Business

WASHINGTON — The International Monetary Fund (IMF) offered a solution to persistently sluggish economic growth last week that included proposals to deregulate product markets and adopt policies to boost labour market participation.

But the analysis in the IMF's annual World Economic Outlook acknowledged arguments from sceptics of such "supply side" reforms that deregulation can cause near-term falls in wages and price deflation and so need to be accompanied by fiscal stimulus aimed at boosting near term.

The IMF said new research shows that structural changes to labour makets and some more heavily regulated business sectors could help lift potential output over the medium term while also helping to strengthen consumer confidence in the near term.

It recommended deregulation of the retail and professional services sectors and network-based sectors such as air, rail and road transportation, electricity and gas distribution, telecom and postal services, particularly in the eurozone and Japan.

But the fund stressed that it is important to pair supply side reforms with fiscal stimulus measures to boost near-term demand and cushion negative shocks. For example, reductions in unemployment benefits and worker protection laws should be paired with reductions in labour taxes to help boost take-home pay and draw people back into the labour force.

"There is a role for complementing structural reform with macroeconomic policy support. That includes fiscal stimulus wherever space is available," said IMF researcher Romain Duval, a lead author of the report.

Duval and co-author Davide Furceri said that product market deregulation can start to pay growth dividends immediately regardless of the economic environment so they should be forcefully implemented. Economic growth can increase by one percentage point by the third year of the reforms, their research showed.

Another analytical chapter released by the IMF shows that emerging markets are coping better with recent capital outflows due to stronger reserve buffers, less foreign currency debt and more flexible exchange rates.

Those with more prudent fiscal policies, less public debt, stronger financial oversight, and foreign exchage flexibility are avoiding the abrupt currency shocks that characterissed previous major emerging market outflows in the late 1980s and late 1990s, the IMF concluded.    

Separately, a World Bank official said recently that concerns over competing countries scrambling for resources such as oil, minerals and farmland have decreased due to lower commodity and food prices.

High oil costs from 2007 to 2008 contributed to higher food prices and food riots in several developing nations including Haiti, Bangladesh and Mozambique.

But a reduction in petrol prices and other factors mean food prices are currently hovering around a seven-year low, providing relief for low-income consumers.

Prior to 2015, at the height of the commodities boom, sovereign wealth funds and large investors poured money into acquiring long-term access to mines and farmland.

Analysts said this scramble for natural resources disproportionately hurt the poor.

The situation has changed markedly since then, said World Bank official Michael Jarvis.

"I am not sure I see a scramble for resources," Jarvis, the bank's global lead for extractive governance, said in Toronto at a mining industry conference.

"Some of the debates around that have died down due to low commodity prices. But they may come back."

As part of what some analysts considered a rush for resources, an area of farmland larger than Poland was sold or leased to foreign investors, according to a 2014 Swedish study.

To avoid another round of large-scale land deals or fight for natural resources if commodity prices spike again, a coalition of 300 organisations launched a campaign last month to double the amount of land formally owned by communities and indigenous groups.

If demand for commodities rises in the face of a growing global population, formal landownership for small farmers provides protection against displacement by outside investors,  rights campaigners said.

AMMAN — The committee tasked with studying the establishment of a company to organise and administer exhibitions in the Kingdom in cooperation with the private sector exchanged views on the company's work mechanism, the Jordan Investment Commission (JIC) said Saturday.

JIC President Thabet Al Wir, who chaired the meeting, said the gathering discussed Jordan Chamber of Industry's demands to allocate a 100-dunum plot of land from the Treasury to establish a comprehensive city for exhibitions as followed in many countries. He also noted the JIC will take into consideration selecting a land serviced by infrastructure and easily accessible to guarantee the success of the project.

Wir said added that providing a land for fairs is an important strategic project that helps attract investments and promote national products, noting that JIC will cooperate with the private sector on the issue, especially that the Investment Law allows the commission to transfer some tasks to private institutions.  

BERN/GENEVA — Banking watchdogs across Europe have begun checking whether lenders have ties to a massive document leak from Panama that showed how offshore companies are used to stash clients' wealth.

