Grand Sheikh of Al-Azhar, the highest Islammic Sunni institution, Ahmed Al-Tayeb (Photo: AP)
Members of the Islamic Research Academy, one of Al-Azhar's affliated institutes, say they reject a bill on Islamic bonds (sukuk) recently approved by Egypt’s Cabinet.
The institute declared that it rejects the bill because “it is not compliant with Sharia rules and threatens the state sovereignty.”
The 50 members of the Islamic Research Academy also contest articles authorising the presidency and Egypt’s Cabinet to deal in Egyptian assets and lands without constraints. They say this right should be given to parliament as the representatives of the Egyptian people.
The draft law the Islamic scholars object to allows the government to issue Islamic sovereign bonds in Egyptian pounds or foreign currencies through public offerings. The bonds represent shares in assets, utilities or services, or properties in given projects.
Because the traditional Western interest-paying bond structure is not permissible under Sharia law, the issuer of a sukuk sells an investor the certificate, who then rents it back to the issuer for a pre-determined rental fee. The issuer of the sukuk also makes a contractual promise to buy it back at a future date at par value.