Business

LONDON — A slide in the price of crude oil is not being matched in Europe by a fall at the pump, and as political pressure for cheaper petrol mounts, retailers and consumer groups differ over what causes the lag.

Retail petrol taxes and the strength of the dollar mean that drivers in Europe cannot expect to see the full benefit of the more than 40 per cent drop in crude prices since June.

Even accounting for these factors, however, the gap is still wide.

European Commission figures show that price reductions for consumers in many of the largest economies amount to less than half the fall in wholesale refined fuel prices, even when taxes and exchange rate moves are taken into account.

In Britain, for example, petrol prices at filling stations fell just 6.1 per cent between June and the start of December, and 14.1 per cent when tax is taken out of the equation. That's less than half the 35.5 per cent tumble in the spot wholesale price at the Amsterdam-Rotterdam-Antwerp hub after taking currency fluctuations into account.

Britain's Finance Minister George Osborne has warned oil companies that the government will be watching carefully whether the fall in prices is passed on to consumers.

Margins hidden

Drivers' consumer group AA said, meanwhile, that the lack of public information on wholesale fuel prices keeps the margins of retailers and middlemen hidden and makes it difficult for buyers to demand price changes.

"It all hinges on what retailers decide to do. They do pass along their reductions, but they take their time," said AA spokesman Luke Bosdet. On the other hand, when crude prices rise, retailers quickly start raising prices, he remarked.

The retailer may or may not be the one to benefit from widening margins as crude falls, given that the distribution chain also includes traders and gasoline blenders. The price also depends on the contract the retailer may have negotiated with the refiner or supplier.

"Without transparency, we can't see who is making what and where they are adding the margin," Bosdet indicated.

Retail analysts who cover British supermarket chains such as Tesco and Morrison said fuel sales are an increasingly important source of income for them and that falling wholesale oil prices will support their margins at a time when competition is fierce over food and other products.

The analysts could not break out specific figures, however, for the retailers' margins on petrol sales.

In the United States, by contrast, pump prices respond to declines in the crude price almost immediately, analysts said, due to greater retail competition, lower taxes and the fact that retail and wholesale prices are both denominated in dollars.

The US government publishes wholesale prices regularly, which ensures consumers will pressure retailers to pass through savings, the AA said.

The AA data shows the overall margin on petrol in Britain was 6.4 per cent in October and most of November 2014 versus 4.7 per cent in the same period of 2010.

The difference meant that British consumers were paying almost 6 per cent more in 2014 than four years ago. But crude prices in the two six-week periods were about the same.

Bosdet said one explanation could be that consumers lose out if crude prices rebound before the previous price decline reaches the retail level.

Refiners

European refiners have enjoyed slightly better margins since oil prices started tumbling. The refining margin in the Rotterdam hub was at $5.54 on Friday compared with $4.44 for the last 365 days, according to Reuters data.

But still, refiners' spot wholesale prices have fallen closely in line with crude prices.

"Hauliers tend to see the [wholesale] price fall by the next time they buy in bulk for delivery, while for consumers we often see a six-week lag before the price falls," said Nick Deal, logistics development manager at the Road Haulage Association.

Retailers blame the high prices on the level of taxes on fuel and the shrinking options for local supply as European refineries close.

"If you take what we've got from wholesale pricing... we're not far off keeping pace with crude oil pricing," said Brian Madderson, chairman of Britain's Petrol Retailers Association.  "There is a massive amount of fixed duty."

The AA comparison between retail and spot wholesale prices does not measure the margin of any one retailer, because each will have negotiated contracts to buy petrol for different time periods at different wholesale prices.

"I imagine that physical volumes throughout the supply chain are hedged to manage price risk," said Stephen George, chief economist at KBC Advanced Technologies. "It will take probably one to two weeks for the cheaper market prices to work their way through the system, but they will eventually."

How quickly retailers respond may come down to public pressure, George remarked.

"So when do they respond by letting the product's price drop? When the market drives them to do this. A few days, at least. Maybe a few weeks. A few extra quid in our pockets for Christmas," he added. 