Switzerland's financial watchdog FINMA said on Thursday that banks must clamp down on money laundering, as the Geneva prosecutor opened a criminal probe.

Four decades of documents from Panamanian law firm Mossack Fonseca, which specialises in setting up offshore companies and has offices in Zurich and Geneva, showed widespread use of those instruments by global banks and triggered investigations across the world.

"Do I think we are where we should be in fighting misuse in the financial system? No," FINMA Chief Executive Mark Branson told Reuters following its annual news conference.

"We think in some ways the risks in Switzerland have risen, not fallen, and that there is more that can be done. We don't want to see large scandals involving Swiss banks," he said.

Switzerland is the world's biggest international wealth management centre with around $2.5 trillion in assets and has taken on more wealth of late from emerging markets, from which it is harder to determine the origin of assets, Branson indicated.

Britain's Financial Conduct Authority said on Thursday it has written to 20 banks and other financial firms, giving them until April 15 to spell out any involvement they have with the "Panama Papers".

HSBC, Britain's biggest bank and its affiliates created more than 2,300 shell companies with Mossack Fonseca, according to the International Consortium of Investigative Journalists (ICIJ). HSBC has dismissed suggestions it used offshore structures to help clients cheat on their taxes.

Also on Thursday, France's ACPR financial regulator said it has told French banks to hand over extra information about their business ties with tax havens.

German regulator BaFin is likewise probing the role of Germany's banks, a source told Reuters on Monday.

Watchdogs in Sweden, Netherlands and Austria said earlier this week that they were looking into banks named in the papers.

The chief executive of Austria's Hypo Landesbank Vorarlberg became one of the first top bankers to quit over reports based on the data leak on Thursday, though he denies his bank violated any laws or sanctions.

Swiss banks

The "Panama Papers" investigation has exposed financial arrangements of public figures including friends of Russian President Vladimir Putin, relatives of the prime ministers of Britain, Iceland and Pakistan, and the president of Ukraine.

Branches of Swiss lenders including UBS and Credit Suisse were mentioned in the leaked documents as being among the main banks that requested offshore companies for clients. Both banks have denied wrongdoing in connection with the practice.

Swiss financial institutions, a focal point of efforts by European governments to crack down on tax avoidance, trailed only Hong Kong in having used Mossack Fonseca, the reports have said.

Branson said FINMA would first check for signs of illegal activity before deciding whether to launch an investigation linked to the Panama Papers. 

There were a few indications that they may be relevant in Switzerland, Branson added.

Geneva's prosecutor also said on Thursday he had launched a criminal inquiry in connection with leaks that revealed many offshore companies set up by lawyers, and institutions in the Swiss lakeside city and financial centre.

"Some information has been made public this week and the prosecutor's office wanted to verify if this information showed anything that was against the law," a spokesman for the prosecutor said.

One prominent Geneva lawyer helped set up 136 Panama offshore companies, Swiss television has reported.

"Yes, it is an industry with a legal dimension. I have been in this business for 30 years and this activity was sought after by foreign nationals. There is nothing illegal, illicit or perception of criminality to it," another Geneva lawyer, Francois Canonica, said on Swiss television on Wednesday night.

Canonica, a former head of the Geneva bar association, referred to a period after the 1981 election of French President Francois Mitterrand, which he said drove French fearful of nationalisation to place their money in offshore Swiss accounts.

Credit Suisse Chief Executive Officer Tidjane Thiam said on Tuesday his bank was after only lawful assets.

UBS said on Monday it conducted its business in full compliance with applicable law and regulations and that it had no interest in funds that are not taxed or derived from unlawful activities.

Branson said a number of Swiss banks were implicated in a corruption scandal surrounding Brazil's Petrobras and suspicious cash flows linked to the Malaysian sovereign fund 1MDB.

FINMA has launched four enforcement proceedings against institutions in the 1MDB case and three over Petrobras.

Branson said: "There are concrete indications that the measures those banks had in place to combat money laundering were inadequate."

Separately, Panama is fighting off a feared international crackdown on its pivotal finance sector, calling for talks to calm a worldwide storm sparked by revelations of its role in a mass of secretive offshore dealings.

