With the issuance of the law, Egypt will be entering the Islamic finance market for the first time, with the volume of sukuk issuances reaching $2.7 trillion, said Maait in a statement today
Egypt is prepared to issue its first offering of sovereign sukuk immediately after the approval of Parliament, in turn signing on the Sovereign Sukuk law, said Minister of Finance, Mohamed Maait.
The law would contribute to achieving financial, economic, and development goals by diversifying the sources of financing the government’s budget deficit and allocating financing for investment projects, according to what was published by the official page of the Council of Ministers.
With the issuance of the law, Egypt will be entering the Islamic finance market for the first time, with the volume of sukuk issuances reaching $2.7 trillion, said Maait in a statement today.
The sukuk aims to attract new Egyptian and foreign investors to invest in accordance with the principles of Islamic Sharia in Egyptian pounds, US dollars and other currencies.
This is if the sukuk issued in the local market is listed on the stock exchange, approved by the Control Committee stipulated by law, and subject to controls, rules and procedures that are compatible with the principles of Islamic Shariah.
Maait explained that the issuance of the sukuk will be based on the assets that will be privately owned by the state, by selling the right of usufruct of these assets, leasing, or by any other method consistent with the principles of Islamic Sharia, relying on a decision to be issued by the Prime Minister which would define the fixed and movable assets owned by the state as “private property” on the basis of which the sukuk are issued.
Usufruct is defined as the legal right to use and derive profit from property belonging to someone else provided that the property itself is not injured in any way.
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, Maait added, saying that 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.
A state-owned company will be established to manage and implement the process of issuing sovereign sukuk that will act as an agent for sukuk owners, he explained.
The maximum period for determining the usufruct of the assets used to issue or lease sukuk is 30 years, with the assets possibly leased back to the issuer, however it will be prohibited to seize or take executive measures on the assets.
