprises (SETE) announced on 5 March. SETE said Greece fell two places in 2009, from the previous year, while it ranked 18th in Europe. The Association attributed the decline in Greece's ranking to a rise in the rankings of Cyprus and Belgium, while it noted that other competitor countries maintained their rankings (Spain was sixth), Portugal (17th), Croatia (34th), Turkey (56th) and Egypt (64th). Greece's advantages were the country's cultural sites and heritage, high-quality healthcare services, tourism infrastructure, while a major disadvantage was a lack of proper regulatory framework to support the tourism sector. Switzerland, Austria, Germany, France and Canada topped the list of this year's Travel and Tourism Competitiveness Index. (HRE05.03)
6.9 Bulgarian Economic Growth Drops by Half
Bulgaria's economic growth nearly halved to an annual 3.5% in Q4/08 due to slowing domestic demand and exports, but was still one of the highest in Eastern Europe. The growth was slightly below a previous estimate of 3.6%, the statistics office said. The economy grew an annual 6.8% in the third quarter and 6.9% in the same period of 2007. Full-year growth stayed strong at a real 6% from 6.2% in 2007 on the back of a good performance in the first half of the year, the Bulgarian statistics office said. The Balkan country's fourth-quarter growth was above that of Poland's year-on-year 2.9%, Slovakia's 2.5%, Romania's 2.9% and the Czech Republic's 0.7%. Hungary's economy contracted 2.3%. Bulgaria's central bank, the European Commission and the IMF see growth slowing to 1.8-2.0% this year, while some economists say it may contract due to the global downturn. (Reuters12.03)
6.10 Bulgaria Sees Economic Growth at 2% - 2.5% in 2009
Bulgaria's economic growth is seen slowing down to between 2% and 2.5% in 2009, mainly due to the effects of the global financial crisis, stated Economy Minister Dimitrov. Meanwhile, the Bulgarian central bank lowered its 2009 gross domestic product (GDP) growth forecast to 2% from 4.4%, mainly due to the impact of the crisis on the processing and extracting industries. The central bank sees domestic demand and economic activity decelerating amid a falling inflation rate and a shrinking current account deficit. In December, the government decided to stick to its earlier gross domestic product (GDP) growth estimates of between 2.1% and 4.7% in 2009 on the expected impact of the global financial crisis. Bulgaria's GDP growth stood at 6% in 2008 versus 6.2% in 2007 on a preliminary basis, below the government's and the European Commission's estimates. Bulgarian government expected a 6.5% economic growth in 2008, while EC forecast a 6.4% GDP growth in the period. The country's GDP amounted to BGN 66.1 million in 2008 versus BGN 56.5 million in 2007. (Reporter05.03)
7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Pope Benedict XIV to Visit Israel This Coming May
Pope Benedict XIV officially confirmed that he is set to visit Israel, Jordan and the Palestinian territories in May. It is planned that Pope Benedict will arrive in Jordan on May 10 and spend the next four days in Israel. This visit will be the third visit of a reigning pontiff to Israel since the state was reborn in 1948. Pope Paul VI made a one-day stopover from Jordan in 1964, but since the Vatican and Israel did not yet have diplomatic relations, he avoided any statement or act that could be interpreted as even indirect recognition of the Jewish state. In March 2000, Pope John Paul II made a five-day pilgrimage to Israel and the Palestinian territories, during which he visited Christian and Jewish holy sites. (08.03)
7.2 World's Largest Kosher Matzah on Display in Ashdod
The Matzot Orenstein matzah factory in Ashdod claims it has produced the largest kosher matzah on earth. The matzah measures 4.2 meters (almost 14 feet) across and is on display in the factory's visitor center. The plant's manager came up with idea of baking the matzah as a means of raising the employees' morale during the recent Cast Lead military anti-terror operation in Gaza. The baking of the mega-matzah required special arrangements. Twelve employees, in six pairs, kneaded the dough and four others were in charge of making the holes in the matzah. Making holes in the center of the matzah posed a particular challenge and the hole-makers used rappelling equipment to reach the center of the matzah. Giant burners were used to bake the matzah. Children who visit the factory will see the various stages of matzah-baking and other special attractions. (IsraelNN15.03)
7.3 Club 1948 Presents 'Subliminal' - US Tour
Chicago non-profit organization, Club 1948 (http://www.myclub1948.org), is hosting top Israeli hip hop band Subliminal in the United States for a concert tour, April 30 - May 15. Subliminal, well-known for their Israeli pride, desire for peace and patriotic lyrics, uses their music to encourage and inspire fans all over the world to live in peace and understanding. Chicago-based hip hop artist and community activist, Brother Enoch "N.O.C.," Muhammad of Hip Hop Detoxx, is scheduled to open for Subliminal in Chicago, which will bring a fan base from the African American community to the show as well. The Club 1948 tour will be Subliminal's second time performing in the United States since 2005, when the group performed in Los Angeles. Each time Subliminal tours in the United States they bring together a crowd from very different backgrounds for one common theme - great entertainment. Subliminal's urban American image and connection with many well-known American artists will make the group an instant hit among American Hip Hop fans. Tour destinations include Chicago, Miami, New York, Maryland and Los Angeles. Club 1948 is also in talks to finalize national television coverage of the tour. Club 1948's mission is to connect Israelis and Americans to the State of Israel. The unaffiliated organization brings together individuals from various backgrounds by engaging them in Israeli-themed social, cultural and educational events. (Club 1948 05.03)
*REGIONAL:
7.4 Kuwait Ruler Accepts Cabinet Resignation
On 16 March Kuwait's ruler accepted the cabinet's resignation after deputies moved to question the prime minister, deepening a political crisis which threatens an economic stimulus plan. Frequent cabinet changes do not usually affect the oil policies of OPEC-member Kuwait, the world's seventh-largest oil exporter, which are set by a high state energy council. But the stalemate could further delay approval of a $5.11b rescue plan, including bank guarantees to soften the impact of the global financial crisis and plans to lower the nation's dependence on oil. State media did not say whether the ruler, who has the last say, would reappoint Prime Minister Sheikh Nasser al-Mohammad al-Sabah, name a successor or dissolve parliament as he did in March 2008 to end a similar standoff. State television said the cabinet would continue work until a new lineup - Kuwait's fifth in two years -takes over. The cabinet had resigned in November after a similar request by MPs but the ruler reappointed his nephew as prime minister. Earlier this month, several deputies submitted a request to question Prime Minister Sheikh Nasser, a member of the ruling family, pushing to crisis point a long-running dispute between parliament and the government. Analysts and diplomats said Kuwait's ruler Emir Sheikh Sabah al-Ahmad al-Sabah might appoint a new prime minister to form a fresh cabinet or dissolve parliament. Kuwait allows more political freedom than other Gulf Arab states but questioning the prime minister, a nephew of the ruler, is considered crossing a red line. No prime minister has ever allowed himself to be questioned. A similar crisis led to the resignation of the cabinet in November but the ruler reappointed Sheikh Nasser as prime minister, triggering protests by deputies. Several bills, such as a plan to set up a financial regulator, have been delayed by the political crisis. Analysts say investment firms such as Investment Dar and Global Investment House badly need the rescue plan to get new loans and weather the financial crisis. (AB16.03)
7.5 Woman Arrested in Saudi Arabia for Driving
Police in Saudi Arabia have arrested a woman for violating the Kingdom's ban on women driving. The incident occurred in the city of Mecca. Arab News reports that the young woman is in her twenties. She was arrested early in the morning after the car she was driving crashed into another. The Mecca police spokesman did not identify the name or nationality of the young woman but said she was caught driving a four-wheel drive Lexus. She tried to escape when she saw a police car and in the process hit another car, which was slightly damaged. The woman driver was handed over to the Prosecution and Investigation Commission for investigation, the daily added. (AB08.03)
8: ISRAEL LIFE SCIENCE NEWS
8.1 Kamada Finalizes Snakebite Antiserum Agreement with Israeli Ministry of Health
Kamada announced that, following an initial set-up period, it has finalized its agreement with the Israeli Ministry of Health to become the exclusive manufacturer and supplier in Israel of snakebite antiserum against Vipera palaestinae and Echis coloratus. Under the terms of the agreement, the Israeli Ministry of Health will fund all costs associated with development of the antiserum and the establishment of a GMP manufacturing facility, a process which is expected to take two years. During this period, Kamada will receive four payments from the Ministry of Health, totaling approximately $5m. In addition, the Ministry of Health is committed to purchase antiserum for ten years at agreed terms. Ness Ziona's Kamada (http://www.kamada.com) specializes in developing a line of specialty life-saving biopharmaceuticals. The company has recently completed a Phase III clinical trial in the US with its flagship IV Alpha-1 Antitrypsin (AAT) product indicated for treating AAT deficiency and is currently in advanced stages of development of its next generation, inhaled administration AAT for the treatment of various lung diseases including cystic fibrosis and bronchiectasis. (Kamada10.03)
8.2 Lumenis Introduces LightSheer Duet for High Speed Permanent Hair Reduction