The small Central American nation launched the fierce rearguard action after a huge leak of 11.5 million documents from Panamanian law firm Mossack Fonseca, the so-called Panama Papers, exposed the confidential dealings of world leaders, celebrities and sports stars.

The revelations have toppled Iceland's prime minister, led to a Swiss police raid on the headquarters of European football body UEFA, and prompted media allegations against the inner circles of both the Russian and Chinese presidents.

Faced by accusations that Panama has allowed the rich and powerful to hide their funds from international tax authorities and the law, President Juan Carlos Varela vowed to "confront whoever comes to put down Panama's image".

"I call on the countries of the Organisation for Economic Cooperation and Development to return to the table for dialogue and seek agreements, and to not use these events to affect Panama's image," said Varela, whose country depends on the finance sector for 7 per cent of its economic output.

'Unfair and discriminatory' 

There was no immediate reaction to Varela's comment from the Paris-based, 34-nation Organisation for Economic Coooperation and Development (OECD), which helps to coordinate the global fight against tax evasion.

Panama has already warned it could retaliate against France if it makes good on a promise to put the country back on France's blacklist of "tax havens" — a status that would cause transactions in Panama to be viewed as likely tax-dodging gambits.

The Panama government has also written a complaint to the head of the OECD, Angel Gurria, attacking a statement he made describing Panama as "the last major holdout that continues to allow funds to be hidden offshore from tax and law enforcement authorities". 

Those accusations were false, "unfair and discriminatory" Deputy Foreign Minister Luis Miguel Hincapie wrote in the letter which was obtained by AFP.

The embattled world of football was the latest victim of the leaked papers, which were obtained from an anonymous source by German daily Sueddeutsche Zeitung and then shared with more than 100 media groups through the ICIJ.

KUWAIT CITY — Kuwait's state-run oil firm has signed contracts to import 2.5 million tonnes of liquefied natural gas (LNG) a year through 2020 to meet the emirate's needs, a company official said on Thursday.

Kuwait, a member of the Organisation of Petroleum Exporting Countries is rich in crude oil, but its natural gas production is too small to meet its needs, which surge during the heat of the summer when power consumption soars. Kuwait Petroleum Corp.

(KPC) signed contracts with British Petroleum and Royal Dutch Shell to buy 1 million tonnes a year from each company, its marketing chief, Nabil Buresli, told the official KUNA news agency. It signed a third contract with Qatar Gas to import half a million tonnes a year.

Buresli did not provide details of the value of the contracts. He said that after 2020, KPC plans to sign long-term contracts of up to 15 years to import 6-7 million tonnes of LNG a year. Kuwait last week inked a $2.93 billion contract with three South Korean firms for the construction of a new LNG import terminal that is due for completion in the first quarter of 2021.

ABU DHABI — Renewable energy capacity grew worldwide by a record 8.3 per cent in 2015, according to a report published on Thursday by a global green energy organisation. “As of the end of 2015, 1,985 gigawatts (GW) of renewable generation capacity existed globally,” the International Renewable Energy Agency (IRENA) said in a statement.

The report from the Abu Dhabi-based organisation described an increase of 152GW last year as “the highest annual growth rate on record,” with wind and solar energy driving the hike “due in large part to a continued decline in technology costs”.

“Renewable energy deployment continues to surge in markets around the globe,” said IRENA Director General Adnan Amin. “Falling costs for renewable energy technologies, and a host of economic, social and environmental drivers are favouring renewables over conventional power sources.”

Wind power capacity grew by 17 percent, or 63GW, “driven by declines in onshore turbine prices of up to 45 per cent since 2010”, the report indicated. Solar power capacity rose by 37 per cent, or 47GW, after prices of solar modules fell. However, hydropower capacity increased only by three per cent, while bioenergy and geothermal energy capacity increased by five per cent each.

LONDON — International firms are hunting for Western-educated Iranians to take on executive jobs in the Islamic Republic after the removal of most sanctions, but are finding it hard to win them over.

