Egypt prepares to issue its first sovereign sukuk in the next period

Mohamed Maait, Egypt’s finance minister, said Egypt is keen to diversify funding sources and instruments by attracting new segments of Egyptian and foreign investors who wish to invest. in compliance with Islamic law.

He stated that this helps to reduce the cost of development financing through sovereign green instruments and sustainable development instruments, to provide the necessary liquidity to carry out investments, development and green projects included in the economic and social development plan in the general state budget And in in in line with the state’s efforts to stimulate demand for government issues of securities and debt instruments issued in local and foreign currencies and to improve the aspects of spending aimed at improving the standard of living of citizens and meeting the development needs of the state.

The Egyptian minister stressed that the government is preparing to issue the first sovereign sukuk offered in the next period. Which helps to achieve the desired goals.

Maait added that the executive regulations of the Sovereign Sukuk Act have been prepared, in collaboration with Al-Azhar, the Financial Supervisory Authority and local and international law firms, to cover all legal aspects and to confer a legal and technical character in compliance with formulas compatible with the principles of the Islamic Sharia.

Forms of subtraction

He explained that the sukuk will be issued in the form of a paper or electronic certificate with the specifications determined by the executive regulations of the law, and will be nominal, of equal value, and issued for a specified period in Egyptian pounds or foreign currencies through public offerings or private on the local market or international markets.

The Egyptian minister also stated that the issuance of sukuk is based on the assets that will be privately owned by the state, by selling the usufructuary right of these assets without the right to parcel, or by renting them, or by any other method consistent with the contract for the issuance of these sukuk according to the principles of the Islamic Sharia, in on which a decision of the Prime Minister defining movable and immovable property owned by the State as “private property”, in basis on which the sukuk are issued, in so that there is a mechanism to assess the right to use those assets or in change of their location a tale purpose, provided that the maximum period for determining the right to use such assets is OR the duration of the lease is thirty years in compliance with the provisions of the constitution, and these assets can be relocated to the issuer.

He stressed that sovereign sukuk are issued according to formulas compatible with the issuance contract and associated contracts, including murabaha sukuk which are issued on the basis of the murabaha contract, and the proceeds of their issuance from sovereign sukuk companies are used; To finance the purchase of usufruct rights on Murabaha assets from a supplier or owner, Ijarah sukuk issued on the basis of a contract providing for the transfer of the usufruct of the assets and concluded between the issuer and the sovereign bond company with the leasing intention to the issuer in under an Ijarah contract, and Istisna sukuk issued on the basis of Istisna’s assets for the purpose of selling the rights The use or leasing of these assets, the sukuk represents a common share in the ownership of the usufruct rights of the manufactured goods, and the sukuk agency issued on the basis of an agency agreement to invest in the usufruct rights of assets. The issuer can combine two or more of these formats for a single issue, and the issuer can also issue sovereign sukuk of all types, including green sukuk or sustainable development sukuk, provided the oversight committee approves.

tax treatment

He explained that the tax treatment prescribed on public treasury bills will apply to the yields of sovereign sukuk and the yield of the trading on them, and to link and collect taxes due on the yields of sovereign sukuk and the yield of trading on them is followed by the same procedures followed for the connection and collection of taxes due on public treasury bonds, underlining that the holders of sovereign sukuk are entitled during the period of issue to periodic profits or returns proportionate to the amount of the contribution of the sukuk and redemption value at the end of the sovereign sukuk’s term or accelerated redemption date, and to trade sovereign sukuk according to their issuance formulas and to form a group of sukuk holders to protect the common interests of its members in compliance with the provisions of the law and its executive regulations.

Supervisory Committee

Maait indicated that work will be done to form a “supervisory committee” made up of experts in economics, finance and law and some scholars from Al-Azhar Al-Sharif, and will be responsible for summarizing emissions technically and legally and approving controls related to the sukuk, in addition to establishing a state-owned company for the management and implementation of the government’s “stinging” sovereign sukuk process. and on the basis of the issuance agreement, and its issuance, circulation and redemption are subject to controls, rules and procedures compatible with the principles of the Islamic Sharia, and the company Sovereign Sukuk can deal with more than one issue and preparation An annual report on the investments in based on their use for the purposes for which they were issued, the emissions in based on their value, the value of the yields owed to sukuk holders and their maturity dates.

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