Business

Athens — Greece's new government is proposing creative solutions as it treads a delicate path between its obligations to international creditors and campaign promises to end austerity and reduce the country's debt.

"If we need to use euphemisms and tools of financial mechanisms to get Greece out of its debt slavery, we will do it," Finance Minister Yanis Varoufakis said Tuesday.

He insisted the new government, led by the anti-austerity Syriza Party, "will not back down" in its efforts to lighten Greece's 315-billion-euro ($359 billion) debt burden, equivalent to 175 per cent of the gross domestic product.

According to an interview with the Financial Times (FT) published Tuesday, Varoufakis proposes to replace 25 billion euros in Greek bonds owned by the European Central Bank (ECB) with "perpetual bonds", which have no set maturity or expiration date.

The advantage for Greece is that it will continue paying interest on the bonds, but will no longer have a repayment deadline hanging over it like a sword of Damocles. Under the current system, Greece is due to pay back 7 billion euros to the ECB this summer.

Under the scheme, the central bank in Frankfurt would neither suffer losses on its Greek debt, nor have to declare Athens in default, avoiding dramatic market turbulence that would erupt if Greece were unable to honour matured bonds.

"A perpetual bond, which is never paid back, may be a little hard to accept. I imagine something closer to a compromise on a very long-term maturity, say, lasting 50 years," Frederik Ducrozet, an analyst at Credit Agricole, told AFP.

He called the proposal to delay Greek repayments for decades a "very good idea".

Varoufakis also suggested in the FT that rescue loans issued by the European Union be exchanged for bonds "indexed to nominal economic growth". Repayment of those would then be linked to the performance of the Greek economy.

The European Financial Stability Facility (EFSF), the European bailout fund, holds around 140 billion euros of Greek debt.

'Financial innovation' 

"It's a financial innovation, but we're not in entirely unchartered territory," said Ducrozet, noting that securities of that kind were issued to ease the losses of private banks when Greek debt was restructured in 2012.

Argentina, another country that has been plagued by debt problems, has benefited from something similar.

"The proposals made by Varoufakis form the basis of an entirely plausible negotiation," said Ducrozet, an opinion shared by many investors.

The Greek newspaper Kathimerini also reported that Greece wants to issue an increased number of short-term government bonds to cover the state's immediate funding needs.

Unable to access long-term lending markets because of prohibitive rates, Athens has been issuing bonds that mature after a few months. They are often bought by Greek banks.

Greece has reached its annual limit of 15 billion euros in short-term bonds, also known as treasury bills or t-bills, but reportedly wants to increase that to 25 billion euros.

Varoufakis will also be asking for the profits made by eurozone central banks from holding Greek debts, about 1.9 billion euros, to be transferred to Greece by the end of February, Kathimerini reported.

This money was due to be included in the next tranche of international loans, worth 7 billion euros. Athens says it does not want this, preferring to renegotiate the entire bailout programme.

To access these funds, and to raise the limit on its short-term bonds, Greece must first seek approval from the finance ministers in the eurozone, the so-called Eurogroup.

According to a diplomatic source, plans are being made for an extraordinary meeting of the group in the coming days.

TEL AVIV  — Israeli companies are increasingly turning to Asia to capture a boom in demand for their technology, as the government urges them to diversify export markets in response to Europe's rising anti-semitism and potential trade sanctions.

Citing attacks on Jews in Europe, including one in a kosher market in Paris last month, and amid fears that the European Union could take trade steps against Israel over its policy of settlement building on Palestinian land, Prime Minister Benjamin Netanyahu told his Cabinet last month: "We definitely want to reduce our dependence on certain markets in western Europe."

At the same time, the pro-Palestinian boycott, divestment and sanctions movement has started to make strides in some European countries, prompting several firms in Holland and Denmark to end dealings with some Israeli companies and raising the prospect of more trade problems in the region.

Israeli entrepreneurs, most of whom see Europe remaining as an important partner, downplay the effects of anti-Israel sentiment in Europe. 

More of a reason to expand to Asia, they say, is that Europe's economy is struggling, the euro has weakened and Asian countries are growing faster.

Either way, the shift to Asia is picking up pace. 

Israelis have been slow to follow European and US firms into Asia because the region's languages and culture have presented more significant problems, particularly the requirement for patient diplomacy in many Asian countries, say Israeli businessmen, known for their often abrasive manner.