Lumenis announced plans to launch the LightSheer Duet Diode Laser System for high-speed permanent hair reduction. The LightSheer Duet is the most exciting innovation in laser hair removal since LightSheer first revolutionized the industry in 1998. LightSheer Duet reduces hair removal treatments up to 75% and vastly improves patient comfort, eliminating the need for topical anesthetics. These ground-breaking changes will significantly improve practitioner and patient acceptance of hair removal, as well as increase the revenue potential for physician practices and clinics. The LightSheer Duet leverages the technology of the original LightSheer system, which is globally recognized as the gold standard for laser hair removal, with the 800nm Diode. This new hair removal laser will enable us to effectively treat large body areas with a speed that is more cost-effective for both patients and clinicians. With the LightSheer Duet, it is possible to treat an entire back in 15 minutes instead of an hour or more. The LightSheer Duet features two hair removal systems on one versatile platform enabling clinicians to optimize permanent hair reduction anywhere on the body. The platform also includes the LightSheer ET system, which is ideal for smaller or bony areas such as the upper lip, chin, or around the ankles. The New LightSheer HS (High Speed handpiece) features a large 22x35 mm diode array that is designed for treating large areas such as legs, arms, chests, abdomen, shoulders and backs. LightSheer HS employs fully integrated vacuum assist technology to gently lift skin into the treatment aperture prior to applying laser energy. Yokneam's Lumenis (http://www.lumenis.com) is Israel's largest medical device company with more than 800 employees worldwide. The Company invests heavily in R&D and holds a leading position in the markets in which it serves. Lumenis has over 250 patents worldwide, over 75 FDA clearances, worldwide presence in over 100 countries, and an installed base of over 70,000 systems. (Lumenis 05.03)
8.3 Nicast to Exhibit Results of the AVflo Clinical Trial at International Symposium in London
Nicast will exhibit the AVflo vascular access graft for hemodialysis, its flagship product which received CE certification in October 2008, at the Charing Cross 31st International Symposium in London, April 2009. AVflo is a self-sealing vascular access graft that enables unobstructed blood flow, allows for dialysis within 24-48 hours after implantation and self-seals within less than five minutes following withdrawal of the dialysis needles. It is simple to implant and to suture to blood vessels; the needle punctures and suture holes self-seal rapidly. AVflo is also strong enough to withstand the pressure of blood flow, yet thin enough for blood flow to be easily felt through it. Lod's Nicast (http://www.nicast.com) is a pioneer in the development of superior implantable medical devices made of electrospun polymer nanofabrics for a wide range of applications. The company is currently focused on the development and marketing of the AVflo vascular access graft and the NovaMesh ventral hernia mesh, which address a combined global market of $0.7b to $1b. Nicast has six patents in the U.S., ten patents outside of the U.S. and 14 additional patents pending. (Nicast12.03)
8.4 CorAssist Raises $5.25 Million in Private Financing
CorAssist Cardiovascular has raised $5.25m in a private financing led by Aurum Ventures MKI. The round was joined by previous investors Ofer Hi-Tech Group, Yozma Management, Evergreen Venture Partners and Argonaut Ventures. The ImCardia is an elastic device placed on the outer surface of the left ventricle. A breakthrough preclinical study has shown the ImCardia to harness elastic energy produced by the left ventricle during systole (contraction) and to release the energy and assist the heart during diastole (relaxation). The Company has successfully implanted the ImCardia in six patients in a multi-center safety clinical trial. Patients have shown the ImCardia to be safe with three months, six months and with the first two patients, nearly 12 months follow-up. The CORolla is an elastic device placed inside the left ventricle through minimal invasive procedure. Preclinical studies have shown the device to be safe and to improve diastolic function. First implantation in humans is expected early next year. Herzliya Pituah's CorAssist (http://www.corassist.com) is a medical device company developing novel therapeutic devices for Diastolic Heart Failure (DHF). DHF is a condition in which the heart becomes stiff and/or fails to relax, and fills inadequately. The company's "spring-like" devices harness elastic energy produced by the left ventricle during systole (contraction) and release the energy during diastole (relaxation). The released energy assists the left ventricle to overcome its stiffness by "springing back" an appropriate amount to improve relaxation and blood filling. (CorAssist 16.03)
9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 ImageID & SBII Provide LDC With Advanced Automatic Identification & Verification Solution
ImageID and France's SBII, a leading integrator of automated identification solutions, announced that LDC Group has chosen Visidot Supply Chain Traceability solution to improve shipping process in its Bourgogne distribution site. Visidot is already operational at LDC SNV site. For the new project ImageID added more capabilities which further optimize the process. The system will also include ImageID's patent pending DUAL technology for Detection of Unlabeled Assets' Location. Visidot will replace conventional scanner verification procedures with much faster, Automatic Identification and Data Capture of multiple barcode labels, with 100% accuracy. The system will capture images of more than 800 pallets of poultry products daily, compare the barcode data with the shipping document and pinpoint any discrepancies. Visidot will eliminate all shipping errors, which particularly in fresh produce, result in loss of income, retailer penalties and customer dissatisfaction. Hod HaSharon's ImageID (http://www.imageid.com) is a leading provider of imaging-based traceability solutions. Visidot, the company's line of proven traceability products, consistently enhances logistics and manufacturing process efficiency and reliability. It enables tracking and tracing of hundreds of thousands of assets a day, with 100% accuracy. Visidot provides complete supply chain control to fresh food manufacturers, RPC poolers, automotive companies and other industries. (ImageID05.03)
9.2 Mellanox's 10 Gigabit Ethernet Adapters & Drivers Certified for a Wide Spectrum of Platforms
Mellanox Technologies announced the immediate availability of ConnectX EN 10 Gigabit Ethernet drivers for a broad array of major operating systems, including Windows, Linux, VMware Infrastructure, Citrix XenServer and FreeBSD. With these broad software platform certifications, Mellanox ConnectX EN solutions enable IT managers with the most efficient, flexible and high-performance 10 Gigabit Ethernet networking for data centers and high-performance systems. Mellanox's ConnectX EN 10 Gigabit Ethernet solutions provide the required flexibility and efficiency to enable true I/O consolidation for virtualized and enterprise data centers. ConnectX EN provides line rate and very low-latency and supports all the stateless offload features, virtualization accelerations, Converged Enhanced Ethernet (CEE) and Fibre Channel over Ethernet (FCoE). ConnectX EN supports a wide variety of cabling options, including UTP, CX4 for copper and SR, LR and LRM for fiber optics. 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. (Mellanox10.03)
9.3 Ness Technologies Adopts WorkLight to Streamline SAP via Secure Social Media
WorkLight, a secure Web 2.0 for Business company, announced that Ness Technologies has implemented WorkLight to enable secure access to business-critical enterprise systems using desktop, web-based and mobile widgets and other consumer Web 2.0 services. Relying on WorkLight's signature product, WorkLight Server, Ness Technologies was able to dramatically decrease time management costs, and allow employees to take advantage of internal SAP business tools via personalized homepages, desktop widgets and other consumer Web 2.0 services. With close to 10,000 employees, Ness expects to save more than 18,000 consultant hours per year in time management-related activities.
Shefayim's WorkLight (http://www.myWorkLight.com) develops server software products that help businesses reach customers, channels, employees, and partners securely in the places they frequent, such as their PC desktop (via widgets), iGoogle, Windows Live, RSS readers, Facebook, the Apple iPhone and more. Through WorkLight, people effortlessly get valuable information they desire, such as account status, product availability, or updates about their latest transactions. They can then take actions, for example order products or services, respond to promotions or offers and consult with colleagues, without having to log into a portal or corporate web site. Tel Aviv's Ness Technologies (http://www.ness.com) is a global provider of IT and business services and solutions with specialized expertise in software product engineering; system integration, application development and consulting; and software distribution. Ness delivers its portfolio of solutions and services using a global delivery model combining offshore, near-shore and local teams. (WorkLight 05.03)
9.4 PLYmedia Introduces ProPLY: Innovative Online Video Enrichment for Publishers
PLYmedia announced the expansion of its portfolio of online video enrichment solutions with the beta introduction of ProPLY for online publishers. ProPLY enables online publishers to enrich their video experience by superimposing interactive contextual information on the video and contextually linking stories to their archive. ProPLY is self-managed, enabling full editorial control for the publisher. Essentially an interactive editorial tool for online publishers, ProPLY optimizes use of the video screen through various information overlays options related to the story and objects within the video, all at the publisher's control. Informational overlays are designed to promote video content and maximize interaction with viewers. Publishers can create screen overlays (or use PLYmedia's customizable overlay templates) that link to additional internal content (related editorial articles) or other web information of interest to the viewer. ProPLY empowers publishers to use innovative interactive methods that will increase viewership of their online video, whilst building brand awareness and increasing sponsorship opportunities. Analytical feedback of the user's interaction on the video screen in response to various overlays is provided by PLYmedia. ProPLY, operable on a variety of video and player formats, is based on either a service fee or revenue share based model.