Interviews with Western companies and headhunters as well as more than 20 Iranians living abroad showed that expatriates are waiting to see how promised reforms progress before deciding whether to go back, despite lucrative job offers.

Many in the diaspora are put off by the poor quality of life and problems such as red tape, a murky business culture, security issues, pollution and a lack of international schools for their children. They are also concerned about their rights and protections under the Islamic Republic's judicial system.

Their reluctance is making life harder for conglomerates who need help to navigate Iran's complex business world, train the local workforce, and bridge a cultural and linguistic gap with affluent local consumers in the country of 80 million.

"This is the place where an expatriate who holds an MBA [master of business administration] and has the right entrepreneurial attitude can make a real impact. Yet there's never been a queue of expatriates applying for jobs here," Giuseppe Carella, the Iran country chief of Swiss food group Nestlé, said.

To nurture future managers, Nestlé sends local graduates overseas for several years, honing their skills away from Iran until they're ready to go back, Carella added.

Expatriates remain a tiny minority of the about 1,000 employees at the firm's subsidiary in Iran, 15 years after its launch.

President Hassan Rouhani met Iranian expatriates in New York last September and urged them to re-engage with Iran, weeks after Tehran agreed to curb its nuclear programme in exchange for the lifting of nuclear-related sanctions.

During a visit to Singapore last month, Foreign Minister Mohammad JavadZarif said Iranian nationals living abroad were "the best bridges for dialogue of cultures and civilisations".

Many misgivings

The Iranian diaspora is estimated by Iranian officials at between five and seven million people, mostly living in North America, Europe and the Gulf.

Some, like PanizGolkar, a 26-year-old dual national of Iran and Canada, are tempted to return.

"I feel it's my responsibility to go back. Iran needs professionals from all fields," said Golkar, who is due to finish her studies at the Southern California Institute of Architecture in April. 

"It will be challenging to prove myself as a woman in business but there are more career opportunities in Iran than anywhere else," she added. "A lot of Iranians in California are talking about moving back, it's an option we can't ignore." 

But there are many challenges to consider.

Some expatriates whose families left Iran before or soon after the 1979 revolution are skeptical about career prospects and worry that Tehran's refusal to recognise their dual citizenship status makes them vulnerable to arbitrary arrest.

Security forces have arrested some dual nationals who hold US and European passports in recent years on unspecified national security charges.

Others hesitate because of concerns over the bureaucratic regime, the lower standard of living in traffic-clogged Tehran and restrictions enforced by the "morality police" on Islamic dress and behaviour codes.

British-Iranian Ali Tehrani, 24, tried to relocate to Iran last October but was worn down by the challenge of securing permits and licenses and an exemption from military service, which in Iran is compulsory and lasts 24 months.

"I quickly realised I didn't have the skill sets to navigate the bureaucracy in Iran," he said.

A graduate of University College London who founded a human resources tech firm, KeyPursuit.com, he had hoped to launch an Internet start-up in Iran focusing on online payments. He abandoned the project after three months.

A 2016 survey of 230 cities by consultant Mercer ranked Tehran 203rd for quality of living, worse than Pakistan's Islamabad and Kenya's Nairobi.

Home to around 14 million people, Tehran's metropolitan area is often blanketed in smog and schools are frequently shut because air pollution keeps reaching alarming levels.

Several Iranians based in the Gulf told Reuters that Western firms wanted to recruit them as they don't trust the local workforce because of concerns about corruption and breaches of security and intellectual property rights.

"Loyalty remains one of the main issues when it comes to local staff," indicated a Tehran-based management consultant who requested anonymity. "Compensation is so low that people tend to have two or three different jobs, without any serious full-time commitment."

Iran ranked 130th out of 168 countries on Transparency International's 2015 Corruption Perceptions Index.

After watching many swings of the political pendulum in recent years, Iranians abroad also worry that the economic reforms led by President Rouhani may ultimately be blocked.

Rouhani wants to modernise the economy with the help of foreign investment and wealthy rich expatriates owning assets worth an estimated $2 trillion. Gains by allies in parliamentary elections are expected to help him push through the reforms.