Nonetheless: "Those making the efforts are being amply rewarded," said Jon Medved, a veteran Israeli venture capitalist.

Ofer Sachs, chief executive of the Israel Export and International Cooperation Institute, noted: "When you look towards the future, the growth potential that exists in China, Vietnam and [the rest of] Asia is greater than in Europe."

Multiply tenfold

Europe is currently Israel's largest overall trading partner. Asia is its second-biggest partner but business, particularly to China and India, is much smaller: Israel's economy ministry estimates that of 3,000 Israeli exporters, about 1,000 trade with Asia.

While government data shows that Asia takes 25 per cent of all exports, just below the 27 per cent that goes to each of Europe and the United States, roughly half that is mainly from just two companies: Intel's Israel unit and potash producer Israel Chemicals.

Economy Minister Naftali Bennett said Israel wanted to multiply its commerce to Asia "tenfold”.

"Israel has made a strategic decision to diversify its commerce so we're moving to the East. I'm talking about China, Japan, India... and it's working, it's going very well," he told Reuters.

Avner Halperin, chief executive of medical device firm EarlySense whose sales to Asia currently comprise 15 per cent, initially looked to the United States and Europe to drive his high-tech company's sales. Now much of his focus is on Asian economies.

"That percentage to the Asian market will go to at least a third and may go to as much as half of our sales by 2016," Halperin indicated. "You can't ignore the East because there are huge opportunities with people very open and ready to work with us."

Investment potential

Asian companies and funds, particularly from China, are also seeing more investment potential in Israel.

China, Israel's third-largest trading partner by country, is looking at an expansion in bilateral trade, which reached nearly $9 billion last year.

"Israel leads the world in high-tech and high-tech is needed in China," Wu Bin, economic and commercial counsellor at China's embassy in Israel, told a recent conference in Tel Aviv. "Israeli technology can easily get industrialised in China."

On Monday, Chinese management consulting firm Shengjing, teamed up with Jerusalem Venture Partners, one of Israel's leading venture capital fund, in a competition to find global start-ups.

"In the next 10 years, Israeli high-tech will have a significant Chinese component... and China can become a significant player in the Israeli economy," said Nechemia Peres, co-founder of Pitango Venture Capital.

Korean giant Samsung has made two investments in Israel, including Halperin's EarlySense, so far in 2015 in addition to numerous investments last year. It also has two research and development centres in Israel.

New Israeli companies, industry executives say, have an edge over their American and European peers in expanding in Asia because they have a limited domestic market and must think internationally from the outset.

"When we do business, we have to take a flight, so it can be east or west," said Peres.

CARACAS — Venezuela has jailed the owners of an unnamed chain of shops accused of engineering queues to whip up anger with the socialist government, President Nicolas Maduro said on Sunday.

Chronic shortages of basic goods, including flour, chicken and diapers, have triggered massive lines that sometimes stretch around blocks and have become a nightmare to navigate for Venezuelans.

Most economists blame the scarcity on currency controls that restrict dollars for imports, as well as falling domestic production.

Maduro, however, accuses a rapacious business elite of waging an "economic war" to bring down his administration.

"Yesterday, we detected that a famous chain of stores was conspiring, irritating the people," Maduro told a crowd of red-clad supporters and soldiers.

"We came, we normalised sales, we summoned the owners, we arrested them and they're prisoners for having provoked the people," he said to cheers, adding that the state would take over the food stores.

The stores purposefully reduced the number of cashiers to create lines, Maduro said earlier on Sunday, likening the strategy to a "guerrilla tactic”.

Authorities are also pressing charges against Venezuelan pharmacy chain Farmatodo for not opening enough check-out counters. Its executives have been summoned for questioning.

The government has jailed businessmen in the past for raising prices, and has launched several campaigns designed to combat contraband of price-controlled goods flowing to neighbouring Colombia.

"Those who use their stores to hurt the people will pay with jail time," said Maduro, donning a tracksuit with his name sewn on and a camouflage hat.

Critics say cracking down on businesses risks aggravating shortages and further deters investment.

They have also lampooned Maduro for not pushing through major structural changes to combat the country's recession, over 60 per cent inflation, and shaky finances.

Maduro, who won an election to replace his mentor, the late Hugo Chavez, in 2013, added he secretly toured the capital Caracas for four hours on Saturday with his wife and close adviser Cilia Floresto to survey the situation at stores. 