PLYmedia (http://www.plymedia.com) is an expert in enriching online video. PLYmedia's solutions challenge conventional video by overlaying rich, external information to enhance online video. By presenting effective video enhancing solutions, these information PLYs increase viewer interest and audience whilst ensuring longer time of engagement. The company, privately funded by leading VCs and prominent industry stakeholders, is headquartered in the United States with R&D facilities in Tel Aviv, Israel. (PLYmedia11.03)
9.5 Lenovo Adopts Waves MaxxAudio Sound Enhancements
Waves Audio announced that its MaxxAudio sound enhancement algorithms are now being implemented by Lenovo in its new Ideapad Y650, Y550, and Y450 series. The Ideapad series is the latest in Lenovo's extensive, groundbreaking product line, and will feature the full MaxxAudio suite. MaxxAudio consists of 5 technologies which enhance and optimize the audio performance of consumer electronics: MaxxBass for improved perceived bass response; MaxxTreble for increased high frequency fidelity; MaxxVolume for dynamic conditioning and level maximization; MaxxStereo for expanded stereo imaging speakers; and MaxxEQ for balanced frequency response. For music, movies, gaming, and more, these cutting-edge technologies take the user experience to new levels. MaxxAudio has been developed by Waves, the world leader in digital sound processing technology, heard on hit records, major motion pictures and popular video games everywhere. The same Waves algorithms used by top recording engineers and mixers, can now be used in a wide variety of CE applications including TVs, notebook computers, docking stations, mobile phones, headphones, speakers, and more.
Tel Aviv's Waves (http://www.waves.com) is the world's leading developer and provider of audio signal processing tools, with award-winning software and hardware for the professional and consumer electronics audio markets. Waves has more than fifteen years of expertise in the development of psycho-acoustic signal processing algorithms which leverage knowledge of the human perception of hearing to radically improve perceived sound quality. Waves processors are used to improve sound quality in the creation of the hit records, major motion pictures, and popular video games the world over. (Waves 11.03)
9.6 Innovid Launches In-Video Online Advertising Platform on Sympatico / MSN
Innovid launched of the company's In-Video Advertising platform for online advertisers, publishers and content producers. The company provides the first solution for In-Video brand integration enabling publishers and marketers to dynamically target the user's brand experience. With online video providing a challenge of monetization and low click-through rates, Innovid is bringing to the market an In-Video solution with a proven track record of generating high engagement and click-through rates. Innovid In-Video Advertising Solution provides a 'made-for-online-video' advertising offering which brings easy-to-implement brand and product integration to the interactive canvas of online video. Through the company's patent-pending Frame-based Meta-Data protocol, Innovid provides a seamless integration of the brand creative into the video storyline while enabling personalized targeting according to marketer or user preferences.
Tel Aviv's Innovid (http://www.innovid.com) is a leading provider of In-Video Advertising solutions for online advertisers, publishers and content producers. The company's In-Video platform combines the marketing value of product placement, which is enjoying a 30% growth rate this decade in all electronic media, with the interactivity only possible on the Internet. Through the use of Frame-based Meta-Data, Innovid's proprietary technology provides a seamless integration between the video and the embedded images. Beyond ad integration and serving, the company solution includes a back-end analytics dashboard to measure and track engagement. (Innovid 11.03)
9.7 Magink Joins with Denpeki to Create First-Ever Digital "Brick Wall"
Magink and its partner, Denpeki Kaihatsu KK, a member of Japanese developer group of advanced construction products, announced an agreement for the joint development of SmartBricks, a revolutionary digital brick for the construction industry. These unique bricks utilize magink's reflective technology to allow the construction of exterior and interior walls enabled to digitally change in color and texture. Today's consumers are more concerned with the aesthetic attributes of their environments than ever before. SmartBricks provide consumers with the ability to constantly change the appearance of their personal housing environment and immediate urban settings to suit their visual desires, dramatically changing the urban experience. By utilizing magink's proprietary technology, the digital bricks reflect ambient sunlight, creating a high-performance, low power digital wall that doesn't intrude upon the consumer's surrounding environment. Mevasseret Zion's magink (http://www.magink.com), founded in 2000, is the world's first developer and provider of full color reflective digital ink technology. The company's product lines of indoor and outdoor solutions are based on proprietary technology that provides high resolution, high contrast, full-color, low energy consumption and cost effective digital display applications to a broad array of global industries. (magink16.03)
9.8 CopperGate Doubles EoC Performance for MDU and Hospitality Industries
CopperGate Communications announced the CopperGate CG3210M chipset. It is the next generation HomePNA-based solution for multi-dwelling units (MDU) and hospitality applications. This state-of-the-art solution delivers up to 190 Mbit/s of IP traffic and is a third of the price for DOCSIS 3.0-based solutions to deliver the same throughput. To achieve such high performance, CopperGate has doubled the communications bandwidth of the chipset. This enables twice as many apartments to communicate with each master device, resulting in a 50% lower cost per apartment. Now, more than 60 end points in apartments or hotel rooms can be supported with a single master device. In addition, the new solution is optimized to work in older infrastructure often found in emerging markets. The application uses the existing coax infrastructure and is known as Ethernet over Coax (EoC). In markets with large numbers of MDUs, such as China, solutions that use existing wires are essential.
Tel Aviv's CopperGate Communications (http://www.copper-gate.com) is the only company whose standards-based chipsets enable carrier-class distribution of broadband digital content over all three types of existing wires in the home: coax, phone and power. The company sells its technology to OEMs who build solutions for multimedia home networking and multi-dwelling unit (MDU) broadband access markets. CopperGate's chips are used in set-top boxes, residential gateways, optical network terminators and Ethernet bridges deployed by four of the top five telcos in North America who are deploying IPTV. (CopperGate 16.03)
9.9 Continuity Introduces RecoverGuard v4.0 - Disaster Recovery Software
Continuity Software, a leading provider of disaster recovery (DR) and high availability (HA) management solutions, today unveiled RecoverGuard version 4.0 (v4.0), featuring key enhancements in the areas of cluster system support, root cause analysis, and high availability (HA) gap detection and reporting. RecoverGuard now offers customers an end-to-end solution for ensuring business continuity, by providing them with a tool by which they can validate and assure both restore point objective and restore time objective (i.e., RPO and RTO). Herzliya's Continuity Software (http://www.continuitysoftware.com) is a leading provider of disaster recovery (DR) and high availability (HA) management solutions. Its RecoverGuard software mitigates data protection and high availability risks by detecting gaps and vulnerabilities between customers' primary production and remote DR sites and/or localized data protection and HA solutions. With RecoverGuard, customers can now confidently validate and ensure their business continuity strategy. (Continuity Software 15.03)
9.10 INEX/ZAMIR and VESystems to Supply Trial Red Light Enforcement System in Florida
Knoxville, Tennessee's INEX Technologies, a worldwide supplier of violation enforcement technologies, has teamed with VESystems of Irvine, California, to conduct a trial of INEX/ZAMIR'S new Red Light Enforcement offering in Florida, beginning in the second quarter of 2009. Data collected during the 90-day trial will only be used to evaluate the product; no citations will be issued to violators observed by the system. INEX Technologies, operating as INEX/ZAMIR since merging with Israel's Zamir Recognition Systems in 2006, has deployed ALPR (Automatic License Plate Reader) systems in over 20 countries. The company currently assists many toll road authorities by capturing data necessary to identify toll violators. INEX/ZAMIR equipment also assists police departments in real-time identification of stolen vehicles. VESystems provides customer service and violation processing software and services to tolling agencies across North America, including several clients in Florida. The company will process images and data captured by INEX in the Florida trial. If the system is accepted for use, VESystems' VTX Violation Processing software will support the operations center staff by managing violator accounts and communications.
INEX/ZAMIR (http://www.inexzamir.com) is the combination of INEX Technologies of Knoxville, Tennessee and Zamir Recognition Systems of Jerusalem, Israel. The two companies merged in 2006 and are dedicated to applying the most current, proven information extraction techniques to meet the requirements of real-world applications. The company's systems are deployed in over 20 countries. (INEX/ZAMIR 16.03)
10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Annual Inflation Rises for First Time in 4 Months
Israeli inflation accelerated on an annual basis in February for the first time in four months as the shekel depreciated and fuel prices rose. The inflation rate climbed to an annual 3.4%, compared with 3.3% in January, the Central Bureau of Statistics in Jerusalem announced on 15 March. Prices had been forecast to rise 3.5%, according to the median estimate of eight economists surveyed by Bloomberg. Month-on-month, prices fell 0.1%, compared with a median estimate of no change. Inflation has eased from a peak of 5.5% in September and October, enabling the Bank of Israel to lower its benchmark lending rate by 3.5 points over the past four months to a record low 0.75%. (Various15.03)
10.2 Israel's High-Tech Exports Increase Despite Overall Drop
Israel's Central Bureau of Statistics announced on 12 March that the exports of goods, excluding diamonds, fell by an annualized 24.7% in December 2008 - February 2009, after falling by an annualized 31% in September - November. Imports of goods, excluding diamonds and fuel, fell by an annualized 38.3% in December-February. Imports of goods totaled $3.3b in February and exports totaled $2.8b, resulting in a trade deficit of $500m. High-tech exports, 52% of all industrial exports excluding diamonds, rose by an annualized 21% in December-February, after falling by an annualized 8.1% in September-November. Exports of mixed high-tech goods, 25% of total industrial exports, fell by an annualized 44% in December-February, after falling by an annualized 37.1% in September-November. Chemicals exports fell by an annualized 30% in December-February.