KIEV — Ukraine's new energy minister pleaded with industrial and domestic consumers to use less electricity as hard frosts led to a sharp drop in gas stocks and low coal stockpiles, making more blackouts likely.

Volodymyr Demchyshyn on Thursday asked for a reduction in evening electricity consumption by 15 per cent.

"Please, take it seriously. We expect reductions in  electricity consumption even today. If we see consumption fall... I promise to appeal [to the regulatory body] to stop the outages," the minister told the government press service.

He also asked industrial companies to switch to working at night, promising attractive tariffs if they do. Shortages on the electricity grid have caused some outages across parts of eastern Ukraine and in the capital Kiev.

Ukraine consumed a record high volume of gas from its limited storage on December 2 due to hard frosts, gas transport monopoly Ukrtransgaz said.

Weather forecasters expect relatively mild weather in mid-December and this could reduce gas consumption.

Ukraine uses gas to produce electricity but has been forced to switch to coal or fuel oil after Russia suspended gas flows.

However, the national electricity company, Ukrenergo, said on Tuesday coal reserves at thermal power plants stood at 1.3 million tonnes, around 65 per cent lower than in December 2013. It said five plants only had enough coal to last up to another four days.

Mired in a power crisis caused by a separatist conflict in industrial eastern regions that has shut down mines and rail links for transporting coal, Ukraine has said it may now depend on Russia for both coal and electricity to make it through the winter.

A spokesman for Ukrtransgaz said 132.7 million cubic metres of gas were drawn from underground storages on Tuesday versus an average of around 100 million per day last week.

Company data showed that the volume of stored gas has fallen more than 17 per cent to 13.8 billion cubic metres since Kiev started pumping gas on October 20 for heating in cold season.

Ukraine has been left without flows from Russia since mid-June due to a pricing dispute and unpaid debts.

After months of talks, the two sides reached an agreement in October, and Kiev said on Wednesday it planned to make a pre-payment for 1 billion cubic metres of Russian gas by Friday. 

Separately, more and more of Ukraine's companies are finding themselves unable to repay overseas debt with an economy in meltdown, a currency that has tanked 45 per cent and a possible sovereign default ahead.

While a relatively modest $12.4 billion in private sector debt falls due in 2015, according to International Monetary Fund (IMF) estimates, it still exceeds Ukraine's total hard currency reserves and is double what the government owes foreign creditors next year.

Many companies and banks have already fallen behind on debt payments. Metals firm Metinvest for instance last week swapped 2015 dollar debt for bonds maturing at the  end of 2017, and agricultural producer Agroton asked bondholders' consent to hold off next year's coupon payments until 2016.

Agro firm Mriya, pipe manufacturer Interpipe and banks First Ukrainian International Bank, VAB, Nadra, and Finance and Credit Bank are also in trouble.

Bonds of all these companies have fallen sharply, with the Agroton issue for instance now valued at 25 cents on the dollar  and Mriya's 2016 bond at 15 cents.

And as company after company reports steep falls in revenues, investors are bracing for more trouble ahead.

"I think that almost all the Ukraine corporate sector will restructure," said David Spegel, head of emerging debt at BNP Paribas.

He bases this on a conviction that the sovereign itself will default, pushed by Russia which could call due a $3 billion debt by spring. That may spark a default cascade across all sovereign debt, in turn flattening the private sector.

Ukraine's Eurobonds are trading around 66-70 cents in the dollar, an indication of how much investors expect to recoup on each dollar invested. Even that is too much, says Spegel, who calculates a recovery value of less than 50 cents in the dollar.

"Even seemingly strong corporates and banks usually default when the sovereign does, as we saw in Argentina," Spegel said. "The speed of sovereign restructuring will decide whether all do, or just most."

None of the companies could be reached for comment. 

Mriya's Chief Financial Officer Oleksander Cherniavskiy told Thomson Reuters financial news service IFR three weeks ago that he expected debt restructuring "to be substantially expanded in companies alongside us as a result of the aggregation of the sovereign's circumstances".