Separately, a Reuters analysis shows that at least 40 major US companies have substantial exposure to Venezuela's deepening economic crisis, and could collectively be forced to take billions of dollars of write downs.

The companies, all members of the S&P 500, and including some of the biggest names in Corporate America such as autos giant General Motors (GM) and drugmaker Merck & Co. Inc., together carry at least $11 billion of monetary assets in the Venezuelan currency, the bolivar, on their books.

The official rate is at 6.3 bolivars to the dollar and there are two other rates in the government system, known as SICAD 1 and SICAD 2, at about 12 and 50. The black-market rate, though, was at about 190 bolivars to the dollar on Sunday, according to the website dolartoday.com.

The problem is that the dollar value of the assets as disclosed in many of the companies' accounts is based on either the rates at 6.3 or 12 and only a limited number of transactions are allowed at those rates. 

The assets would be worth a lot fewer dollars at the 50 rate in the government system and the dollar value would almost be wiped out at the black-market rate.

The currency system is also about to be shaken up following an announcement by Maduro on January 21, leading to fears of a further devaluation.

American companies will also have additional exposure to the bolivar that isn't disclosed because they don't see the size of that exposure as material to their results. 

The Reuters analysis also doesn't look at the thousands of publicly traded and private American companies that aren't in the S&P 500 and will in some cases have bolivar assets.

Black-market rate

Some leading American companies have already decided that the stronger exchange rates, the official rate at 6.3 and the SICAD 1 exchange market at 12, are not reflective of the currency conditions they face in the South American country.

Diaper and tissue maker Kimberly-Clark Corp. recently announced a charge of $462 million for its Venezuelan business, leading to a fourth-quarter loss for the company, after it concluded that the appropriate exchange rate was the SICAD 2 exchange rate at 50 rather than the 6.3 it had previously used.

Using the stronger exchange rates is unrealistic because of how hard it is to repatriate profits earned in Venezuela back to the United States at any rate, let alone those rates, securities analysts say. Citigroup Inc says it has not been able to buy US dollars from the Venezuelan government since 2008.

Companies can seek dollars at the official rate if they are using those dollars to import raw materials for production of priority goods such as food and medicine, and some can buy dollars at the SICAD 1 rate at around 12 bolivars to the dollar through auctions that are typically held several times per month but are only targeted at specific sectors. 

As tumbling oil prices have left Venezuela with fewer dollars, its currency board has steadily reduced approval for repatriation of dividends at the official rate, leaving companies with growing quantities of bolivars trapped by currency controls.

"It's a huge deal and companies will get hit big," said Ali Dibadji, an analyst at Sanford C. Bernstein & Co. Inc. "Take a look at what Kimberly-Clark did last week and what Clorox did a few months ago by getting out of Venezuela."

Cleaning and household products maker Clorox last year decided to exit Venezuela altogether. Its Chief Executive Officer Don Knauss said at the time: "We saw no hope that we could create a sustaining business in that country."

The currency issues are hurting many US companies much more than their sales might suggest. Many of the companies in the analysis have been getting between 1-3 per cent of their global revenue from Venezuela.

Ford Motor Co. and oil services company Schlumberger NV took big-ticket hits to their quarterly profits because of their Venezuelan operations. Ford took a fourth-quarter charge of $800 million and Schlumberger $472 million.

A Ford spokeswoman said that it still values its Venezuela assets at about 12 bolivars per US dollar. But for Ford, the currency system and other conditions are so tough in the South American country that it has made an accounting change that will allow it to ring fence its Venezuela business so that it doesn't have a direct impact on the company's operating results.

Schlumberger, which previously used the 6.3 rate, said it is now using the SICAD 2 rate of 50 as it "best represents the economics of Schlumberger's business activity in Venezuela".

Another S&P 500 company to switch to the 50 rate from 6.3 in recent weeks was industrial gases producer Praxair Inc., which took a fourth-quarter charge of $131 million as a result. It also said the switch will hurt its revenue and earnings in 2015.

Another devaluation?

Those changes don't reflect the prospect of another currency devaluation in Venezuela, as recently telegraphed by Maduro, who is struggling to keep a lid on consumer prices amid a 64 per cent inflation rate and a plunge in oil revenue. The official rate was last devalued by 32 per cent to the current 6.3 from 4.3 in February 2013, at that time the fifth devaluation in a decade.