The decline of Israel's diamond industry continued apace. Exports of rough and polished diamonds amounted to $800m in January - February, 65% less than the $2.3b in exports in the corresponding months of 2008. Imports of rough and polished diamonds amounted to $346m in January-February, 76% less than the $1.48b in exports in the corresponding months of last year.
Imports of consumer goods fell by an annualized 17.7% in December-February, after falling by an annualized 16.5% in September-November. Imports of consumer durable goods, including furniture and appliances, fell by an annualized 34% in December-February, while imports of perishable goods, including food, pharmaceuticals, clothing, and footwear, fell by an annualized 6.2%. Imports of energy products totaled $1.3b in January-February, 38.5% less than in the corresponding months of last year. (CBS12.03)
10.3 Foreigner Investors Return to the TASE
According to figures published by the Bank of Israel, foreign investors returned to the Tel Aviv Stock Exchange (TASE) in January. Investments by foreigners reached $476 million in January, of which $331 million was in fixed income securities and $145 million was in equities. Of the equity investments, most were in chemicals and pharmaceutical companies. In October and November, foreigners sold a total of about $1.4 billion in shares. In addition to the $331million invested in bonds on the TASE, foreigners invested $500 million in bonds issued abroad by a large Israeli company in the energy industry. Foreign direct investment was $392 million in January, following $590 million invested in December, 2008. Most of the direct investment in January was in high-tech companies. Israelis invested $276 million in shares on foreign stock exchanges, and sold a net $101 million in bonds. (BoI08.03)
10.4 Israel's Luxury Car Sales Rise Despite Downturn
Globes' analysis of new car sales in Israel during January - February 2009 shows that despite a 35% drop in total sales, compared with the corresponding months of 2008, sales of luxury cars rose strongly. In January – February, 782 luxury cars and jeeps were sold, 30% more than in the corresponding months of last year. Globes feels that there are several possible ways to explain the contrast. One possible explanation is the well-known trick of pushing off sales closed in December to the following month, in order to improve delivery numbers for the next year. Industry sources estimate that 15 - 20% of luxury cars sales in January were actually made in the preceding month. Another possible explanation is a sharp rise in self registration. New regulations require vehicle importers to register themselves as the owners of unsold inventory 12 months after the manufacture date. In the luxury car segment, where customers are fashion-conscious and selective, importers are often left with unsold inventory. These cars are sent to trade-in agencies, where the cars may sit for months before they are sold. Nonetheless, these cars are recorded in the importers' monthly reports as "sold". A third possible explanation is the aggressive marketing by importers, such as large discounts on special sales days. It is estimated that nearly half of all luxury car sales were made at these special events, which customers have come to rely on. (Globes 05.03)
10.5 Israel's Cafes & Restaurants Suffer As Consumers Cut Back
Globes reported on a survey conducted by Geocartography Knowledge in early March for the Histadrut Consumer Authority that found that 56.3% of consumers said that they have reduced their spending because of the economic situation. The survey found that the biggest cuts were made in eating out at cafes and restaurants. Some 67% of respondents said that they have cut back on eating out. It also found that 54% of respondents said that they were spending less on food, 61% were spending less on clothing and footwear, 50% were lowering their telephone bills, 53% were spending less on entertainment, 57% were spending less on recreation in Israel and 58% on recreation overseas. Geocartography found 90% of respondents said that they would prefer not reducing spending on healthcare, and 67% were not cutting spending on their children's school and extracurricular educational activities. An analysis of the profile of the people spending less found that low income-earners were forced to cut back on almost every item. 63% of low income-earners have reduced their spending on food, compared with 54% of the general population. (Globes 09.03)
11: In Depth
11.1 ISRAEL: The Israeli Nanotech Survey:
Israeli and overseas scientific funds account for half of $ 320m invested in academic nano research in Israel. Venture capital funds account for only 1% The Israeli national nano-technology venture, which reviewed the situation of nano research towards the first international nanotech conference to be held in Israel, found that to date, each researcher has received approx. $ 1.1m in research grants, that the number of researchers is on the rise and investors are favorably viewing the nanotech market
A survey of Israel's nanotech industry held by the Israel National Nano-technology Initiative (INNI) in anticipation of the 2009 NanoIsrael Week, conveys careful optimism. The survey, which looked at the situation of academic research in Israel, reveals that the average investment per Israeli investor averages $ 1.1m. It is estimated that some $ 320m were invested, to date, in academic research.
The survey also shows that despite the difficult times experienced by Israel's economy, investors still regard Israel as a promising opportunity for nanotech research. "A review of the research stages reached by researchers sends positive signals to potential investors," say the survey's authors. 58% of the researches are in their preliminary stages; 24% in the prototype stage, 14% in the testing phase and 4% are already being commercialized. The survey concludes that this is the right time for starting partnerships with players from the Israeli academy and industry.
Close to half the funding given to Israeli nano research (45%) comes from Israeli and foreign scientific funds. The Israeli government contributes about 15% to the nano pie through bodies like MAGNET (generic technological R&D program) and the defense ministry. The balance of the multi-annual budget, approx. $ 320m, is shared by the hosting institutes (17%), foreign government programs, donors and independent funding sources. The Israeli industry is responsible for a mere 8% of the funding, and foreign corporations 6%. Venture capital investors invest only one%.
The survey, which was held in collaboration with Dr. Dovev Lavie from the Technion and Prof. Israeli Drori from the Administration College and Tel Aviv University, shows that the Technion employs 170 nano-researchers, followed by 55 researchers at Tel Aviv University, 45 at the Hebrew University in Jerusalem, 37 at Ben Gurion University of the Negev, 35 at the Weizmann Institute of Science and 30 at Bar Ilan University. Since 2002, the number of nano researchers in Israel has doubled.
The two main disciplines which provide researchers to the nanotech field are chemistry (25.6%) and physics (19.5%). Most of the researchers surveyed prefer focusing on materials (33% of the researchers), electronics and photonics (22%) and biotechnology (17% of the researchers).
NanoIsrael 2009 (http://www.kenes.com/nano) will be held on March 30th and 31st at the Inbal Hotel in Jerusalem. It is organized by Kenes Organizers, (the organizers of the annual Israel Biomed Weeks) and in collaboration with INNI – Israel National Nanotech Initiative and the Nanotech centers of Israeli universities. (Donitza 16.03)
11.2 LEBANON: IMF Mission Conducts Article IV Discussions & Review under EPCA Program
An International Monetary Fund (IMF) mission visited Beirut February 19 - March 5, 2009, to conduct annual discussions on economic and financial policies and to review performance under the economic program supported by Emergency Post-Conflict Assistance (EPCA).
The Lebanese economy has so far shown remarkable resilience in the face of the unfolding global financial crisis. The domestic financial system has had virtually no direct exposure to distressed financial products or markets and remains very liquid and amply capitalized, while economic growth has remained strong. Despite large fiscal and external vulnerabilities related to the size of the public debt and the government financing requirement, prudent macroeconomic and financial policies in recent years have strengthened the economy's ability to weather external shocks. Primary fiscal surpluses have contributed to lowering the debt-to-GDP ratio by nearly 20% since 2006; interest rate policy has supported deposit inflows, rapid de-dollarization and a build-up of international reserves; and strict financial regulation and oversight have shielded banks from exposure to troubled international banks, structured products and wholesale financial markets.
The IMF has supported these policies through a quarterly monitoring framework and two drawings under the Emergency Post-Conflict Assistance (EPCA). All end-December 2008 quantitative indicative targets under the EPCA-supported program were met, some with wide margins. However, the intended revision of electricity tariffs did not take place, and, largely as a consequence of the ongoing global financial turmoil, telecom privatization has been postponed.
Despite these successes, difficult challenges lie ahead, as spillovers from the global recession and the weakened outlook in the Gulf will be felt in Lebanon. Remittances, tourism, merchandise exports, foreign direct and portfolio investment and deposit inflows are all likely to be adversely affected, and real GDP growth is expected to drop to 3-4% in 2009, from over 8% in 2008. The possible confluence of a further deterioration of global conditions, rising funding costs, and domestic political uncertainty could again test the country's fiscal and financial vulnerabilities and heighten the importance of developing contingency plans.
Against the backdrop of an expected widening of the fiscal deficit in 2009, the mission discussed with the authorities the set of policies needed to safeguard the achievements to date against financial and macroeconomic risks, focusing on the following three pillars:
- The realignment of fiscal policies to the deficit and debt reduction objectives of the Paris III reform program, based on cautious budget implementation and the adoption of fiscal consolidation measures after the election. Reducing the debt-to-GDP ratio remains the top priority. Lowering the budgetary cost of energy generation and distribution through reform of the public electricity company (EdL) and revision of tariffs, along with the mobilization of additional revenues, would be key in this regard. With this, the objective should be to avoid an increase in the deficit. At the same time, the expected economic slowdown calls for a targeted redirecting of expenditures - within the existing envelope - to protect the poor.
