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Egypt Takes First Step in Islamic Finance Market

Egypt Takes First Step in Islamic Finance Market

Tuesday, 8 June, 2021 - 09:45
With the issuance of this law, Egypt is entering the Islamic finance market for the first time, with the volume of sukuk issuances reaching $2.7trln (Reuters)

Egypt is getting ready to offer its first sovereign bonds (Sukuk), almost the first of its kind for the country, following parliament’s — House of Representatives — approval on the sovereign bonds (Sukuk) bill, said Minister of Finance Mohamed Maait on Monday.


The parliament approved on Sunday the new bill, which is waiting on the final vote of a two-thirds majority of MPs.


The bill received cabinet approval in November 2020.


The bill paves the way for Egypt’s government to usher in an Islamic financing system, which recorded $2.7 trillion in transactions globally by the end of June, according to Maait.


If passed, the bill will see Egypt attracting new types of investors who will pour extra finances and liquidity into Egypt’s governmental financial market and will contribute to putting the cost of the state’s public budget deficit on a downturn as well, according to the minister.


Egypt will likely offer Islamic Sukuk in both local and hard currencies for the sake of providing cash liquidity for the Egyptian economy and decreasing the cost of investments, he added.


Egypt will issue its Islamic Sukuk in either a paper or electronic certificate according to the specs the bill’s bylaws will set, according to Maait.


He added that a state-owned corporation will be established to be an agent for Sukuk owners and will manage and execute the Sukuk issuance.


He also noted that the time ceiling of the right to use the state-owned assets, under Sukuk bonds, is set at 30 years with the availability of re-letting these assets.


According to the minister, the bill bans foreclosing on these assets and forbids taking any regulatory procedures on them.


The sovereign Sukuk bill is part of the finance ministry’s plan to diversify its base of investors who want to invest in governmental financial securities, especially that the new legislation will be issued in line with the principles of Islamic Sharia.


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