Maduro said in the January 21 announcement he would merge the two existing SICAD rates (the ones at 12 and 50 per US dollar). He also would introduce another new rate to offer dollars via private brokers to vie with the black-market rate. There has yet to be a further announcement providing details of the new system and the rates.

Currency uncertainties aside, foreign companies face a myriad of other problems in Venezuela, from weak demand to shortages of many goods, difficulty in importing parts and products, and relying on the government to approve price increases to keep pace with hyperinflation.

Most of the S&P 500 bolivar exposure is concentrated among 10 companies that have disclosed about $7.3 billion in assets linked to the country's currency system, according to the Reuters analysis of their latest quarterly financial statements.

But if those companies used Venezuela's SICAD 2 currency rate, the one at about 50 bolivars to the dollar, their assets would decline by as much as $5.8 billion. All of these companies currently either use the rates at 6.3 and 12.

It would be far worse if they used Venezuela's black-market rate of about 190 for the currency. The companies' bolivar assets would be worth only a tiny fraction of their current estimated value if they used that rate.

GM, which ranked No. 1 out of the group analysed, with $1.5 billion in Venezuela exposure, said it is closely monitoring conditions there. "We have nothing to announce at this time," spokesman Tom Henderson said.

Some US companies, such as Merck, justify valuing their Venezuela assets at the most preferential rate because they are providing essential services and goods, like medicine, to the country. They report some success in translating bolivars into dollars at the 6.3 rate. Merck did not respond to a message seeking comment.

Still, some of these same companies have prepared their investors for a currency hit in their latest round of quarterly disclosures. PepsiCo Inc. said it would take an after-tax charge of up to $440 million if it revalued its Venezuela assets at the 50 rate. As of early September, the company disclosed $505 million in bolivar-denominated net monetary assets.

"I do think that more companies may consider exiting Venezuela if the inability to remove cash or take prices to offset devaluations persist," said Dibadji, the Sanford Bernstein analyst.

WASHINGTON — President Barack Obama on Monday proposed a $3.99 trillion budget for fiscal year 2016 that sets up a battle with Republicans over programmes to boost the middle class that are funded by higher taxes on corporations and wealthy Americans.

The budget foresees a $474 billion deficit, which is 2.5 per cent of US gross domestic product. It projects deficits stabilising at that rate over a 10-year period, senior administration officials said.

Obama's budget fleshes out proposals from his State of the Union address last month and helps highlight Democratic priorities for the last two years of his presidency and the beginning of the 2016 presidential campaign.

But it is as much a political document as a fiscal road map and would require approval from the Republican-controlled Congress to go into effect.

"There are going to be areas where we get big disagreements, but what I want us to focus on is the areas... we have in common," Obama said on NBC's "Today" show.

"And we'll have some battles along the way, but there's going to be a whole bunch of stuff that we can do that's really productive," he added.

The president is scheduled to speak about the budget late Monday from the Department of Homeland Security, a site the White House chose to emphasise its insistence that Republicans fund the agency charged with implementing his controversial executive actions on immigration.

Republicans have said they see room for compromise in areas such as tax reform and infrastructure, but many of Obama's programmes, which were rolled out in the weeks before the budget's release, have landed with a thud.

"When... he devotes his time and energy to talking about the new tax-and-spend policies that progressives like and Republicans universally oppose, he signals to Congress that he is once again looking to argue rather than to legislate," said Keith Hennessey, a former economic adviser to Republican President George W. Bush.

Democrats, however, viewed the budget as a statement of their priorities and a chance to demonstrate that they represent the party that champions middle-income Americans.

"[It] affords him an opportunity to contrast his vision of helping the middle class with the Republican Congress' approach of exacerbating inequality, ignoring the middle class and making the burdens of those who want to enter it even greater," said Neera Tanden, president of the Centre for American Progress, which has close ties to the White House.

Infrastructure, tax reform

The budget achieves some $1.8 trillion in deficit reduction over the next 10 years, officials said, through healthcare, tax and immigration reform, but the forecast assumes Republican support for Obama's programmes, which is unlikely.

Republicans have blocked immigration reform legislation in the House of Representatives, for example, and Obama's budget assumes passage of such a bill.

The administration foresees a continuation of the decline in unemployment, forecasting a rate of 5.4 per cent in 2015. The rate currently stands at 5.6 per cent.