- A cautious approach to interest rate policy to support ongoing deposit inflows and de-dollarization. Risks over how the global crisis will unfold, combined with domestic political uncertainty ahead of the June parliamentary elections, calls for a continuation of the current prudent monetary stance in the near term.
- Continued vigilance in bank supervision backed by a strengthening of the legal framework. The recent steps to strengthen the bank resolution framework through the implementation of the Merger Law are welcome. This should be supplemented by the extension of legal protection to bank supervisors, in line with international best practices. The Banque du Liban and Banking Control Commission should continue to carry out their effective close monitoring of commercial banks and contingency planning in the wake of the worsening global outlook. (IMF05.03)
11.3 LEBANON: Food and Drink Report 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Lebanon Food and Drink Report 2009" report to their offering. This Lebanon Food Drink Report provides independent forecasts and competitive intelligence on Lebanon's food and drink industry.
The Lebanese food and drink industry is continuing to attract the attention of expansion-oriented companies. The country's mass grocery retail (MGR) sector is still very fragmented, with independent local operators owning the majority of the country's supermarkets. Most international retailers have stayed out of the country, scared off by its political and economic instability. However, there were signs that this is slowly changing in 2008 when in August Kuwaiti retailer The Sultan Center (TSC) announced its acquisition of Lebanese food retailers Monoprix and Geant Casino from local company Admic, in a deal worth $108mn. Under the terms of the agreement, TSC will eventually take over five Monoprix supermarkets, which will be renamed TSC Plus, as well as the Geant supermarket, which will be rebranded under the TSC Mega banner. TSC then went on to announce several months later that it plans to further expand its presence in the Lebanese MGR.
TSC has said that Lebanon's political instability is a burden for the company, but it clearly feels that the potential gains outweigh the risks. The company has plans to set up a wholesale market in the Beirut Souk in the first quarter of 2009, with $10mn earmarked for interior design and merchandise, as it looks to firmly establish its presence in this burgeoning market. It is easy to see why the Kuwaiti company has decided to invest in the Lebanese market. Currently we are forecasting growth of 76.4% between 2008 and 2013 for the country's MGR industry, when it will reach a value of $2.97bn. Supermarkets are set to continue to dominate the sector, and are forecast to experience a growth rate of 80.4% to 2013. The main reason for this level of growth is simply the currently underdeveloped state of the sector and the room this accordingly allows for growth.
However, it is not just outside investors who are benefiting from the country's slowly improving food and drink sector. Lebanon's food and drink producers are steadily improving the quality of their output in order to take advantage of growing export opportunities for their products. Lebanon benefits from a major agricultural sector and thanks to significant differences in altitude within the country, it enjoys wide variation in its agricultural production. Although the country still imports a significant proportion of its food and drink products, this is set to change in coming years. According to our forecasts, there will be a major shift in Lebanon's food and drink trade balance over our forecast period. While imports are forecast to grow by a modest 4.8%, exports are forecast to almost double, growing by 99.6% to 2013. This shifting trade balance reflects the increasing sophistication of the country's food-processing sector as well as the growing trade opportunities, both with the EU and regionally throughout the Middle East. With Lebanon having joined the newly-formed Union for the Mediterranean this year, this will also help significantly improve export opportunities for the country's producers. (R&M12.03)
11.4 JORDAN: IMF 2009 Article IV Consultation
Jordan's limited integration with global financial markets has buffered it from recent turmoil. At the same time, strong trade links with the region and rest of the world, which have underpinned robust economic growth in recent years, imply that the global economic downturn will affect the domestic economy. Managing the prospective slowdown is the key near-term challenge.
1. Jordan's macroeconomic performance was generally favorable in 2008. Real GDP growth averaged over 6% in the first three quarters, only slightly slower than the 2007 pace. After climbing sharply due to the surge in world fuel and food prices, inflation subsequently came down quickly as commodity prices softened. Lower world commodity prices also helped narrow the current account deficit to an estimated 12¾% of GDP in 2008 (from 17% in 2007). Official foreign exchange reserves rose to $7.7b by end-2008 (equivalent to 5½ months of imports).
2. Economic activity is expected to slow significantly in 2009, reflecting the much weaker global and regional outlook. Real GDP growth is projected to ease to 3–4%. Inflation will likely continue to moderate to an average of about 4% over the year, aided by soft world food and fuel prices. Exports are projected to decline because of weaker external demand as well as lower mining export prices. The impact on the current account, however, will be more than offset by lower imports. As a result, the current account deficit is projected to narrow further to about 11% of GDP. With risks to the global economy tilted to the downside, Jordan's macroeconomic policies should remain focused on reducing external and fiscal vulnerabilities.
3. The budgeted fiscal stance for 2009 strikes a reasonable balance between reducing vulnerabilities and supporting domestic activity. Based on the latest developments and macroeconomic assumptions, the fiscal deficit is projected at a little above JD 800m (about 5.3% of GDP). Although the decline in world commodity prices will result in significant savings in the cost of subsidies and transfers, this will be more than offset by weaker revenue on account of lower inflation and slower GDP growth. The consequent widening of the deficit in relation to the budget - by 0.8% of GDP - should be seen as moderate stimulus that will help support activity without unduly exacerbating macroeconomic imbalances. The projections assume that foreign grants will remain relatively high (4.5% of GDP). Clearly, a shortfall in grants will heighten fiscal and external vulnerabilities.
4. Further fiscal stimulus - beyond that contained in the updated baseline budget outlook - would carry significant risks. Since Jordan is a highly open economy, a large share of any additional spending will be associated with increased imports. This will dampen the stimulative impact on domestic activity and, at the same time, widen the external deficit and associated vulnerabilities. Moreover, with capital spending already set to increase by over 35% in the baseline, the efficiency of an even larger increase would be difficult to maintain. If further stimulus is nevertheless undertaken, it will be critical to ensure that additional spending is temporary and carefully targeted. In such circumstances, announcement of a credible plan to reduce the fiscal deficit over the medium term will be needed to maintain confidence in the sustainability of fiscal policy and the external position.
5. Once cyclical conditions improve, a significant tightening of fiscal policy is needed to reduce public debt and the associated fiscal and external vulnerabilities. Given the already high revenue ratio, the adjustment should concentrate on the expenditure side. The mission recommends reducing the overall deficit by about 1% of GDP a year. This can be accomplished by limiting the growth of recurrent spending - especially wages and pensions - supported by much-needed pension and civil service reforms. In the absence of such adjustment, the public debt ratio will likely exceed the medium-term public debt ceiling of 60%. If additional fiscal stimulus is undertaken in 2009, the necessary medium-term fiscal adjustment will be correspondingly larger.
6. Moderate monetary policy easing may now be appropriate. In recent months, the CBJ has taken pre-emptive steps to maintain confidence and support the domestic money market. These include a full guarantee of all bank deposits, cessation of liquidity operations, and cuts in policy interest rates and reserve requirements. In addition, confidence in the peg has helped maintain a strong balance of payments position at a time of unusual turbulence in global financial markets. With reserves continuing to build, inflation firmly on a downward path, bank credit slowing sharply, and a widening interest differential with foreign rates, there now appears to be room for cautious easing of the monetary stance. A gradual lowering of policy rates and reserve requirements would help support economic activity and soften the impact of the global slowdown on the domestic economy. Of course, monetary policy should remain attuned to external developments, especially in these turbulent times. Close monitoring of the Central Bank of Jordan's (CBJ) key external and financial early warning indicators will be necessary, and the CBJ will need to stand ready to tighten quickly -possibly by resuming CD issuance - if signs of balance of payments pressure emerge.
7. The exchange rate peg, which has provided stability in the challenging global environment, remains an appropriate nominal anchor. The mission's analysis of the real exchange rate suggests that the dinar remains broadly aligned with medium-term fundamentals. The risk of external instability from the capital account is mitigated by the fact that external debt is almost entirely to official creditors and reserves are comfortable in relation to short-term liabilities, although the sharp increase in errors and omissions in the first half of 2008 is a concern.
8. Banking sector profitability and soundness indicators are generally favorable, but the weaker global environment poses significant risks. Stress tests conducted by the recent FSAP Update indicate limited exposure to interest rate, liquidity, interbank contagion, and other market risks. However, the tests also identify vulnerability to credit and concentration risk. In particular, the real estate, construction and foreign trade sectors are vulnerable to weaker activity, and banks with substantial exposures abroad will also be adversely affected by the slowdown in advanced economies. Encouragingly, banks have been repricing credits, closely monitoring exposures, and building capital buffers to reflect the heightened risks in their portfolios.
9. Intensified banking supervision is warranted in the current environment. The FSAP Update identified a number of areas that would strengthen the financial system. These include strengthening capital adequacy of banks close to the regulatory minimum, enhancing consolidated supervision, and developing the contingency planning framework. The mission welcomes the measures taken by the CBJ to enhance banking supervision, the capital buffers in the banks, and its early warning systems, and the CBJ's indication that it will take further measures if necessary to ensure banking soundness and stability. The mission encourages the authorities to intensify their contingency planning to deal with worst-case situations, including delineation of responsibilities and coordination between the CBJ, the Ministry of Finance and the Deposit Insurance Corporation. The mission also recommends recapitalizing the CBJ over the medium term.
