The financial facilities, the maturity of which extends up to three years, are needed for thepublic treasury and to fund the FY2021/2022 budget deficit, said the ministry. 

Egypt’s House of Representatives gave the go-ahead for sukuk bills in June. The cabinet had approved it in November 2020.

With the June announcement, Egypt ushered in an Islamic financing system, recording $2.7 trillion in transactions globally by the end of June.

Egypt’s Islamic sukuk are expected to be offered in both local and hard currencies to provide cash liquidity for the Egyptian economy and decrease the cost of investments, Maait added.

The Islamic sukuk issuance is part of the finance ministry’s plan to diversify its base of investors who want to invest in governmental financial securities in line with the principles of Islamic Sharia.

It will also allow the utilisation of state-owned assets according to the beneficial right system through ownership without usufruct or renting.

Islamic finance is part of a bigger concept of the Islamic economy, the value of which ranges between $2.5 trillion and $2.7 trillion globally, according to Bashar Al-Natoor, the global head of Islamic finance at Fitch Ratings.

More than 40 countries are adopting Islamic finance, but it is focused significantly in six Gulf countries, Malaysia, Pakistan, Indonesia, and Turkey.

A number of non-Arab countries have also tapped this ground, including the UK – which issued sukuk twice – in addition to Luxemburg, South Africa, and Honk Kong.

In September 2020, Egypt sold $750 million in five-year green bonds, in the first sale of such bonds by a government in the Middle East and North Africa region.

Egypt has adopted a green bond framework for the issuance of sovereign green instruments, signalling its commitment to its environmental and sustainable development objectives.

“Egypt is pursuing an ambitious plan to upgrade its infrastructure for greater energy efficiency and resource conservation,” said Maait.