Egypt's Senate approves in principle Sovereign Sukuk Act

CAIRO - 17 May 2021: The Senate, during its plenary session on Monday headed by Counselor Abdel Wahab Abdel Razek, approved in principle the bill submitted by the government to issue the Sovereign Sukuk Law.

Senators praised the bill, stressing that it brings unconventional investments, complies with Islamic law, and preserves the state's right to ownership of assets and the rights of investors.

Senator Youssef Ali said that the project guarantees the right of ownership to the state and that its affairs are proceeding according to Islamic law, setting a period for the instrument, encouraging investment protected by the state, enabling the state to achieve development projects and maximizing the national economy.

Senate member Akmal Nagaty announced the approval of the Youth Coordination of Parties and Politicians to the draft law, while Deputy Basem Al-Khawasi announced his rejection of the bill in principle due to a group of concerns, including that there are segments benefiting from the sukuk, they may be foreigners and we do not guarantee their affiliation, the type of sukuk issuance is it public, private, specific and known in advance, which leads to suspicion of corruption.

Senate member Mohamed Abdel-Moati indicated his approval of the bill, stressing that had it not been for the Egyptian economy to recover, this law would not have been presented.

Senate member Suleiman Al-Zalout confirmed that the government did not delay in submitting the draft law because it would not have issued the law except in conditions of stability and economy, which was achieved by the efforts of President El-Sisi.

For his part, Senate member Abdulaziz Al-Nahhas said on behalf of the Al-Wafd Party, "We announce our approval of the bill," pointing out that the project achieves its goal and purpose, which is attracting and pumping money.

The importance of the draft law is due to the existence of a current legislative vacuum, and there is no regulation that enables the state to issue sovereign sukuk. There is a legislative vacuum as there is currently no legislative regulation that enables the state to issue sovereign instruments, which necessitated the preparation of an integrated draft law to regulate sovereign instruments.

The parliamentary report of the joint committee from the Committee on Financial, Economic and Investment Affairs, and the Office of the Constitutional and Legislative Affairs Committee confirmed that sovereign sukuk as a financing instrument enjoy a large degree of acceptance in the world's financial markets, with the total number of sukuk issuances currently in circulation about$ 2.7 trillion.

Malaysia, Saudi Arabia, Indonesia, Britain, the United Arab Emirates, Turkey and Bahrain are among the countries that issue these sukuk the most, and Egypt's proceeds from this market are currently non-existent.

The committee added, and there is no justification for disrupting the use of this financing mechanism as long as the appropriate environment and tools are in place to ensure optimal implementation in line with the state's needs and requirements for financing to meet the challenges that may cause the stalling of its progress.