10. Continued progress in public sector structural reforms will enhance prospects for private sector led growth. In the public financial management area, top priority should be accorded to tackling outstanding reforms, especially implementing fully the treasury single account; improving budget classification and control; rolling out the GFMIS; and continuing to strengthen the medium-term framework for budget formulation and preparation. The mission welcomes continued efforts to enhance public debt management, which is expected to be supported by follow-up technical assistance from the Fund in June.
11. The mission urges expeditious progress in resolving data issues. Priority should be given to the remaining requirements for SDDS subscription—improving the compilation and coverage of wages and earnings data, and aligning the coverage of budget revenues and expenditures with government financing flows. Progress is needed in identifying any gaps in the coverage of balance of payments statistics that could explain the sharp increase in errors and omissions in 2008. A better understanding of these flows is critical for policy making. Further improvements in the quality of quarterly production-based national accounts statistics as well as the frequency and timeliness of expenditure-based national accounts data would also aid policy formulation. (IMF08.03)
11.5 QATAR: CI Says Country Robust To Oil Price Shocks
Cyprus' Capital Intelligence (http://www.ciratings.com) believes the threat posed by the global economic downturn to Qatar's ‘AA-‘ (AA minus) sovereign rating is low and the long-term outlook for sovereign creditworthiness remains stable.
Qatar's sovereign ratings are supported by the strength and flexibility of the government's balance sheet and the country's external finances, which in turn are underpinned by the sheer scale of hydrocarbon production relative to the small size of the population.
Capital Intelligence expects Qatar's economy to grow by about 9% in real terms in 2009, reflecting capacity expansions in the liquefied natural gas (LNG) sector. Sharply lower oil prices will, however, contribute to a moderate contraction in nominal GDP and activity in non-oil sectors is likely to slow significantly in response to tighter financial conditions and the downturn in the global economy. Inflation is expected to return to single digits but will probably remain comparatively high at around 8%. The public finances are expected to remain strong, notwithstanding the oil price shock. Assuming an average oil price of USD40 a barrel and broadly unchanged policies, Capital Intelligence expects the central government budget to remain in surplus in the fiscal year ending in March 2010, although the magnitude of the surplus is projected to decline from about 14% of GDP in 2008/09 to around 3%.
The government's room for fiscal maneuver in the event of further shocks is high. Government debt is low at around 7% of GDP, while government financial assets have grown rapidly over the past five years and are probably at least seven times as large as the debt stock even after adjusting for likely valuation losses on foreign investments in 2008. These estimates are, however, subject to a large margin of error as details on the size and composition of assets are not disclosed by the authorities. Even so, with the budget projected to remain in surplus the government's net asset position can reasonably be expected to continue strengthening over the medium term. Export earnings are projected to fall in 2009 and the current account surplus is expected to shrink but nevertheless to exceed amortization payments on external debt by a substantial margin. Although gross external debt is reasonably high at an estimated 57% of GDP at end-2008, much of the external debt of non-banks is related to export-oriented projects in the hydrocarbon sector where repayment capacity appears to be strong even at current oil prices. Moreover, both the public sector (including Qatar Petroleum and its subsidiaries) and banking sector, which together account for the bulk of the debt stock, are net external creditors.
Capital Intelligence notes that Qatar's banking system has so far weathered the global financial turbulence and systemic risks appear to be low. Nevertheless, the combination of markedly slower growth in non-hydrocarbon sectors of the economy and declining asset prices is likely to weigh on credit quality in 2009-10. Together with substantially lower loan growth this is expected to lead to reduced profitability and some banks may see their financial strength ratings come under downward pressure.
To shore up confidence in the sector, the government has instructed the Qatar Investment Authority (QIA) to purchase up to 20% (about $5 billion or 5% of 2008 GDP) of the share capital of listed Qatari banks and we believe additional support would be forthcoming should the operating environment deteriorate further. (CI05.03)
11.6 QATAR: Pharmaceuticals and Healthcare Report Q1 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Qatar Pharmaceuticals and Healthcare Report Q1 2009" report to their offering. Qatar Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Qatar's pharmaceuticals and healthcare industry.
Qatar's drug market expenditure was estimated at $204mn in 2008 and is predicted to grow to $0.345bn in 2013. In this period, Qatar's GDP growth, government expenditure growth and inflation are all projected to slow and as a result it is also predicted that drug market expenditure will also slow over the forecast period. Qatar's dependence on oil exports to fund investment in the health system means that investment may decrease as a result of falling oil prices. This may necessitate Qatar implementing cost-containment measures.
Exchange rates also have a significant impact on Qatar's pharmaceutical market due to its reliance on imported drugs. The riyal is pegged to the US dollar, which has weakened significantly against the euro over the past year. Since the country is reliant on imported pharmaceuticals to satisfy demand, the cost of medicines from the eurozone has risen by almost 40%. In 2006, France and Germany alone supplied over 20%. Problems are compounded by rumors that Qatar's Central Bank will seek to break the riyal's peg to the US dollar. This makes distributors wary of holding large stocks of medicine, since a breaking of the peg would make imported medicines cheaper and thus benefit distributor margins.
Despite Qatar's small market size, its high per capita drug expenditure and a favorable country structure ensure that it scores highly for potential returns. Qatar does not have a local pharmaceutical manufacturing industry, although the recent establishment of a medical device company - the Qatari German Company for Medical Devices (QGMD) - and a biotech research company - the Scientific Medical Applied Research & Development Company (SMARD) - suggests that the country may establish its own pharmaceutical industry in the medium term as part of the government-led drive to diversify the economy.
Health insurance reforms are likely to redistribute the health expenditure burden further towards the individual over the coming years and there are plans to begin implementation of a health insurance scheme by the end of 2009.
In December 2008, it was announced that the Qatar National Health Authority had stopped imports of products produced by PharmaCare, a drug manufacturing firm in the United Arab Emirates (UAE), since it had been temporarily closed as the UAE's Ministry of Health investigates potential product safety violations at the plant. The Qatar National Health Authority has recalled all of the company's products from pharmacies around the country. BMI views this as a positive indication of both the UAE and Qatar improving their pharmaceutical regulatory environment. (R&M16.03)
11.7 SAUDI ARABIA: CI Says Outlook on Ratings Remains Stable
Cyprus' Capital Intelligence (http://www.ciratings.com) says the outlook on Saudi Arabia's ‘AA-' (AA minus) sovereign rating remains stable, supported by the large net asset position of the government, a strong external balance sheet, and a sound banking system.
The government has used accumulated budget surpluses to reduce debt to relatively low levels and build up financial assets, resulting in a strong balance sheet that can act as a buffer against oil-price driven reductions in cashflows and provides ample room to maneuver in the event of other economic or financial shocks.
Capital Intelligence estimates that the general government's net asset position, which includes the external assets of the state pension funds but excludes substantial local equity holdings, was around 90% of GDP at end-2008. On the liability side, central government debt (all of which is domestic in terms of issuance and part of which is held by other public sector institutions) is comparatively low at a provisionally estimated 13.5% of GDP at end-2008.
Fiscal pressures have increased in 2009 but are manageable. The 2009 budget foresees a 50% fall in total revenue compared to 2008 and is based on an average oil price equivalent to current market levels (around $40 a barrel). To partly offset the impact on the fiscal position, the government intends to reduce overall public expenditure from the record high level reached in 2008 but to increase outlays on social and physical infrastructure to support economic growth. The budget plans (which do not take into account the operating surpluses of the state pension funds) imply an overall deficit of 5.6% of GDP, but the eventual outturn could be somewhat higher as actual spending tends to exceed the targeted level. Financing risks are negligible given the size of the government's asset buffer and good appetite for government securities from local banks and pension funds, and the general government is expected to remain a relatively large net creditor.
Saudi Arabia's balance of payments position is also expected to shift into deficit this year, putting downward pressure on central bank reserves. Nevertheless, with official foreign assets in excess of 80% of GDP at end-2008 against a projected current account deficit of 7% of GDP and gross external debt of 17% of GDP, Saudi Arabia's capacity to absorb external shocks is high.
Dramatically lower oil prices and a decrease in oil production in line with OPEC commitments will result in a large decrease in nominal GDP in 2009 and contribute to a moderate contraction in real output growth of 1.6%, according to Capital Intelligence's estimates. We currently expect oil prices to partially recover in 2010-2011 (to $65-70 a barrel), returning the budget and current account to surplus, and consider Saudi Arabia's medium-term growth prospects to be favorable given substantial investment in industrial capacity and infrastructure (although the global economic crisis is likely to result in the delay or cancellation of some projects) and ongoing efforts to diversify production and expand the role of the private sector.