Avangardco, Ukraine's biggest agriculture firm, is a prime example of the hardships companies are facing. It posted a net loss of $5.7 million in the first nine months of the year compared to net profits of $162 million in the same period of 2013. It suspended work at poultry farms in rebel-held regions and said egg sales were down as people spend less.

Its $200 million 2015 bond has fallen to 69 cents in the dollar as the company, owned by the same group as the failed VAB bank, is seen likely to restructure.

For firms like Avangardco that have hryvnia earnings, the currency collapse makes debt servicing costlier, while economic recession causes a cash flow collapse at home.

Banks' bad loans meanwhile are approaching 40 per cent, while the hryvnia value of their total deposits is down 20 per cent this year, according to Andre Andrijanovs, a debt strategist at Exotix.

"Several companies have done liability management and other companies will be asking themselves if they should do the same," Andrijanovs said. "Most bonds are already pricing haircuts."

There is some sympathy for Ukrainian companies, given the country's plight and Russia's perceived aggression. Restructurings have also been mostly investor friendly, says Jefferies analyst Richard Segal, involving some cash payments, maturity extensions, higher coupon rates and fees for consenting to restructure.

"If this practice remains the rule rather than the exception, then market engagement with the sector should remain encouraging overall," Segal said.

Investors are watching state-run Ukreximbank's $750 million bond due April 2015. The bond price, at 80 cents in the dollar, suggests some expectation of restructuring.

LONDON — Global oil and gas exploration projects worth more than $150 billion are likely to be put on hold next year as plunging oil prices render them uneconomic, data show, potentially curbing supplies by the end of the decade.

As big oil fields that were discovered decades ago begin to deplete, oil companies are trying to access more complex and hard to reach fields located in some cases deep under sea level. But at the same time, the cost of production has risen sharply given the rising cost of raw materials and the need for expensive new technology to reach the oil.

Now the outlook for onshore and offshore developments, from the Barents Sea to the Gulf or Mexico, looks as uncertain as the price of oil, which has plunged by 40 per cent in the last five months to around $70 a barrel.

Next year, companies will make final investment decisions (FIDs) on a total of 800 oil and gas projects worth $500 billion and totalling nearly 60 billion barrels of oil equivalent, according to data from Norwegian consultancy Rystad Energy.

But with analysts forecasting oil to average $82.5 a barrel next year, around one third of the spending, or a fifth of the volume, is unlikely to be approved, head of analysis at Rystad Energy Per Magnus Nysveen said.

"At $70 a barrel, half of the overall volumes are at risk," he indicated.

Around one third of the projects scheduled for FID in 2015 are so-called unconventional, where oil and gas are extracted using horizontal drilling, in what is known as fracking, or mining.

Of those 20 billion barrels, around half are located in Canada's oil sands and Venezuela's tar sands, according to Nysveen.

Assessing the economics 

Geographically, the projects on the balance are widespread.

Chevron's North Sea Rosebank project is among those with a shaky future and a decision on whether to go ahead with it will likely be pushed late into 2015 as the company assesses its economics, analysts said.

"This project was not deemed economic at $100 a barrel so at current levels it is clearly a no-go," indicated Bertrand Hodée, research analyst at Paris-Based Raymond James. 

He estimates a development cost of $10 billion for Rosebank, with potential reserves of 300 million barrels, meaning the Chevron would only recoup $33 a barrel.

Even with oil at $120 a barrel, the economics of some projects around the world were in doubt as development costs soared in recent years. Chevron's Rosebank project has already been delayed for several years.

In response to a question from Reuters, the company said "the Rosebank project is in the Front End Engineering and Design phase. The review of the economics and the additional engineering work is progressing... It is premature to make any statements on an FID date”.

According to Hodée, any offshore project with a development cost above $30 a barrel would most likely be put on hold in current oil prices.

Norway's Statoil this week said it had postponed until next October, a six-month delay, a decision to invest $5.74 billion in the Snorre field in the Norwegian Sea as its profitability was under threat.

New oil fields typically require four to five years to be developed and billions before the first drop of oil is produced.