It also proposes a new infrastructure bank, a 6 per cent increase in research and development, and a controversial consolidation of US government agencies. Obama has previously proposed combining trade agencies, but the proposal fizzled.

The budget sets aside $14 billion to strengthen US cybersecurity defences after a spate of high-profile hackings.

It calls for a one-time, 14 per cent tax on an estimated $2.1 trillion in profits piled up abroad by companies such as General Electric and Microsoft, while imposing a 19 per cent tax on US companies' future foreign earnings.

It proposes a 7 per cent rise in US domestic and military spending, ending "sequester" caps with reforms to crop insurance programmes and closing tax loopholes such as one on "carried interest". Those moves would help fund investments in infrastructure and education.

The budget would also reform rules governing trust funds and raise the capital gains and dividend rates to 28 per cent from the current top rates of 23.8 per cent.

In foreign policy, the budget funds efforts to defeat Islamic State militants and support NATO and European allies against Russian aggression, the White House said.

AMMAN — Jordan Industrial Ports Company on Sunday signed an agreement with a consortium of two Spanish companies to expand the industrial Port, according to a company statement.

Under the agreement, the consortium will work to re-qualify and expand the industrial pier at the southern port of Aqaba, which is equally owned by the Arab Potash Company and the Jordan Phosphate Mines Company (JPMC). 

JPMC  Chairman Amer Majali said that after expansion works are completed, the pier capacity will be doubled and it will be able to receive larger ships carrying from 5 to 100,000 tonnes.

This will enable the company to export its produced DAP fertiliser, potash and other  products such as phosphorus pentoxide and also import needed raw materials, he added. Expansion and re-qualifying works will take 22 months, according to Majali. Spain’s Ambassador to Jordan Santiago Ansorena attended the signing ceremony, besides representatives of the companies involved. 

AMMAN — Airport International Group (AIG), the Jordanian company responsible for the rehabilitation, expansion and operation of Queen Alia International Airport (QAIA), announced on Sunday in a press statement that annual traffic at the airport reached 7,089,008 passengers during 2014, an impressive 9 per cent year-to-date (YTD) increase compared to 2013. 

The statement indicated that since the beginning of 2014 and up until December, YTD aircraft movements (ACM) rose by 7.6 per cent totalling 73,125 ACM.

"These annual traffic figures are the culmination of 12 months of robust growth experienced at QAIA in terms o f passenger traffic (PAX) and ACM," it said.

"During 2014, QAIA achieved several firsts in the airport’s history by exceeding 500,000 monthly PAX in January and February; 600,000 monthly PAX in April and May; 700,000 monthly PAX in August; and 600,000 monthly PAX in September, as opposed to the same months during 2013.

" AIG Chief Executive Officer Kjeld Binger attributed the overall growth experienced during 2014 to strong traffic performance during peak holiday seasons.

ERBIL, Iraq — Billboards still read "Welcome to Erbil, 2014 Arab Tourism Capital", but most of the visitors Iraq's Kurdistan region welcomed last year were people made homeless by a jihadist offensive.

It was supposed to be tourism's takeoff year but the Islamic State (IS) group's June onslaught dashed those hopes overnight when it plunged Iraq into chaos.

"I cannot even talk about a decline in numbers, it's more like everything collapsed," said Hearsh Ahmad Karem, the manager of the Kurdistan Hotels and Restaurants Association.

What was a growing $1 billion (885-million-euro) sector in 2013 came to a screeching halt when IS fighters took over large parts of Iraq north and west of Baghdad and moved within striking distance of Erbil.

Plans for a new zoo, the renovation of Erbil's UNESCO-listed citadel and many similarly ambitious projects have been halted.

"Instead of getting tourists, we got IDPs," said Karem, referring to the 900,000 internally displaced persons (IDPs) who fled conflict in Iraq and found refuge in Kurdistan.

The autonomous three-province region has been spared most of the violence that tore Iraq apart but Kurdish peshmerga forces were mobilised en masse, transport was disrupted and the destination's image took a big hit.

"After June 10, you can't say we were the 2014 tourism capital anymore. Tourism was annihilated," said Karem.

Iraq hasn't been an obvious tourism destination in recent decades but Kurdistan has long been a holiday spot for Iraqi Arabs and was starting to draw adventure-seeking foreigners.