But hardline allies of Supreme Leader Ayatollah Ali Khamenei that Western business delegations have failed to deliver any benefit to Iran's economy.

Competition to woo diaspora

Aware of expatriates' reservations, foreign firms are trying to woo Western residents with packages that can include high pay, family expenses and private school fees, and are billed as offering a faster career path than in the West.

A Western-educated Iranian can earn in excess of $15,000 a month, up to about $250,000 a year, in a senior executive role at a Western conglomerate in Iran, several headhunters and executives told Reuters.

For the same job at an Iranian firm, they said, locals would earn around $5,000 a month, up to about $100,000 a year.

This compares to a minimum monthly wage for local workers of $225, according to a 2015 study by Tehran-based consultancy REF Group.

Former science and technology minister Reza Faraji Dana indicated that in 2014 about 150,000 of Iran's "highly talented people" were leaving annually, costing the economy as much as $150 billion a year.

"For years Iran has had a brain-drain problem. Now people holding a Western degree can get high-profile jobs and move up through the ranks [in Iran] at a much faster pace than anywhere else," said Sarmad Afarinesh, an Austrian-educated Iranian whose Vienna-based company, Arhax Consulting, helps multinational firms enter Iran.

Consultants who cater to Western conglomerates seeking access to Iran, one business that is growing fast across all sectors, can earn up to $10,000 a month without relocating permanently, headhunters say.

Reza Joorabchi, a 35-year-old Iranian-Canadian who left Iran at the age of six months, moved back to Tehran in November to help Western firms crack the market.

"Everybody is surprised that I've lasted for more than two months. The quality of living is so poor that many expatriates give up almost immediately," he said. "You need to have a thick skin to survive."

Joorabchi added that foreign companies must now distinguish between expatriates willing to live in Iran and those who are ready only to travel there.

Many executives prefer to be based in Dubai where international companies have their Middle East headquarters.

Dubai-based executive search firm Wise & Miller, which has placed senior managers at international companies such as Royal Dutch Shell, Unilever Plc., Heineken and Philips in the Middle East, is building a database of foreign-educated Iranians willing to relocate.

It is "an increasingly crowded market”, according to the company's co-founder, Marc Mulder, who says he approaches dozens of candidates each week using social media to establish a connection with Iranian professionals around the world.

Hamid Biglari, a former Citigroup vice-chairman and financier with emerging market expertise now also advising investors on Iran, indicated that the country needs to come up with incentives for people of Iranian origin to come back, such as issuing identification cards that would allow them to travel to and invest in Iran without a visa or dual citizenship.

"More needs to be done to persuade the Iranian diaspora to re-engage with their land of origin," said Biglari, who left Iran in 1977.

Their role could be similar to that of Indian expatriates in the United States who helped make India a global technology powerhouse, he added.

"Iranians abroad can provide capital, knowledge and business connections, all of which are vital to rebuild the country," Biglari elaborated.

NEW YORK — Moves by the Obama administration to protect the US tax base torpedoed the massive $160 billion merger of drug giants Pfizer and Allergan Wednesday.

Pfizer said the deal announced last year, which would have seen it move its corporate domicile to Allergan's Ireland headquarters to slash its US tax bill, was cancelled due to new tax rules directly aimed at halting such "inversion" takeovers.

The companies said they were terminating the merger "by mutual agreement" just hours after President Barack Obama labelled such deals "insidious".

‘Gaming the system’

While not mentioning the Pfizer-Allergan inversion, the largest such deal announced yet, Obama on Tuesday called tax avoidance using legal loopholes "a big global problem".

He said wealthy individuals and corporations are "gaming the system" and are not "paying their fair share" while benefitting from the country's skilled workforce, infrastructure, and rule of law.

"They effectively renounce their citizenship. They declare that they're based somewhere else, thereby getting all the rewards of being an American company without fulfilling the responsibilities to pay their taxes the way everybody else is supposed to pay them," he said.

The decision to cancel the merger "was driven by the actions announced by the US Department of Treasury on April 4, 2016, which the companies concluded qualified as an 'Adverse Tax Law Change' under the merger agreement," Pfizer said in a statement.

