Egypt denies intention to issue sovereign sukuk to mortgage assets in exchange for borrowing

CAIRO – 22 June 2021: The Egyptian Ministry of Finance denied the state's intention to issue sovereign sukuk as a tool to mortgage state-owned assets in return for borrowing.

The ministry said in a statement on Tuesday that the goal of issuing sovereign sukuk is to create a new financing tool to diversify the investor base, in a way that contributes to achieving financial, economic and development goals, and providing the necessary financial allocations for investment projects in line with the state's efforts to enhance aspects of spending on improving the standard of living of citizens.

It added that the sukuk also comes in line with Islamic Sharia principles, without mortgaging or selling any of the state-owned assets, according to the media center of the Council of Ministers.

The ministry added that sovereign sukuk are issued on the basis of state-owned assets privately owned, by selling the right to use these assets without the right of neck, or by leasing them, provided that it is prohibited to seize or take executive measures on those assets on the basis of which the sukuk are issued, to nullify any action or conduct contrary to that, and to impose a criminal penalty on violators.

It indicated that the fixed and movable assets owned by the state will be determined as "private property" on the basis of which the sukuk are issued, so that there will be a mechanism to assess the right to use those assets on the basis of which the sukuk are issued or in return for leasing them for this purpose.

The statement explained that the sukuk will be issued in the form of a paper or electronic certificate with the specifications determined by the executive regulations of the law, and it will be nominal, of equal value, and issued for a specific period in Egyptian pounds or foreign currencies through public or private offerings in the local market or in international markets.

The ministry added that a state-owned company will be established to manage and implement the process of “sukuk” government sovereign sukuk that will be an agent for the sukuk owners, provided that the issuance is in accordance with any of the formulas that are compatible with the principles of Islamic Sharia approved by the oversight committee stipulated by law, and on the basis of the issuance contract. Its issuance, circulation and redemption are subject to the controls, rules and procedures that are compatible with the principles of Islamic Sharia.