Any cutbacks in oil production bodes ill for international oil companies that are already struggling to replace depleting reserves as exploration becomes harder and discoveries smaller. It also points to tighter supplies by the end of the decade.

Least likely

Projects in Canada's oil sands, which require expensive and complex extraction techniques, are the most unlikely to go ahead given their high investment requirements and relatively slow returns. 

Total recently decided to postpone the FID on the Joslyn project in Alberta, the cost of which Hodée estimated at $11 billion.

Shell's liquefied natural gas (LNG) project in Canada's British Columbia, already under pressure from a looming supply surge, faces further strain in the current price environment, analysts said. 

According to research by Citi, the project requires oil at $80 a barrel to break even.

Royal Dutch Shell's chief financial officer Henry Simon indicated in October that it was "less likely" to go ahead with unconventional projects in West Canada if oil falls below $80 a barrel.

Asked by Reuters what the company's current thinking was, a Shell spokesman would not comment on "internal decision-making."

Even in the Gulf of Mexico, one of the most attractive oil production areas in the world, projects are facing challenges.

BP last year put on hold a decision on its Mad Dog Phase 2 deep water project in the Gulf of Mexico after its development costs ballooned to $20 billion and the oil major is now expected to further delay an investment on the field's development.

"BP were talking positively about bringing it back, but now it may be put on hold," BMO Capital Markets analyst Iain Reid said.

BP's chief financial officer Brian Gilvary, however, said in an analysts briefing in October that he expected Mad Dog Phase 2 to be sanctioned in the first quarter of 2015.

Statoil's Johan Castberg field in the Barents Sea, which was expected to get its FID in 2015, seems unlikely to get the go-ahead at the moment given it has an estimated project cost of $16-$19 billion, Hodée said.

Statoil said the final project design is due in the summer of 2015. Its giant Johan Sverdrup field in the North Sea is still on track for development with a price tag of $32.5 billion.

DUSHANBE/BISHKEK — Vali Salimov quit his job at a Moscow supermarket last month after his salary was halved, and returned home to Tajikistan another migrant victim of Russia's economic downturn whose family livelihood now looks precarious.

Salimov, like millions of other migrants, used to send much of his salary back home. So as he and others leave Russia, the economies of their home countries — poor former Soviet republics like Tajikistan and Kyrgyzstan — are also feeling the pinch.

"I was paid 25,000 rubles ($536) a month. Then they started paying me just 15,000 rubles. My boss said his revenues had dropped," Salimov, a father of three who also supports his elderly parents, said in the Tajik capital, Dushanbe.

Nonetheless, the 35-year-old — who could only afford to eat cheap instant noodles in Moscow — still hopes to return to Moscow in the spring. No matter how stacked the odds look, he has even less chance of finding work in Tajikistan.

On a World Bank calculation, Tajikistan was the world's biggest recipient of migrant workers' remittances last year at 42 per cent of the gross domestic product.

The share in neighbouring Kyrgyzstan was 32 per cent, demonstrating a similar number of workers suffering the knock-on effects of the crisis in Russia, which has seen its economic growth and currency collapse as a result of falling oil prices and Western sanctions imposed over the crisis in Ukraine.

Mukhayo Zhorobayeva, a 45-year-old teacher in southern Kyrgyzstan, relies on the 26,000 rubles a month that her husband sends home from his job at a confectionery distributor in St Petersburg.

"He was not paid in October. I don't know why," she said. "I watch the news and think my husband's problems could be linked to those sanctions — they are selling fewer sweets now."

Adding to the family's troubles, her 23-year-old son Saidmaksud, a cook in the Russian city of Perm, recently returned home because his work permit expired.

Safety valve

About 1 million Kyrgyz citizens and over 1 million Tajiks — about half each country's workforce — work in Russia.

For Tajikistan, a state of 8 million bordering Afghanistan and China, having so many of its citizens earning a living in Russia has helped bring stability following a 1992-97 civil war. The same goes for Kyrgyzstan, a country of less than 6 million where two presidents have been overthrown since 2005.