The risks to sovereign creditworthiness from the banking system remain fairly low. The sector is strongly capitalized and well-regulated, and at 42% of GDP at end-2008 commercial bank credit to the private sector is not high. Banks' reliance on external funding is limited at about 9% of total assets, and the net foreign asset position of the sector is positive. The authorities have taken steps to ensure adequate levels of liquidity in the system, but credit growth is likely to ease in the months ahead. Capital Intelligence believes there is likely to be some weakening in asset quality as the domestic economy slows and this could give rise to additional provisions and put pressure on profitability. Nevertheless, the banking sector as a whole appears to be capable of withstanding a moderate deterioration in the operating environment. (CI05.03)
11.8 SAUDI ARABIA: The Benefits of Restraint
The Oxford Business Group said that Saudi Arabia currently well equipped to deal with whatever challenges might arise as a result of the global financial crisis. Though the government has projected a budget deficit of $17.34bn for 2009 - its first since 2002 - the Kingdom's ample reserves will provide a buffer. Government debt stands at a mere 13% of Gross Domestic Product (GDP), while 2008 saw a record budget surplus of $157bn. Additionally, as of the end of 2008, combined net foreign assets for the Saudi Arabian Monetary Agency (SAMA) and Saudi commercial banks amounted to an impressive $449bn, while total deposits for all domestic commercial banks stood at $226bn, according to SAMA's most recent monthly report.
These reserves will come in handy now, with the country announcing a record $126.7bn budget for 2009 in an effort to combat the effects of the global slowdown - a 16% increase from 2008. The budget includes an ambitious plan to spend $400bn on infrastructure development over the next five years. Saleh A. Al Turki, chairman of Nesma Holding, told OBG, "We realize that we are part of the globalised world, so we do have a problem. But overall this is a very strong economy."
The high expenditure levels, particularly the investment in infrastructure development, underline the government's commitment to economic diversification. Sectors such as finance, construction, transport, communications and petrochemicals have already experienced growth, gradually reducing the country's dependency on oil. A recent report from Bank of America Securities - Merrill Lynch stated that Saudi Arabia's non-oil growth has averaged 4.6% since 2002, versus 2.7% during the 1990s. Nonetheless, according to the same report, the commodity still accounts for 88% of total exports and 87% of budgetary revenue.
Foreign investment will also contribute to diversification. Saudi Arabia's privileged economic situation is attracting attention from companies seeking to offset their difficulties in other markets. Dubai-based contractor Drake & Scull, for example, has recently announced that it is examining acquisition opportunities in the Kingdom as a way to offset the international downturn. "Saudi Arabia has been attracting investors for the past 17 years, but especially recently, the country has been looking for ways to further encourage investment and reduce obstacles," Al Turki told OBG. "There are tremendous opportunities, since most of our sectors outside of oil and petrochemicals are doing well."
The major impact on Saudi Arabia has been a drop in oil revenues, as prices have fallen from their record high of $147.27 a barrel in July 2008 to around $45 a barrel. However, the country's history of judicious decisions concerning its petrodollars should provide a buffer. According to the BAS-ML report, the Kingdom set aside 76% of its oil earnings between 2002 and 2008.
Meanwhile, the banking sector has remained stable, maintaining sufficient liquidity and avoiding any need for a bailout. "We know that our banks' exposure to international investment was about 6% of its total exposure, and it was mainly individuals' money, not the banks," Al Turki told OBG.
Finally, one positive effect of the slowdown has been a fall in inflation, with rates now decelerating after reaching a record high of 9.9% for 2008. Food prices - which were pushed up last year following supply shortages of basic staples in various producing countries - have fallen about 12.1%, according to the International Monetary Fund (IMF). Subsequently, January figures registered a one-year low of 7.9% annual inflation, compared to 9.0% in the previous month, according to the Central Department of Statistics & Information.
Various estimates predict that rates will fall further. The latest monthly economic report from financial brokerage company Jadwa Investment has stated that inflation will average 6.7% in 2009. Another estimate forecasts that inflation will settle at 7.5% this year, based on the median prediction of eight economists surveyed by Bloomberg News. Of course, despite its strong position, the economy will still face difficulties. But the Kingdom seems well prepared to face any surprises with characteristic sagacity. "With the bigger budget, the bureaucracy may face new challenges," Al Turki said. "The major question will be how to manage the economy and spend the budget properly." (OBG09.03)
11.9 SAUDI ARABIA: Pharmaceuticals and Healthcare Report Q1 2009
Research and Markets(http://www.researchandmarkets.com) has announced the addition of the "Saudi Arabia Pharmaceuticals and Healthcare Report Q1 2009" report to their offering. The Saudi Arabia Pharmaceuticals and Healthcare Report provides independent forecasts and competitive intelligence on Saudi Arabia's pharmaceuticals and healthcare industry.
In a clear sign that Saudi Arabia's government is looking to offload some of its financial burden from health expenditure, Manar Al-Moneef of the Saudi Arabian General Investment Authority (SAGIA) described the current funding model as 'unsustainable' in an interview with the Financial Times in October 2008. Al-Moneef pointed to population growth and the growing disease burden as key reasons for the strain on funding.
The Saudi Arabian government has recognized that as the population is projected to increase to 27.6mn people by 2013, and has all but admitted it cannot finance a sustainable healthcare sector. It has proposed to restructure the management of the existing 218 government hospitals into private enterprises.
Furthermore, any additional hospitals or clinics built will be private. The Saudi Ministry of Health authorities are progressing toward regulating medical services instead of financing the provision of healthcare. It is believed that eventually, this will reverse the trend for patients to travel abroad for treatment as privatization will raise the quality of medical care offered.
In October 2008, the Dr. Soliman Fakeeh Hospital (DSFH) was officially accredited with the Australian Council of Healthcare Standards International (ACHSI). This represents a significant achievement for the first private hospital in the western region and marks the development of Saudi Arabia's commitment to raising the quality of healthcare. The ACHSI criteria is not restricted to specific countries and therefore is used a means of objective comparison. It is hoped that an increase in the number of Saudi hospitals that attain approval from the body will increase the confidence of patients who choose to be treated there. Health insurance companies are more likely to extend their cover if the hospital in question has gained ACHSI accreditation. This development may lead to improved quality of care delivered at other hospitals, in order to mirror the achievement of DSFH. Overall, it points to a trend of increasing awareness of the importance of quality of care and the commitment to maintaining international alliances to continue improve standards.
A shortage of nurses in the country has initiated an international recruitment drive to make up the deficit. Over 2,000 specialist nurses are to be recruited from the Philippines in cooperation with the Saudi Ministry of Health. However, long term ambitions to decrease dependence on foreign staff will still be the main focus, with places on specialist nursing courses reserved for Saudi women.
In an encouraging development for Saudi Arabia's R&D sector, researchers have successfully mapped the Arab genome. It is believed that understanding the genetics of certain populations will support further investigations into predisposed illnesses. The development will provide strong indicators for predicting the spread of certain diseases, as well as creating opportunities for more specific research into preventive measures. (R&M16.03)
11.10 EGYPT: Food & Drink Report Q1 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Egypt Food and Drink Report Q1 2009" report to their offering. The Egypt Food Drink Report provides independent forecasts and competitive intelligence on Egypt's food and drink industry.
Despite the worsening global economic outlook, the Egyptian market has continued to catch the eye of foreign investors as discussed in our recently published Egypt Food & Drink Report for Q109. In August 2008, leading Saudi Arabian dairy and fruit juice company Almarai reached an acquisition agreement with Egyptian dairy and juice manufacturer International Company for Agricultural Industrialization Projects (Beeaty). Almarai is the largest dairy company in the Gulf region by market value, and has been looking to increase its presence beyond the Gulf and throughout the Middle East region with a series of acquisitions. According to a statement by the Saudi company, it will complete the Beeaty acquisition once it has finalized all financial, technical and legal audits, as well as receiving all regulatory approvals, in a deal which is estimated to be worth $112mn.
Also in August a group of foreign and domestic companies announced that they are planning on investing in building a new phosphate fertilizer complex in Aswan, Upper Egypt. The plant, which comes with a $2bn price tag, should start production in 2011. The domestic companies investing in the project are Polyserve, Egyptian Financial and Industrial Company (EFIC), Abou Kir Fertilizers, Helwan Fertilizers and El-Nasr Mining Company, while Greece's Indagro and American Agirfos will also hold stakes in the new production facility. Alongside the growing demand for food commodities, there has also been a corresponding rise in the demand for fertilizer.
Nevertheless, despite these continued investments in its food industry, Egypt will continue to deal with a number of challenges. The increasing competition for agricultural commodities has come as bad news for Egypt, which is heavily dependent on food and drink imports due to its natural agricultural constraints. The government is therefore continually looking for ways to increase the country's agricultural output.