The deal, in which Pfizer was to buy Allergan but then move its corporate administrative base into Allergan's Dublin headquarters to benefit from Ireland's ultra-low business tax rates, would have created the world's largest pharmaceutical company.

At least two dozen inversion mergers have been announced over the past four years, with Ireland the preferred destination for US companies relocating their legal domicile offshore. Other destinations have included England, Bermuda and Canada.

For example, in 2014 Miami-based Burger King's Brazilian owners 3G Capital merged the fast food giant with smaller Canadian coffee shop chain Tim Hortons in order to move the corporate address to Canada for tax savings. The main operations remained in Miami.

While US companies say the US corporate tax rate is uncompetitively high, the US Treasury has repeatedly warned that such deals are eating away at an important source of government revenues.

The Pfizer deal was particularly targeted by the new Treasury rules because Allergan itself had been built on previous inversion deals. In 2012, the US drugmaker Watson Pharmaceuticals took over Swiss company Actavis but took on Actavis' identity and offshore location.

In 2013, Actavis took over Ireland-based Warner Chilcott in an all-stock deal and moved its administrative headquarters to Dublin, where the corporate tax rate is 12.5 per cent, compared to a maximum rate of 35 per cent in the United States.

In 2014, Actavis took over US drug maker Forest Laboratories, reaping more tax benefits. And then last year Actavis merged with Allergan, the US maker of Botox, in a $66 billion deal that also cited huge tax savings.

Both Allergan and Pfizer expressed disappointment that their merger would not go ahead.

"Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies," said company Chairman and Chief Executive Officer Ian Read.

Pfizer agreed to pay Allergan $150 million to reimburse its expenses linked to the planned merger.

Allergan Chief Executive Officer Brent Saunders said in a separate statement that while he is "disappointed" that the merger will not proceed, his company is nevertheless "poised to deliver strong, sustainable growth built on a set of powerful attributes".

Obama called global tax avoidance a "huge problem" and urged Congress to take action to stop US companies from tax-avoiding corporate "inversions", which lower companies tax bills by redomiciling overseas.

"While the Treasury Department's actions will make it more difficult... to exploit this particular corporate inversions loophole, only Congress can close it for good," Obama said.

Several US presidential candidates, including Republican Donald Trump and Democrats Hillary Clinton and Bernie Sanders, have seized on the issue in their campaigns.

"We have so many companies leaving, it is disgraceful,"  Trump told reporters as he greeted voters in Waukesha, Wisconsin on Tuesday. Clinton and Sanders both expressed support for Treasury's plan.

Besides Pfizer-Allergan, other pending inversion deals that have not yet closed include the proposed $16.5 billion merger of Johnson Controls Inc. with Ireland-based Tyco International Plc., Waste Connections Inc.'s  $2.67 billion deal with Canada's Progressive Waste Solutions Ltd., and IHS Inc.'s $13 billion acquisition of London-based Markit Ltd.

In all these cases, the shares of the target companies fell only slightly. Johnson Controls and Tyco said they would respond after conducting a review of the new rules.

Waste Connections and Progressive Waste Solutions said they expected the rules would impact less than 3 per cent of the combined adjusted free cash flow in their first year after the deal.

IHS and Markit said they believed the rules would not affect their adjusted effective tax rate guidance of a low to mid-twenties percentage range.

Three-year rule

Under previous rules which still apply, Allergan shareholders needed to own at least 40 per cent of the combined company for the two companies to enjoy the full tax benefits of an inversion, and more than 20 per cent to have any inversion benefit at all.

But a new “three-year-look-back rule” issued by the Treasury on Monday made this much harder for Allergan, and appeared to take aim directly at it because of how the company was put together.

The new rule does not allow stock accumulated through a foreign company's US deals in the last three years to count towards the book value needed to meet the inversion threshold.

This weighed on Allergan heavily because of its significant deals in this timeframe. These include the $66 billion merger of Allergan and Actavis Plc., the $25 billion purchase of Forest Laboratories and the $5 billion takeover of Warner Chilcott.