The prospect of those workers returning home has raised not just concern about the economic impact but also worry that high unemployment could exert intense pressure on the population.

"Even partly losing this outlet to Russia could give rise to social discontent domestically, particularly if the Russian economic downturn is protracted," said Lilit Gevorgyan, senior economist at IHS Global Insight.

Worker remittances to Tajikistan dropped by $162 million to $2.517 billion in January-September, International Monetary Fund (IMF) data showed. As a result, Tajik growth will slow to 6.5 per cent this year from 7.4 in 2013, according to Jonathan Dunn, the head of an IMF visiting mission to Tajikistan.

Tajikistan's budget envisages gross domestic product (GDP) growth of 7 per cent in 2015. But a Tajik official, declining to give his name, said: "We hope for real growth of 4 to 5 per cent, and these are the most optimistic expectations."

The reality is that Russia's economic problems are likely to result in a worsening situation in Tajikistan and Kyrgyzstan.

"Our view is that growth will decline further because we expect the remittances will decline further," Dunn said.

Separately, the Russian economy ministry on Tuesday slashed its economic forecast for 2015, announcing a contraction of 0.8 per cent because of Western sanctions over the Ukraine crisis combined with falling oil prices.

The ministry cut its previous outlook of 1.2 per cent growth by two percentage points, referring to worsening economic indicators and a "more conservative" assumption that Western sanctions will remain through 2015.

Plunging oil prices also led to the revision, with a weakening ruble  and rising inflation slowing consumer spending, the ministry added in its official statement.

In its outlook on recession, Deputy Economy Minister Alexei Vedev said the economy may completely flatline or slightly shrink in the fourth quarter of 2014, which could push Russia into recession by the end of the first quarter next year. 

The technical definition of a recession is two successive quarters of economic contraction. It would be Russia's first recession since 2009.

The ministry previously assumed Western sanctions would be lifted during 2015, with Russia then ending its tit-for-tat food embargo. 

"The current forecast for 2015 is, on the contrary, based on continuing strong geopolitical risks," the ministry said.

"Uncertainty and lack of economic confidence caused by harsher geopolitics have led to a prediction of higher capital flight and lower investment," the ministry added in the full report briefly posted on its website before it was removed.

Capital flight is expected to reach $125 billion for 2014, the ministry indicated, up from the previous estimate of $100 billion.

The World Bank also slashed its growth projection for Russia Tuesday from 0.5 per cent in 2014 and 0.3 per cent 2015 to 0.7 per cent and 0 per cent respectively.

Nine per cent inflation seen  

Russia's economy has been hit by falling oil prices which have battered Russia's energy-driven economy and triggered a record drop in the value of the ruble.

The Russian currency experienced its worst slump since 1998 on Monday. After rallying slightly Tuesday morning it lost all its gains and was trading at around 53.9 to the dollar and 66.8 to the euro at 1600 GMT.

The economy ministry has forecast the foreign exchange rate to average 49 rubles to the dollar next year — 30 per cent higher than its previous expected rate of 37.7 rubles.

The growth forecast for 2014 was slightly raised from 0.5 per cent to 0.6 per cent due to a better-than-expected performance of the agricultural sector, the ministry said.

Vedev said the ministry expects the Russian economy to reach bottom in mid-2015 and begin a rebound on rising oil prices which could climb back to $85-$95 a barrel.

Russia's growth has slowed dramatically in recent years, the rate falling to 1.3 per cent in 2013 compared with 3.4 per cent the previous year.

Meanwhile, inflation has accelerated over the ruble's falling value, and is set to reach 9 per cent by the end of 2014, Vedev said, up from the previous estimate of 7.5 per cent.

Real incomes of Russians will shrink by 2.8 percent next year instead of increasing by 0.4 per cent as previously predicted, due to inflation and slowing economic activity.

Alfa Bank economists said in a note Tuesday that 12 per cent inflation for the year was "inevitable", predicting spending to fall even further than during the 2008 economic crisis due to the government's inability to compensate the population through increasing pensions and salaries.

