Egypt's Finance Minister Hany Qadry (Photo: AP)
Egypt will issue Islamic bonds (Sukuk) to finance its budget deficit for the current fiscal year, which is estimated around $36 billion, the country's finance minister Hany Kadry Dimian told the Euromoney Egypt Conference on Monday.
The Sukuk will be issued in 2016, Dimian told Ahram Online during the conference.
Sukuk are financial certificates issued by companies or governments and sold to investors, who then rent them back to the issuer. The mechanism allows sukuk-issuers to raise capital from investors without using debt, which is prohibited in Islamic teachings.
Egypt has embarked on 'aggressive' fiscal policy reform since the election of president Abdel-Fattah El-Sisi in June 2014 to clench the widening finance gap.
The government reduced fuel subsidies this fiscal year to LE61 billion compared to LE70 billion spent in the previous year.
As part of fiscal consolidation measures, the government reformed the food subsidy system to subsidise the consumers rather than the products in the old system.
"I cannot say that we have a food subsidies system anymore. It has been effectively transformed into a cash transfers system," Dimian said.
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