President Morsi refers Islamic bonds law to Egypt's Al-Azhar

Sunday 31 Mar 2013

Proposed legislation regulating Islamic bonds – passed earlier this month by parliament's upper house – is referred by President Morsi to Egypt's Al-Azhar for approval

President Mohamed Morsi on Sunday referred a controversial draft law on Islamic bonds – or sukuk – to Al-Azhar's Senior Scholars Authority, according to Egyptian state television.

In late February, Al-Azhar, Egypt's leading Islamic religious authority, said its clerics must be consulted on the proposed law, which would allow the government to issue Islamic bonds.

Al-Azhar's statement set it at odds with the Muslim Brotherhood, which drove the legislation through the Shura Council (the upper house of Egypt's parliament, currently endowed with legislative powers) on 19 March.

The law would let Egypt issue bonds compliant with Islamic principles regarding debt interest, allowing the state to tap into new areas of finance as the administration of President Morsi grapples with a widening budget deficit.

The proposed sukuk law has been a source of friction between the Brotherhood, whose Freedom and Justice Party (FJP) represents a majority in the Shura Council, and more hard-line Islamist groups who say the draft legislation must first be approved by Al-Azhar scholars.

Morsi hails from the Muslim Brotherhood and was the head of the FJP before assuming the presidency.

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