Retail giants and foreign companies have already hiked prices or announced expected hikes because of the ruble's slump, with Apple raising Russian prices by about 25 per cent.

AMMAN — Small- and medium-sized enterprises (SMEs) received JD2 billion or 11.3 per cent of banks’ total financing in 2012, the chairman of Jordan Youth Economic Society indicated Wednesday during a symposium on empowering SMEs.

Noting that SMEs contribute 50 per cent to the Kingdom’s gross domestic product (GDP), account for 98.5 per cent of the overall number of companies in Jordan, and constitute 60 per cent of the total work force, Samer Kawar said SMEs still lack proper support and guidance, even with a roadmap drafted by the government for large investment projects.

Kawar listed entrepreneurship culture, access to funding and its cost, legal and bureaucratic hurdles, access to new markets, tax burdens, qualified work force, research and innovation, transportation and infrastructure as key challenges that face SMEs in Jordan.

He said world economies have activated SMEs to growth and development, and enabled them to  become main contributors to GDPs and employment.

Businessmen described SMEs and startups as key for economic development in the Middle East, particularly in Jordan, if they were empowered.

Rasha Rashed, project manager at Konrad-Adenauer-Stiftung, said SMEs play a basic role in economic growth, noting that SMEs constitute 70 per cent of operating companies in any country.

“SMEs sector plays an important role in accelerating economic growth by diversifying the resources and creating job opportunities. It guides the youth towards the private sector instead of the public sector and its limited vacancies,” Rashed said during the symposium.

The businessmen and entrepreneurs called on the government to approve a number of laws which they said will support the SMEs sector, including a bankruptcy law, moveable assets law and credit information law.

DUBAI — Plunging oil prices could mean the first budget cuts for major exporter Saudi Arabia since 2002 but they are not expected to be large enough to stop growth in the Arab world's biggest economy.

The government gets about 90 per cent of its revenue from oil exports and is believed to need an average oil price above $90 to balance its budget this year.

But Brent crude fell to $67 a barrel this week from $115 in June and if current prices are sustained, the budget plan for next year, expected late this month, will produce a deficit for the first time since 2009.

"There is no way for Saudi authorities to announce a bigger budget in 2015 than what they announced for 2014," said John Sfakianakis, a former adviser to the Saudi finance ministry who is now regional director of asset manager Ashmore in Riyadh.

"Unavoidably they will have to scale down the budget. [But] I do not expect the budget to be hugely lower," he added.

As recently as last month, the International Monetary Fund (IMF) predicted Saudi Arabia would enjoy a fiscal surplus of 1.6 per cent of gross domestic product (GDP) in 2015; now, private economists are talking of a deficit of over 1 per cent.

But businessmen and economists do not expect big cuts in state spending because the government has built huge fiscal reserves to cover any deficit and its ultra-low debt levels would allow it to borrow easily if needed.

This means the economy, which grew an annual 3.8 per cent in the second quarter, should continue to expand and major infrastructure projects, such as the $22.5 billion plan to build a metro rail system in Riyadh by 2019, should not be at risk.

Some analysts believe Saudi Arabia is content to see oil prices fall as a way to squeeze out competing shale oil producers in the United States, confident it has enough reserves to ride out a period of cheap oil.

Budget plan

Even before oil started falling in June, Saudi Arabia was curbing spending growth after several years of spectacular increases following the global financial crisis and the 2011 Arab Spring uprisings.

The current year's budget plan envisages expenditure of 855 billion riyals ($227.8 billion), a mere 4.3 per cent rise from the 2013 plan and the slowest increase in a decade.

Top Saudi officials have been coy about their 2015 plans.

"The global oil situation usually in one way or another affects countries' revenues and debts, but the kingdom has always been keen on building its budgets on estimates that take all possibilities into consideration," Finance Minister Ibrahim Alassaf told a local newspaper last month.

The government usually ends up spending substantially more than its budget plan, overspending by an annual average of 25 per cent in 2004-2013. So the 2015 plan could quickly change if oil prices rebound.

It seems clear, however, that the government will not be under pressure to reduce spending sharply.