While the rest of Iraq mired itself in sectarian politics and corruption, Kurdistan lured investors and built up a region with most of the trappings of a functioning state.

Hotels closing

Spectacular waterfalls and snow-capped mountains, archaeological sites and cultural tours, as well as a no-visa policy for most Westerners meant Kurdistan could attract a broad range of visitors.

"Everything was ready, we spent a lot to welcome them," the tourism board's Nadir Rwsty said, adding that there were no reliable figures for visitor numbers last year.

Close to 3 million tourists visited Erbil in 2013 and estimates predicted up to 4 million would come in 2014.

The oil-producing region had hoped to make tourism the second pillar of its economy. Now cash is in short supply, with oil prices at a six-year low and soaring military spending.

According to Karem, at least 72 hotels have closed down over the past six months. He noted that at least as many had empty rooms and only kept their restaurants running.

The absence of tourists has affected thousands of people who worked in hotels, restaurants or as taxi drivers.

Sitting in front of his souvenir shop at the foot of the citadel in Erbil, Burwa Mohammed Aziz said he would have to close if business did not pick up soon.

"I could make up to 3 or 4 million dinars (more than $3,000) a month but now it took me four months to bring in one million," the 22-year-old said. "Consider that my monthly rent is 500,000."

He held up a pair of white "klash", the traditional hand-knitted Kurdish moccasin made of cotton and cowhide that had become a hit with foreign tourists.

"They used to snap these things up. The few Westerners I get now are Erbil residents and know how to bargain," Aziz added, shaking his head.

Travel agents worried  

Baxtiar Sadiq Ahmed runs his own travel agency in central Erbil and specialises in high-end customised tours focusing on the region's multi-millennial history.

"Everything was going well, business was really picking up... I was expecting up to eight groups in 2014. I only had time for two before the crisis," he said.

His tours included sites beyond Kurdistan's official borders and were popular with young retirees from Europe eager to escape mass tourism and discover new cultures.

"I had prepared tours looking at the Armenian presence in the region, Jewish heritage, Assyrian history or the Yazidi shrine town of Lalesh for example," he added. "There is so much to do, there are 700 archaeological sites in Erbil governorate only."

Although visiting Kurdistan remained safe throughout the crisis, Ahmed said travel agents and their insurance companies were worried.

"Now I need to go to Europe to market my business properly and reassure them. I am ready to pay for them to come here and see for themselves," he added.

DUBAI — A lavish payout to public employees ordered by Saudi Arabia's new King Salman will help to sustain the kingdom's consumer boom and reassure financial markets that the government is not slashing expenditure in the face of low oil prices.

On Thursday, Salman ordered the immediate payment of two months of bonus salary to all state employees and pension to retired government workers, in a string of decrees which also reorganised the economic policy making apparatus.

The announcement did not give a monetary figure, but Saudi Arabia's 860 billion riyal ($229 billion) state budget plan for 2015 said salaries, wages and allowances would comprise 50 per cent of total spending.

That implies the new payout, announced a week after Salman succeeded his brother Abdullah as king, will be worth up to around 70 billion riyals, about 8 per cent of the original budget, or 2.5 per cent of the last year's gross domestic product (GDP).

Other benefits announced by Salman will increase spending further. 

He ordered payments to students, grants to professional associations and sports and literary clubs around the country, and 20 billion riyals in spending to improve electricity and water services, though it was not clear if the utility spending was part of a previously announced plan.

A Reuters poll of economists earlier in January found them predicting GDP growth of 3.2 per cent this year, down from 3.6 per cent in 2014, on the grounds that the plunge in oil prices would cause the kingdom to slow some energy and petrochemical investments and make the government more cautious about spending in general.

Salman's announcement on Thursday suggested the government remained willing to spend heavily despite the hit to its oil revenues from low prices, and that GDP growth this year might, therefore, be higher than originally expected.

"I believe it will be growth supportive, especially on the consumption side," said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

Saudi retail industry shares such as Jarir Marketing, United Electronics and Fawaz Alhokair, plays on the kingdom's fast-growing private consumption, may benefit.

Salman's announcement appeared to take a step back from a pledge in the 2015 budget, which was announced in December when he was already overseeing economic policy, to "rationalise" spending on public salaries.