"The serial acquisition portion of the regulations will cause Pfizer to be treated as an 'expatriated entity' [under the terms of its existing deal with Allergan]," Robert Willens, a  corporate tax and accounting analyst, wrote in a note.

Shedding generics

In a second change to the rules, the Treasury also said it would seek to limit a practice known as earnings stripping that is often undertaken following, but not limited to, an inversion. The new Treasury rules would restrict related-party debt for US subsidiaries in dealings that do not finance new investment in the United States.

Without Allergan's new, fast-growing medicines, Pfizer may need to look for other companies with attractive products, such as US drugmakers Biogen Inc., Regeneron Pharmaceuticals Inc. and AbbVie Inc., said Raghuram Selvaraju, managing director of brokerage H.C. Wainwright.

Pfizer had planned to make a decision by 2016 whether to split off its hundreds of generic medicines, but delayed the decision until 2019 after announcing its merger with Allergan. Morningstar analyst Damien Conover had said the decision could be moved to late 2017 or 2018 if the deal with Allergan collapsed.

Pfizer, which announced the deal in November, had said its tax rate would drop to about 17 or 18 per cent after the deal, from around 25 per cent. That would have represented more than $1 billion in annual cost savings.

The deal's collapse is also a blow to the investment banks involved. 

Guggenheim Partners LLC, Goldman Sachs Group Inc., Centerview Partners Holdings LLC and Moelis & Co.  stood to share $94 million in fees advising Pfizer had the deal closed, while Allergan would have paid its advisors, JPMorgan Chase & Co. and Morgan Stanley, $142 million in total, according to the latest estimates by Freeman & Co. LLC.

Bankers may now get paid only 10 per cent of these amounts, according to Freeman.

This is not the first time a tightening of the US inversion rules have caused a merger to unravel. US pharmaceutical company AbbVie abandoned its $55 billion takeover of Ireland-domiciled peer Shire Plc after the Obama administration cracked down on inversions in 2014. AbbVie had to pay Shire a $1.6 billion break-up fee.

STOCKHOLM — World military spending rose 1 per cent in 2015, the first  annual increase in four years, a Stockholm think tank said on Tuesday as it estimated 10 per cent of this could cover the costs of global goals aiming to end poverty and hunger in 15 years.

The Stockholm International Peace Research Institute (SIPRI) said military expenditure nudged up to almost $1.7 trillion last year, with the United States accounting for by far the greatest amount despite its spending dipping 2.4 per cent to $596 billion.

China was the second largest spender for the second year in a row with spending up 7.4 per cent to $215 billion, while Saudi Arabia passed Russia to take third place at $87.2 billion and Britain came fifth. Moscow spent $66.4 billion.

During the 10-year period from 2006-2015, the US military budget shrank by 4 per cent, while China's soared by 132 per cent. Those of Saudi Arabia and Russia also increased significantly, by 97 and 91 per cent respectively.

France, which had the fifth biggest budget in 2014, fell to seventh place behind Britain and India.

SIPRI said military expenditure amounted to 2.3 per cent of the global gross domestic product, and 10 per cent of this would be enough to fund the global goals agreed upon by United Nations' 193 member states in September to end poverty and hunger by 2030.

"This gives some sort of perspective that can allow people to see what is the opportunity cost involved with global military spending," Sam Perlo-Freeman, head of SIPRI's military expenditure project, told the Thomson Reuters Foundation.

"This could stir up some debate although we are certainly not expecting a 10 per cent cut in military spending at all," he said. "That is all about the politics of these countries."

UN figures show an estimated 800 million people live in extreme poverty and suffer from hunger, with fragile and conflict-torn states experiencing the highest poverty rates.

SIPRI's annual military spending report showed overall expenditure increased last year in Asia, Central and Eastern Europe and for Middle East countries with data available.

However spending fell in North America, Western Europe, Latin America and the Caribbean, and Africa, a continuing trend attributed partly due to the global economic crisis, falling oil prices and the withdrawal of troops from Afghanistan and Iraq.

"On the one hand, spending trends reflect the escalating conflict and tension in many parts of the world; on the other hand, they show a clear break from the oil-fuelled surge in military spending of the past decade," Perlo-Freeman said.