Government reserves at the central bank totalled 905 billion riyals at the end of October, enough to cover an annual budget deficit of 3 per cent of GDP for about 10 years. That excludes the government's other assets and its ability to borrow.

Also, Saudi Arabia funds some of its large infrastructure projects, such as housing and transportation, off-budget from a separate central bank account established to insulate them from budget fluctuations, economists said. That account contained 514 billion riyals in October.

Any drop in budget spending of, for example, 1 or 2 per cent would slow economic growth but probably not dramatically, because the non-oil private sector has been booming. The sector's annual growth edged up to 4.7 per cent in April-June.

Foreign aid

Economists believe Saudi Arabia will be reluctant to cut spending on areas such as social welfare and housing because it views them as key to political stability. Similarly, its infrastructure projects aim to ensure long-term economic stability by diversifying the economy.

But the foreign aid budget could see cuts. Riyadh pledged $22.7 billion to its geopolitical allies between January 2011 and April 2014, disbursing $10.9 billion, mostly to Egypt, the IMF has said.

"We think that the financial aid will be the first to be cut if we see a further decline in oil prices," said Fahad Al Turki, head of research at Jadwa Investment in Riyadh.

Reducing domestic energy price subsidies, which cost the government tens of billions of dollars every year, could also bring savings. As oil has dropped, Kuwait, Oman and Abu Dhabi have taken steps towards cutting subsidies.

However, economists say the Saudi government may still shy away from this reform.

"I do not think the current oil prices being low for only a few months will create credible pressure that will trigger any change in the subsidy policy. There needs to be a longer horizon for that to happen," Alturki said.

AMMAN — Finance Minister Umayya Toukan on Tuesday said a delegation from the International Monetary Fund (IMF) will pay the Kingdom a regular visit next week to follow up on financial and economic reform programmes.

Toukan added that the team will discuss recent financial and economic developments that affect the national economy, especially after the IMF executive board agreed to conclude the fifth revision to the national reform programme.

He noted that the IMF may finish the revision programme by February 2015. The minister said Jordan’s commitment to apply the financial and economic reform programme has a great impact on improving the financial performance and stability of the Jordanian economy. 

AMMAN –  Jordan's real estate trading is continuing unabated due to a steady surge in property sales, official data showed Tuesday. 

According to national statistics, the trading boom is driven by higher spending on properties by Jordanians, who purchased apartments and land plots worth over JD6.6 billion so far this year.

The value of purchases made by non-Jordanian investors was only JD454.8 million in the first 11 months of this year. 

A report, issued by the Department of Land and Survey (DLS), showed that trading in the Kingdom's real estate market reached over JD7 billion in the first 11 months of this year,  up by JD1.2 billion or 21 per cent over the JD5.8 billion registered in the same period of 2013. 

The rise in trading boosted DLS revenues during January-November 2014 by over JD60 million to reach JD387 million compared to JD325 million during the same period of the year before. 

The DLS attributed the positive performance of the property market to a surge in home sales which, according to the report, grew by 17 per cent, while growth in land sales slowed down of the same percentage as last year. 

The data showed that a total of 32,768 housing units were sold in the first 11 months of this year, compared to 27,925 residential apartments sold during the same period of 2013.

Jordanians bought nearly 90 per cent of the apartments as non-Jordanians purchased only 3,270 residential units in the first 11 months of the year,  the report indicated, estimating the value of the apartments sold to non-Jordanians at JD287 million. They spent JD167 million on lands.  

The higher trading in the property market is in line with expectations of industry leaders. 

Jordan Housing Developers Association President Kamal Awamleh previously expected trading in the real estate  market to exceed JD7 billion this year due to population growth and the desire of the majority of Jordanians to purchase homes rather than pay rent.

"Our forecast for trading this year was JD7 billion, but now we expect it to easily exceed JD7.5 billion," Awamleh told The Jordan Times in previous interview.

AMMAN — A bonanza is in store for the banking industry in Jordan after the dust settles in Iraq and Syria, according to a top banker.