One recent attempt has involved increasing potato production, with the government having announced plans to increase potato output by 60% over the next ten years, as it looks to increase both consumption and export sales. With the price of a number of key food crops such as rice, wheat and corn having risen dramatically over the past year, experts have started to advocate potatoes as an alternative crop. Yet even with increasing crop output, Egypt still continues to battle food price inflation. As this report went to press, the consumer price index (CPI) was at 21.5%, interest rates were spiking and the stock market was down nearly 50% year-to-date: clearly, the economic outlook is not as stellar as it once was, and this could well feed through into a more negative picture for both the political scene and the business environment. With the economic conditions likely to worsen, and the population increasingly critical of the government, there is a real risk of unrest. (R&M16.03)
11.11 LIBYA: A Defining Moment for the "King of Kings"
Ronald St John notes that Muammar al-Qaddafi celebrates his fortieth year in power in 2009, the same year in which he savors the personal triumph of election to leadership of the African Union (AU) - twenty-five years after he was the first and only African leader who sought but was denied the leadership of the Organization of African Unity, predecessor to the AU. Qaddafi has pledged a "year of serious work," and yet it is unclear whether his energies will be directed toward the African continent only or will also be applied to his own country's economic and political dilemmas.
Statesman in Waiting
In addition to being the self-proclaimed "King of Kings" of Africa, Qaddafi is the chief promoter of a United States of Africa, complete with central bank, parliament, standing army, and single currency and passport. Some of the poorer states of Africa, many of whom have benefited from Libyan largess, support his proposal. Larger states such as Nigeria are less enthusiastic, favoring sub-regional integration as a building block to continental integration at a later stage.
The interests of the United States are at stake in the ongoing debate. A proponent of "Africa for the Africans," the Libyan leader has opposed U.S. initiatives such as the Trans-Sahara Counter-Terrorism Partnership and the U.S. Africa Command (AFRICOM). In turn, Washington worries about Tripoli's involvement in the domestic affairs of African states, its courtship of minority groups in the Sahel-Sahara region, and its involvement in regional peace-keeping efforts. Libya can be expected to continue to cooperate with the United States in areas such as counterterrorism and trade, but Qaddafi's AU role gives him a bully pulpit to challenge other U.S. initiatives. In a likely harbinger of the future, Libya recently blocked a UN Security Council statement, supported by the United States, which would have condemned the escalating civilian losses in Darfur.
Economic Backsliding at Home
But will Qaddafi also make his fortieth anniversary a year in which to come through on the reforms he has been promising to Libyans? Outside the petroleum sector, recent attempts at economic liberalization have been correctly characterized as uncoordinated, hesitant and piecemeal. The situation looks set to get worse. Charging that government ministries are centers of mismanagement and graft, Qaddafi has promised to dismantle them, distributing direct to the Libyan people the monies they controlled. In mid-February 2009, he again called on Libyans to endorse his proposal to dismantle the government and redistribute oil wealth. The Basic People's Congresses considered the idea in February, as the General People's Congress will do in March. If implemented, the redistribution of oil revenues directly to Libyan citizens will create short-term chaos. By fueling inflation and encouraging capital flight, it will also do considerable long-term damage to the economy.
Even reforms to the petroleum sector, long considered a success in terms of efficiency and transparency, have stalled and are now at risk. Faced with declining oil prices, the Libyan leader has threatened to nationalize the oil and gas industry. At the same time, the National Oil Company (NOC) has forced foreign oil producers to renegotiate the terms of agreements concluded in recent years, a move that threatens the sanctity of international contracts. To reduce the oil take of foreign producers from as much as 49% to less than 20%, NOC has negotiated revised contracts with Eni, Occidental Petroleum, Petro-Canada, and Total, to name a few. If nationalization does occur, it will return Libyan petroleum policy to the 1970s, undermining the positive economic reforms of the last few years.
A Constitution?
Political reform remains a promise but not a reality, and Qaddafi continues to promote his system of direct democracy as the solution to the world's political problems. Speaking at the recent African Union summit in Addis Ababa, he decried multi-party democracy, arguing that the Libyan system of direct democracy was the best model for Africa. As for the long-promised new Libyan constitution, the details of the draft document remain a closely guarded secret. Available evidence suggests that when it emerges, the constitution will be more of a social contract - a philosophical statement of governance a la Jean-Jacques Rousseau - than a practical document outlining a system of representative democracy.
With those involved in drafting the document citing certain red lines that cannot be crossed - notably Qaddafi's collected thoughts in The Green Book - it is highly unlikely that the constitution will include core elements of democracy such as the separation of powers, checks and balances, political parties, and free elections. It is equally unlikely that any document released will make more than superficial changes to the formal system of direct democracy created by Qaddafi and used by him to mask an informal, all-powerful government based on family and tribal ties.
Defining Moment
Through a combination of design and happenstance, 2009 offers the Libyan leader fresh opportunities to redefine himself and his revolution, a remake he has pursued since the turn of the century. Will Qaddafi continue to promote quixotic economic policies, repressive political institutions and idiosyncratic foreign policies? Or will he take advantage of his new role to build on recent efforts to increase his international stature and return Libya to the global mainstream? It is too early to tell which path Qaddafi will take, but indications so far are not encouraging. Whichever direction he turns, the year 2009 will be a defining moment in his long and controversial career.
Ronald Bruce St John served on the Atlantic Council Working Group on Libya and the International Advisory Board of The Journal of Libyan Studies. He is the author of six books on Libya, including Libya: From Colony to Independence (Oneworld Publications, 2008). (CE ARB02.2009)
11.12 BULGARIA: IMF Executive Board Concludes 2008 Article IV Consultation
On March 4, 2009, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Bulgaria.
Background
Bulgaria has been hit by the global financial crisis, with clear signs that the country's capital-inflows driven boom has come to an end and that the real economy is slowing down.
Since agreement was reached on EU accession in 2004, Bulgaria experienced a surge in capital inflows and a credit boom. Inflows were driven by expectations of rapid convergence with the EU, and were further boosted by the confidence-enhancing effect of the currency board and a strong fiscal policy. By 2008, net inflows had increased to about 27% of GDP. Boosted by capital inflows, credit to the private sector rose rapidly, and the credit-to-GDP ratio climbed from 36% in 2004 to 67% in 2007. The surge in inflows generated strong GDP growth, but also a sharp widening of external and internal imbalances. GDP grew by more than 6% annually, leading to a significant narrowing of the income gap with Western Europe. Growth remained strong in 2008—at 6%, Bulgaria was one of the fastest growing countries in Europe.
As the growth of domestic demand outpaced GDP growth, the current account deficit widened from 5% of GDP in 2003 to an estimated 25% of GDP in 2008. As unemployment dropped and the labor market tightened, wage growth accelerated to 25% in June 2008. The overheating of the economy, together with rising food and oil prices, resulted in a surge of inflation, which peaked at 14.7% in June 2008. Competitiveness deteriorated, and the unit labor cost -based real effective exchange rate appreciated 27% in the two years ending in mid-2008.
The global financial market turmoil has had a severe impact on financial asset prices in Bulgaria. Foreign parent banks have reduced new financing to their local subsidiaries and credit growth to the non-government sector has slowed sharply.
Executive Board Assessment
Executive Directors commended the Bulgarian authorities for their prudent policies that have built strong balance sheets in the public sector including large foreign reserves, low public debt and a substantial Fiscal Reserve Account. They noted that there are substantial buffers in the banking system. At the same time, large capital inflows contributed to an investment and consumption boom, creating a large current account deficit and increasing private sector debt, while heavy reliance on foreign capital is a source of vulnerability. Looking forward, Directors considered that economic growth would slow sharply with the downturn in partner countries and only modest net capital inflows. Moreover, as risks are predominantly on the downside, the authorities were advised to monitor developments closely and adapt policies, as warranted.
Directors considered that the currency board arrangement has served Bulgaria well as an anchor for macroeconomic stability. They took note of the staff assessment that the real effective exchange rate is somewhat overvalued, but that determining its extent is a difficult question. The authorities were encouraged to avoid any further erosion in international competitiveness as a result of real wage increases exceeding productivity gains.
Directors considered that the most immediate policy challenge will be to maintain confidence in the currency board arrangement and in the banking system. While the banking sector remains well capitalized, liquid and highly profitable, a severe recession could cause nonperforming loans to increase and bank capital to erode. Directors welcomed steps to improve depositors' confidence, increase capital cushions by curtailing most banks' dividend payout, and to secure commitments from parent banks to provide adequate liquidity and capital to their subsidiaries. They observed that the substantial Fiscal Reserve Account allowed a major lender-of-last-resort capacity. They supported the authorities' efforts to improve Bulgaria's crisis management capacity by intensifying the monitoring of liquidity and credit risks, further strengthening the stress testing capacity, and cooperating more closely with foreign supervisors.
Executive Directors welcomed the authorities' commitment to maintaining prudent fiscal policies, which will provide crucial support for the currency board arrangement. They concurred with the authorities' intention to maintain a fiscal surplus of 2% of GDP in 2009, in part by containing public spending. They cautioned, however, that were growth to slow more than expected, additional expenditure cuts will be necessary to achieve the targeted surplus. They viewed the rule to restrict spending to 90% of the amount budgeted as an effective short-term tool, but emphasized that prioritization and further spending restraint will be needed to sustain appropriate fiscal surpluses over the medium term.
Directors noted that further structural reforms will be key to a smooth and speedy economic recovery and achievement of convergence with the European Union. They welcomed the recent education and labor market reforms to raise productivity and labor market participation rates, and the progress made in reducing administrative burdens for businesses. (IMF17.03)
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