The new Sukuk law will be approved on Wednesday by the cabinet before being referred to the Shura Council on the same day, said Ahmed El-Najjar, member of the economic committee at the Freedom and Justice Party (FJP) and advisor to the minister of finance.
“The new law is entirely different from the previous one,” he said. “It will not be called an ‘Islamic sovereign sukuk law’; just ‘sukuk law’.”
“This doesn’t mean that it doesn’t respect Islamic legislation,” he continued. “On the contrary, the first article of the law mentions that it is fully Sharia-compliant, and it will have a special [Sharia] committee to oversee its implementation.”
“It will be a comprehensive law that covers all the issuances, governmental and private,” continued El-Najjar, adding that all the recommendations of the Egyptian Financial Supervisory Authority (EFSA), political parties, the Central Bank, governmental entities and the economic committee of the Shura council, who have all discussed the law recently, were taken into consideration.
“When I began my work at the ministry of finance, mid-January, I gathered all the concerned parties, and we began editing the law with everyone’s comments on the table,” he explained. “The law was slightly modified by the legal committee of the cabinet; it will be approved tomorrow before being sent to the Shura Council.”
“We have now decided on a law that was praised by the Islamic Development Bank, who will adopt it as a model law for sukuk,” El-Najjar concluded.
During his keynote speech at the 7th International Takaful Summit, Minister of Finance Al-Morsi Hegazy denied ignoring Al-Azhar’s opposition to the law, emphasising its role as an indispensible Islamic reference-point, and adding that the government fully considered its comments on the new modified law. He also reiterated that the new law is fully Sharia-compliant.
The minister also said that sukuk revenues will be used to bridge the budget deficit gap in an indirect way, by financing long-term investments that are supposed to be backed by the government, confirming, however, that they will not be used as an alternative to regular debt instruments, but will, rather, function more within a complimentary capacity.
On his official Facebook page, Essam El-Erian, vice chairman of the FJP, stated that the new sukuk law will “alleviate the judicial discomfort which some people have regarding usury”, and that it will provide a new financing mechanism that will ease the burden on the budget and the weight of accumulated debts, helping launch services and developmental projects in all governorates.