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The government of the UAE has announced it will pay off debts worth AED2 billion ($544.5 million) owed by Emirati nationals. According to state news agency WAM, President of the UAE, Sheikh Khalifa bin Zayed Al Nahayan, issued a decree saying debts of around 6,830 citizens will be paid by the government. The ruling stipulates that borrowers will agree to a 25% deduction from their salaries until the outstanding debt is not paid back and vow not to borrow again.

Etihad Airways announced it has signed an agreement with Air Seychelles to acquire a 40% stake in the Indian Ocean carrier. The Abu Dhabi-based airline said in a statement that it agreed to invest $20 million and also provide a $25 million loan to help Air Seychelles working capital requirements and fund network development. This deal is consistent with our approach to expansion, which relies on the strength of strategic partnerships across the globe. The investment in the national carrier of Seychelles is a natural next step towards growing our operations in the increasingly important leisure markets of the Indian Ocean and Africa, James Hogan, Etihad Airways CEO, said in a statement. Etihad Airways has made its second equity deal during last two months following the acquisition of 29.21% stake in Air Berlin, making it the single biggest shareholder in Germany’s second biggest airline.

Meanwhile, Etihad Airways announced it operated its first bio-fuel powered flight from Seattle to Abu Dhabi and became the first Gulf carrier to attain the feat. The 14-hour flight of the newest Boeing 777-300ER aircraft was operated using a mix of both traditional jet fuel and plant-based bio-fuel, the UAE’s flag carrier said in a release. “This flight marks a significant milestone in our efforts to support and drive the commercialisation of sustainable aviation fuel in Abu Dhabi, the region, and globally. However, the use of a presently available biofuel is just one part of a more comprehensive long-term biofuel strategy to ensure that we are able to use biofuels to decarbonise substantially an entire industry sector in the long term.” James Hogan, Etihad Airways’ President and Chief Executive Officer, said in a statement.

On the other hand, Gulf Air’s CEO has announced the airline is seeking a bailout from the government amid falling passenger numbers and dropping revenues. “The downsizing will affect the network and affect the fleet,” CEO Samer Majali said but dismissed rumours of state carrier’s sale or dissolution. “The country needs an airline….they will retain the airline but at an affordable level,” he added. Bahrain’s Gulf Daily News reported that the government could dissolve, shrink or sell the airline and create a new flag carrier at the cost of 460 million Bahraini dinars ($1.22 billion). “At this stage a range of strategic options are being considered. Gulf Air has faced challenges in recent times, in common with other carriers around the world, and combinations of unprecedented regional and economic factors have made business increasingly difficult,” a Gulf Air spokeswoman explained in an email statement.

According to a Standard Chartered Bank forecast, Bahrain’s economy is recovering from last year’s slowdown and grew 1.1% year-on-year in Q2 of 2011 and 2.4% year-on-year in Q3. “Owing to the oil-driven economy, we expect real GDP growth to accelerate to 3.5 percent in 2012 from 1.9 percent in 2011. Growth in 2012 will be driven by strong oil production and a highly favourable base effect. Bahrain’s growth story is driven by hydrocarbons. The non-oil economy was still witnessing contraction in the third quarter of 2011,” Standard Chartered report added.

Kuwait Petroleum Corporation announced it has chosen Total as its third partner to build a $9 billion oil refinery in China with a 50% stake in the refining and chemical venture. “We are negotiating now with Total, and hopefully we will reach an agreement based on a memorandum of understanding. Wed like to sign it in February, Farouq Al Zanki, CEO Kuwait Petroleum Corp. said in an interview. KPC also unveiled plans to build an oil refinery at home, which will cost at least 4bn dinars ($14.4bn), and boost oil production. The 615,000 barrel-a-day Al-Zour plant is still awaiting final approval from the Supreme Petroleum Council, the countrys highest decision-making body for oil policy.

The Dubai Financial Market General Index rose 2.35% to 1,396.04 points, its highest level since 5 December. The Abu Dhabi Securities Exchange General Index also rallied with a rise of 0.5% to reach 2,375.25 points. In a dramatic rise since October 2011, the value of shares traded on the Dubai market rose for the third consecutive day to AED242 million ($65.88 million).

Meanwhile, Tunisian stock market recorded the best ever performance in the Arab bourse during the last six months after dramatically losing 30% of its worth in the wake of Arab Spring that saw the toppling of Zine Al Abedin bin Ali in January last year. Analysts attributed the strong performance to strong corporate earnings growth in the second half of 2011, growing trade with neighbouring Libya and a positive outlook for economic growth in 2012. “If we work together, we could achieve strong growth in the country despite the economic downturn facing most countries in the EU. This has encouraged local investors, in the absence of foreign investors who were net sellers in the first half of the year,” Mourad ben Chaabane, a board member at the bourse and the chief executive of MAC, one of the biggest investment banks in the country, said in a statement.

(By Moign Khawaja – Editor: Arabian Gazette)

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