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News of Sukuk issuance agreement creates confusion among Islamist parties

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The Ministry of Finance’s head of the Public Debt Unit, Samy Khallaf, declared that a preliminary agreement has been reached with 10 international investment banks to carry out the procedures of issuing the first Egyptian Islamic Sukuk in international markets. The value of the projected Sukuk, Khallafa dded, would range from $750 million to $1 billion, reported Al-Borsa newspaper on Wednesday.

Khallafa added that the move is tied to IMF approval of the $4.8 billion loan which the Egyptian government has requested. Yet, the Ministry has not disclosed any further details regarding the agreement, nor any information regarding projects which the government plan to fund through Sukuk.

A member of the Economic Committee of Al-Nour Party, Ayman Farouk, was puzzled by the news, saying, “Islamic Sukuk by definition are related to investment.” He explained that Sukuk are different from conventional financial certificates. “They’re funding tools, not debt tools,” Farouk told Daily News Egypt.

Government officials explain that the IMF loan is not an end itself, but rather a means to an end. Minister of Finance Momtaz Al-Saeed, argues that the IMF loan approval represents a certificate of guarantee for the credibility of the Egyptian economy.

Islamist parties such as the FJP, Al-Nour and Al-Wassat have been supporting the amendment of Capital Market Law no. 92 of 1992 to pave the way for the issuance of Islamic Sukuk for the first time in the Egyptian market. A senior member of the economic committee at the FJP, Ahmed Al-Naggar, told Daily News Egypt that Islamist parties are coordinating with the government and investment firms in order to reach a consensus over the proposed amendments.

Islamist politicians say that the dissolution of the People’s Assembly in July hobbled the amendment of the Capital Market Law, which was approved in principal by the Egyptian Financial Supervisory Authority (EFSA) last June.


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