Bahrain sovereign fund net loss narrows
Bahrain sovereign fund net loss narrows
One of the smaller sovereign wealth funds in the Gulf region, it had $7.1 billion of assets under management at the end of September. It holds stakes in 40 firms in the kingdom’s non-oil sector, including Bahrain Telecommunications Co. (Batelco) and Aluminium Bahrain (Alba).
Mumtalakat made a net loss of 181.7 million dinars ($482 million) in 2012, it said in a statement, versus a net loss of 270.6 million a year earlier.
Revenues fell 9.9 percent mainly due to lower aluminum prices impacting Alba, said the fund, which was set up in 2006 and has posted net losses for the past five years.
Alba, which owns the world’s fourth-largest smelter, posted a 54.4 percent fall in profits. It was hurt by aluminum cash prices on the London Metals Exchange which fell 16 percent to an average of $2,019 per metric ton.
While it made no mention of it, struggling Gulf Air may have also contributed to the fund’s 2012 loss. Restructuring initiatives at the airline were behind its 2011 loss.
In March, Bahrain’s national carrier cut 15 percent of its workforce and dropped four loss-making routes in its latest round of cost-cutting measures. Last November it trimmed orders for Boeing and Airbus aircraft.
Better performers for Mumtalakat in 2012 included its financial services and telecommunications portfolio, which helped raise profits from associated companies by 9.1 percent, it said.
A 28.3 percent fall in impairments also helped narrow the fund’s loss.
Mumtalakat CEO Mahmood Al-Kooheji said in March that the fund would focus on investment in Bahrain in 2013, with $150 million earmarked for local projects this year.
Jordanian cabinet approves new IMF-guided tax law to boost finances
AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”