Middle East Business News Review – A look at today’s important financial news and business updates from the Middle East and North Africa region:
Kuwait’s constitutional court ruled on Wednesday the country’s Islamist-dominated parliament was elected unconstitutionally and restored the previous legislature. The state news agency KUNA said the court declared that ”the decree calling for the National Assembly 2012 election is void, and (ordered) the return of the dissolved council”. The decision comes just days after the Kuwaiti ruler suspended parliament meetings for a month amid an escalating feud with opposition lawmakers flexing their muscles in the Gulf’s first elected parliament.
Oman posted a 1.5 billion rial ($3.8 billion) budget surplus for the Jan-Apr period of this year thanks to a surge in oil revenues. Inflation also dropped to 3% in April, the Gulf country’s economy ministry data showed on Wednesday. The latest surplus of 5.3% surprised many analysts who were expecting a fiscal surplus of 5% of nominal gross domestic product (GDP) in 2012. Revenues from crude oil account for 76% of Oman’s national income. The surplus was posted before crude prices plunged by more than $30 since the end of March, currently hovering around $90-95 per barrel.
Iran received a massive boost on Wednesday when two of its Asia’s four top buyers said they will keep importing crude by finding out ways around an EU ban on insuring tankers carrying Tehran’s oil. The Japanese parliament has approved plans that will allow the government to provide insurance cover. China, on the other hand, has asked Iran to take on the risk and deliver the crude on their ships. South Korea and India, Iran’s other top Asian buyers, are also seeking active solutions. Growing Asian economies depend heavily on oil and despite top Gulf producers vowing to boost oil supplies if they agree to halt Iranian oil imports, importers are wary given that output from other alternative suppliers such as Libya and Iraq has not stabilised.
King Abdullah II of Jordan, whose country is host to a large number of refugees from neighbouring countries, expressed concerns on Wednesday about the implications of the Syrian crisis for the entire region. The call comes amid reports that Jordan’s trade deficit widened 34.2% to 3.24 billion dinars ($4.56bn) in the first quarter of this year compared to the same period in 2011, due to a higher energy import bill.
The Libyan sovereign wealth fund chairman announced on Wednesday investigations on investment losses of $1.75 billion on structured products managed by Goldman Sachs and Societe Generale are underway. Mohsen Derregia, chairman of the Libyan Investment Authority (LIA), told reporters in Milan that the LIA is looking into how these investments were managed and compensation claims could be made.
DP World, the Dubai-government owned port operator, said allegations it had failed to meet its obligations in running Yemen’s Aden container port were “misleading and unfounded.” The impoverished country’s anti-corruption body said on Tuesday it would ask parliament to cancel the deal with the world’s third largest port operator, saying it had failed to carry out investment projects on time.
National Bank of Kuwait moved a step closer to a takeover of Kuwait’s Boubyan Bank on Wednesday, but a disputed stake held by another bank remains an obstacle to the $2.1bn deal. The Boubyan Bank board gave its backing to its main shareholder, describing NBK’s offer for the 52.7 percent stake it does not already own as “fair and suitable”. However, NBK must still resolve the issue of a 19.2 percent stake held by Commercial Bank of Kuwait.
The annual inflation index for Iraq fell by 1.3 percent in May compared to April, while the annual inflation rate declined from 9 percent in May 2011 to 7 percent for May 2012. This is according to a report by the Iraqi Ministry of Planning, which attributed the decline in overall inflation to a “fall in the prices of food, especially vegetables, which influenced inflation to this decline.” The report said that, “The Central Bureau of Statistics completed the inflation report for the month of May 2012 on the basis of field data collection for the prices of goods and services comprising the consumer basket at a selected sample of outlets in all of Iraq’s provinces, having adopted 2007 as the base year.” It explained that, “The general index of consumer prices reached 140.6 percent in the month of May 2012, a decline of 1.3% from the previous month, and an increase of 7.2% compared with the month of May 2011.”
The terms of members of Oman’s central bank board have been extended by a further five years without any changes, a senior central bank official said on Wednesday. “There are no changes at all. The same board members were renewed by the royal decree,” Hilal al-Barwani, vice president in charge of banking oversight at the central bank, told Reuters.
The Turkish lira gained against the dollar after Moody’s Investors Service raised Turkey’s government bond ratings by one notch to Ba1 from Ba2 on Wednesday, and has maintained its positive outlook on the country. The agency cited a significant improvement in Turkey’s public finances and the resulting increased shock-absorption capacity of the government’s balance sheet. It also noted policy actions that have the potential to address external imbalances, such as the large current account deficit, which is the largest credit risk facing the country.