Middle East Business News Review – 30 October

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Today’s top business and economy news from the Middle East and North Africa:

UAE govt approves deficit-less 2013 federal budget

The United Arab Emirates Prime Minister Sheikh Mohammed bin Rashid Al Maktoum announced on Tuesday the government has approved a deficit-less 2013 federal budget with an expenditure of AED44.6 billion ($12.1 billion).

“There was a meeting of the Council of Ministers. We approved the draft budget for 2013 with total spending of 44.6 billion dirhams, without a deficit,” Sheikh Mohammed, who is also the ruler of Dubai, wrote on his official Twitter account.

“The government’s plan over three years is to spend 133 billion dirhams for strategic plan development,” he added.

The UAE federal budget accounts for only around 11% of overall fiscal spending in the UAE, with individual emirates accounting for the rest.

Abu Dhabi Islamic Bank to boost capital through rare sukuk sale

ADIB, the largest sharia-compliant lender by market value in Abu Dhabi, will start investor meetings on 31 October ahead of a potential Islamic bond (sukuk) sale, a statement from the arranging banks said on Tuesday.

Considered as a rare move, Abu Dhabi Islamic Bank is planning to boost its core capital ratios through the sale of a sharia-compliant debt instrument. One source at an arranging bank said the sukuk sale is likely to be benchmark-sized, which are bonds typically of $500 million or more in size.

ADIB itself, along with HSBC Holdings, Morgan Stanley Inc, National Bank of Abu Dhabi, and Standard Chartered Plc will arrange the roadshows that will be followed by a potential sale of tier one perpetual dollar-denominated sukuk, subject to market conditions.

Dubai, Abu Dhabi see mixed hotel results

Hotels in Dubai showed strong profitability throughout September although the market witnessed a 2.8 percent fall in occupancy, according to the latest HotStats survey by TRI Hospitality Consulting.

It said average room rates (ARR) in the city increased by 3.9 percent to $218.30, while total revenue per available room (TRevPAR) grew 2.7 percent to $311.59.

The city hosted a range of events throughout September allowing hoteliers to yield higher rates, thereby boosting gross operating profit per average room (GOPPAR) 11.3 percent to $93.66, the report said.

UAE airports post double digit growth in Sept

International airports in Dubai and Abu Dhabi on Tuesday posted double digit growth in passenger numbers for September.

Dubai International Airport, the world’s fourth busiest aviation hub, saw passenger numbers rise by 12.8 percent while Abu Dhabi International Airport passengers increased by 14.5 percent.

According to operator Dubai Airports, passenger traffic in September surged to reach 4,780,394 compared to 4,236,587 recorded during the same month in 2011.

Etihad orders two more Airbus A330s for $418m

Abu Dhabi carrier Etihad Airways on Tuesday purchased two more A330-200 aircraft from manufacturer Airbus in a deal worth US$418m at current list prices.

The two wide body aircraft, which have a range of up to 14,000 km, are due for delivery in January 2014 and April 2014. They will be in a two-class configuration with 22 business class seats and 240 in economy.

Etihad currently operates 16 A330-200s which service destinations including Frankfurt, Brisbane, Singapore, Tokyo, Beijing and Johannesburg. It also counts six Airbus A330-300s and two Airbus A330-200 freighters among its combined Airbus-Boeing fleet of 67 aircraft.

Qatar Insurance approves $134.2 mln share sale to Qatar Holding

The board of Qatar Insurance has approved the sale of shares worth 488.6 million riyals ($134.2 million) to state fund Qatar Holding, the insurer said in a bourse filing on Tuesday.

The fund purchased 7.76 million shares at 63 riyals each, raising its capital to 969.4 million riyals. The capital hike still requires the approval of the Ministry of Business and other regulatory authorities, as well as existing shareholders, the statement said.

Saudi and Poland to launch $2bn joint venture in Q1 2013

A new US$2bn holding company due to be set up next year is aiming to generate revenues of US$30bn over its first few years by establishing joint venture projects between Saudi Arabia and Poland, it was reported on Tuesday.

The Saudi-Polish firm will be set up in the first quarter of 2013 and will have a bank of capital worth US$2bn over the first five years, according to reports in the Saudi press.

Yasir Al Harbi, board chairman of the Saudi-Polish Business Council (SPBC), told Al Sharq Al Awsat newspaper the firm will use Polish technology to develop investment projects and is aiming to generate around US$30bn in revenue in the first few years.

Fitch threatens Kuwait’s AA rating amid opposition unrest

Kuwait received a warning from Fitch Ratings on Tuesday that its AA sovereign credit rating could be downgraded amid escalating political protests.

The credit rating firm declared that despite the nation’s strong balance sheet, the recent popular protests over a change in the election law decreed by the ruling emir is “radicalising the political scene.”

“Prolonged political stalemate could also undermine Kuwait’s rating through its impact on the economy,” Fitch said in a press statement. The rating has a stable outlook.

Soaring inflation emptying pockets of over half of Lebanese

A Lebanese Finance Ministry survey showed on Monday over half of ordinary people cannot afford to save money while two thirds face difficulties securing food and other necessities amid rocketing inflation during first nine months of 2012.

“More than 55% of Lebanese do not have any monthly income surplus and over 63% face difficulties in providing for foodstuff and necessities,” the report published in the October newsletter of the Lebanese Institute of Finance said.

In an interview with leading Lebanese newspaper The Daily Star, economist Marwan Iskandar warned the lack of savings has a dire direct impact on the economy.

Egypt secures vital oil supplies for rest of year

Egypt has secured oil supplies for the rest of the year, despite fears about its ability to make payments, from a small number of Western suppliers who have agreed to deliver unusual grades of crude for hefty premiums, market sources said.

The country has been struggling to import oil since the 2011 revolution due to government deficits and resulting constraints on its ability to get credit, stemming largely from the high cost of providing fuel subsidies.

After several attempts, Egyptian state oil company EGPC has completed most of its fourth-quarter crude purchasing tender and is set to award Petraco, Shell and JP Morgan with November and December delivery dates for around 6 million barrels, traders said.

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