But it is in a long Saudi tradition of welfare handouts at times of political transition or tension. The 2015 budget plan projected a deficit of 145 billion riyals; the actual deficit now looks likely to be much larger, but with government reserves at the central bank totalling some 900 billion riyals, Riyadh can easily cover such shortfalls for now.

Economic council 

Salman may intend to recoup some of the costs of his handout through economic and bureaucratic reforms.

Thursday's decrees kept the identity of key economic ministers unchanged, suggesting to many observers that major, politically sensitive reforms, such as cutting energy subsidies, or large tax shifts, are not on the cards for now.

"With the oil, economic and finance portfolios remaining steady, I do not expect to see wider change in policy," said Malik.

But Salman replaced many other ministers including telecommunications, agriculture and the civil service, suggesting he may seek changes in the way those ministries operate. 

Economy Minister Muhammad Al Jasser said last week that the next reform drive should focus on efficient administration.

King Salman appeared to be seeking bureaucratic efficiency on Thursday when he abolished 12 committees and councils, creating a new Council of Economic and Development Affairs to substitute for some of them.

The new council, chaired by King Salman's son Prince Mohammed Bin Salman, who is only 34, may give the king a platform to push controversial economic reforms in the future if he wishes.

AMMAN — Arab Bank Group generated $577.2 million net profit after tax and provisions in 2014, according to a bank press statement received Saturday.  

The net profit, the press release indicated, was 15 per cent higher than amount recorded in the previous year. 

"To enhance the bank’s capital adequacy ratio and to further expand its business, the board of directors recommended distributing dividends at a rate of 24.5 per cent for the year 2014: cash dividends of 12% and two free shares for every sixteen shares," the press release stated.

"Despite the challenging environment and the devaluation of several major currencies, the bank managed to grow loans and advances by 3 per cent to $23.7 billion, compared to December 2013," it added. 

According to the bank, customer deposits grew by 2 per cent to  $35 billion. Adjusting for the impact of exchange rates and extraordinary items, loans and customer deposits increased by 9 per cent and 7 per cent respectively.

Sabih Masri, Arab Bank’s chairman described the results as a confirmation of the bank's ability to deliver strong results, maintain a solid balance sheet and a quality portfolio.

"Loan quality remains very strong with no increase in non-performing loans and a provisions coverage ratio in excess of 100%, excluding the value of collaterals held," he indicated

Nemeh Sabbagh, Arab Bank’s chief executive officer, stated that Arab Bank succeeded in growing its operating income benefiting from its diversified business model, and controlling operating expenses.

"Key financial indicators remain strong as the bank’s liquidity continues to be robust with a loan-to-deposit ratio of 67.7 per cent," he pointed out. "Capital adequacy ratio reached 14.8 per cent as at end of December 2014."

Sabbagh reiterated confidence in the bank's soundness and strength of its legal position in the appeal stage of the lawsuit filed against the bank in New York. 

Masri expressed full confidence in the bank’s ability to maintain sustainable growth in profits and a strong level of capital adequacy.

The bank’s results are subject to the final approval of the Central Bank of Jordan.

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad on Saturday discussed  ways to expand trade and investment ties with Malaysia and South Africa.

At separate meetings with Malaysian Ambassador Zakri Jaafar and South African Ambassador John Davis, Murad and ACC board members looked into various means to increase commercial trade volume, hold economic forums and promote joint investment opportunities.

Murad stressed the importance for Malaysia to benefit from Jordan’s distinguished geographical location that could be used as a hub for Malaysian exports of palm oil to the Middle East and Africa, according to an ACC statement.

Murad also reiterated the importance of encouraging more Malaysian businessmen and investors to come to the Kingdom and benefit from the investment opportunities in many industrial sectors. 

Jaafar stressed the need to increase Malaysian exports to Jordan, especially the palm oil, his country’s most important agricultural product, noting that Malaysia is also focusing on attracting more Jordanian tourists.

At his meeting with Davis, Murad highlighted the need to develop commercial ties with South Africa and benefit from available investment opportunities. 

The ACC president said there is a noticeable development in the commercial balance between the two countries, where the Kingdom’s exports to South Africa increased from JD11 million in 2010 to JD25 million in 2014, while South African exports to Jordan during the same period went up from JD15 million to JD21 million.

Davis noted that he would review the investment environment in the Kingdom and acquaint the private sector in his country with them, inviting the Jordanian private sector to visit South Africa to explore investment opportunities there.