Egypt prepares to issue 1st sovereign sukuk after gov't approval

CAIRO – 4 November 2020: Minister of Finance, Mohamed Maait, announced the Cabinet's approval of a new sovereign sukuk bill, which it was decided to submit to the House of Representatives.

Maait said in a statement, Wednesday, that Egypt is preparing to issue the first sovereign sukuk, as soon as the House of Representatives approves, and President Abdel Fattah El-Sisi ratifies the new law, stressing that it will open the door for Egypt to enter the world of Islamic finance, whose volume of transactions reached at the end of last June about $ 2.7 trillion.

The minister added that the proposed law is part of the ministry’s plan to diversify the investor base in government securities, especially since sovereign sukuk are issued in formats compatible with Islamic Sharia principles.

He explained that Egypt's issuance of sovereign sukuk will contribute to attracting a new segment of investors interested in investing in accordance with the principles of Islamic law, thus providing additional financing and liquidity to government financial markets, and also helping to reduce the cost of financing the state's budget deficit and prolonging the average life of the debt portfolio.

Maait pointed out that the issuance of sovereign sukuk is based on the usufruct of the assets owned by the state in private ownership, by selling the right to usufruct these assets without the right of of the title, or by leasing them, or by any other method consistent with the issuance contract of these sovereign sukuk without guaranteeing the owner of the sukuk in the assets in accordance with the principles of Islamic Sharia.

Maait confirmed that the ministry approved the final form of the new bill after referring to all ministries and agencies concerned with financial control, as well as with some Islamic banks with experience in the field of issuing sovereign sukuk, as well as Al-Azhar Al-Sharif, with the aim of reaching the best formula for the articles of the law in line with the nature of the sukuk. Sovereignty and government financial markets, as well as to ensure that all its articles are in accordance with the principles of Islamic law.