"This volatile economic and political situation creates an uncertain picture for the years to come," he added.

Countries that bumped up military spending in 2015 included Algeria, Azerbaijan, Russia, Saudi Arabia and Vietnam, many of which were involved in conflict or faced heightened regional tensions.

Perlo-Freeman said this was the first time SIPRI has mapped military spending to the UN's new Sustainable Development Goals but it had previously compared it to spending on health and education.

The SIPRI military expenditure project was established in 1967 to study developments in world military expenditure.

"It is no secret that we are a peace research institute and our mission is towards promoting peace and demilitarisation, but we don't say how this should be done," he added.

FRANKFURT — The global economy's already modest prospects will decline further unless authorities take stronger action to boost growth, the head of the International Monetary Fund (IMF) warned on Tuesday, saying the fund would cut its headline forecasts next week.

Christine Lagarde said China's shift to an economic model based more on domestic demand, stubbornly low commodity prices and tighter funding conditions in some countries had all clouded the outlook.

"Let me be clear: we are on alert, not alarm. There has been a loss of growth momentum," the IMF's managing director said in a speech at Frankfurt's Goethe University.

The recovery from the 2007-2009 global financial crisis "remains too slow, too fragile and risks to its durability are increasing".

But if policymakers confronted the challenges and acted together, "the positive effects on global confidence, and the global economy, will be substantial".

Lagarde advised the United States to raise its minimum wage, Europe to improve job training and emerging economies to cut fuel subsidies and boost social spending.

She gave her strongest hint yet that the IMF will cut its global economic forecasts next week.

"The global outlook has weakened further over the last six months so you can [deduce] from that there will be a slight revision [in the IMF estimates]," Lagarde said.

Spring meetings

Lagarde's remarks come less than two weeks before ministers, central bankers and other policymakers from the fund's 188 member countries gather in Washington to assess the health of the world economy at the IMF and World Bank Spring Meetings.

While the US recovery has been gaining momentum and some emerging markets, including Mexico, have performed well, the IMF views Europe and Japan as major disappointments, while China's slowing growth has hurt oil and commodity exporting countries, including Brazil and Russia.

To counteract the headwinds, Lagarde called for accelerated structural reforms, increased fiscal support and continued accommodative monetary policy.

She urged improved tax incentives for research and development (R&D) investments, citing IMF data showing that a 40 per cent increase in R&D spending in advanced economies could yield a 5 per cent increase in gross domestic product (GDP) over 20 years.

Asked about negotiations between the IMF, European lenders and Greece for a new bailout programme for the heavily indebted country, Lagarde told Bloomberg TV the fund continued to negotiate "in good faith".

After Internet site WikiLeaks published an apparent transcript of an IMF conference call, Lagarde denied that IMF staff might threaten to pull out of the bailout as a negotiating tactic to force more European debt relief for Greece.

Introducing Lagarde's speech, Jens Weidmann, who sits on the European Central Bank's decision-making body and heads Germany's Bundesbank, said the IMF was "an essential component" in any eurozone rescue programme.

Among other sources of uncertainty facing the global economy, Lagarde listed Britain's debate over remaining in the European Union.

AMMAN — A Jordanian business delegation that recently visited Georgia discussed ways to enhance commercial exchange and holding joint projects between the two countries, Jordan Exporters Association (JEA) President Halim Abu Rahmeh said Tuesday.

During the five-day visit, the delegate representing the construction, textile, tourism, renewable energy, food and ICT sectors,  met with government officials and public sector representatives to identify the requirements for penetrating the Georgian market and the available investment and commercial opportunities, Abu Rahmeh added.

He described the Georgian market as a good export opportunity for national products, especially the plastic, food, fertilisers, textile and furniture, noting that it can serve as a gateway for neighbouring markets. Jordanian exports to Georgia include fertilisers and Dead Sea products, while imports from Tbilisi include livestock, cereals, nuts and plant oils. The volume of commercial exchange between Jordan and Georgia at the end of 2015 stood at JD6.5 million.