Jim Cowles, Citi's chief executive officer (CEO) for Europe, Middle East & Africa (EMEA), told The Jordan Times in a interview last week that banks were getting stronger in the Middle East, despite the challenging environment, and Jordan is “well positioned to be a financial hub in the area”.

He expects an eventual economic boom, especially in Iraq, which will translate into a thriving business for the financial sector in Jordan. Proof of that is the fact that Citi opened a Baghdad representative office in June last year .

The CEO was upbeat about the bank's operations in the local market and praised the Kingdom’s economic and financial performance over the years.

He also lauded the Kingdom's stability and sound policies, and recommended that authorities keep up the drive to intensify job creation and ensure sustainable stability.

"Jordan is mature, disciplined, stable and professional," said the banker, adding that its policies are sound and institutions solid.

The presence of Citi in Amman since 1974 is a validation and testament to that standing, according to the banker who was in Jordan to celebrate the 40th anniversary of Citi Amman.

Cowles said by participating as the largest underwriter and lead manager for Jordan's recent flotations of $2.23 billion sovereign bonds in international markets, Citi attested to Jordan's safety and prudent financial management.

Through such participation, Citi helps promote Jordan's stability and security for global investment considerations; the bank has an edge by virtue of having long experience and having gained good knowledge of the Kingdom during 40 years of operations.

Besides the sovereign bonds, Citi has been corporate broker to Hikma Pharmaceuticals since its initial public offering in 2005 and, in 2014, Citi acted as financial adviser to the corporation in its agreement to acquire substantially all the assets comprising Bedford Laboratories from Ben Venue Laboratories. 

Mayank Malik, CEO for Jordan and Iraq, said Citi Amman is now adding mid-size firms to its list of corporate clients because this sector has the potential to grow locally and outside Jordan and, as such, fits well in the bank's expansion strategy.

Another area where Citibank Jordan Branch  is active through Citi Foundation, Malik said, is with non-governmental organisations such as Amideast’s Arab Women's  Entrepreneurship Project, the Jordan River Foundation, The Arab Foundation for Sustainable Development and Tamweelcom, in order to help raise awareness among marginalised communities about banking and financial management, besides extending funds to bolster the microfinance industry.

In this context, Malik underlined the role of women who are supported by the bank to become active entrepreneurs due to their perseverance.

Cowles said that Citibank targets institutional business and that despite the challenging conditions in 12 Middle East and North Africa (MENA) countries, the bank remains committed to its operations.

"We are staying the course," he stressed, noting that the Citi's MENA operations are growing and profitable, especially in Dubai, where business is on the rise.

The EMEA CEO indicated that the bank only operates retail business in seven markets out of 55 in the EMEA region.

Worldwide, Cowles said banking activities in the current phase are transitional, following the international financial crisis.

He said the global banking industry is now adjusting to stricter regulatory controls that limit the amount of leverage for banking operations, a process he sees as positive.

Cowles added that the methodology now is discipline and delivering value, with a focus on governance, compliance and enhanced regulations.

In this context, the bank’s restructuring over the past five to six years lowered its balance sheet to $1.9 trillion from $3 trillion, Cowles said, stressing the importance of redeployment of resources and maintaining a competitive advantage.

He highlighted globality as Citi's key area of strength, besides the bank's keenness to offer high-quality services to clients and to invest in innovation, noting that Citi was the bank which invented the ATMs (automated teller machines) and the first to introduce electronic banking to Jordan.

AMMAN — The Jordanian Indian Fertilisers Company (JIFCO) on Monday announced the start of the operational phase at its industrial zone in Shidiyeh, which was established at a cost of $860 million.

The zone includes two factories: one to produce phosphoric acid and the other to manufacture sulfuric acid, in addition to other facilities. 

JIFCO Chairman Amer Majali said the project was funded by the European Investment Bank and an agency affiliated with the International Monetary Fund.

He noted that around 500,000 metric tonnes of phosphoric acid are expected to be produced at the zone and to be exported  to other countries, namely India, with revenues projected to reach $325 million. A total of 300 Jordanians are working at the zone.