The government is considering the issuance of sukuk (sharia-compliant bonds), in the local currency, worth $2 billion within two months, Mohamed Hegazy, head of the debt management unit at the Ministry of Finance, told a business conference in Cairo last week.
Hegazy has said that the government aims to issue sukuk in the local currency before the end of this year to attract local and Arab investors, who are keen on investing in sharia-compliant instruments. The new drive is aimed at luring investors, who only deal in sharia-compliant instruments.
The government aims at tapping sukuk as a sovereign financing instrument. Sukuk can offer a diversified package of interest-free funding schemes for state and corporate investments.
The IMF defines sukuk as investment certificates that can be issued by sovereigns and corporations and which exhibit similarities and differences with conventional bonds.
Similar to bonds, sukuk have a maturity date and sukuk holders receive a regular stream of income (fixed or variable) over the life of the certificate along with a balloon payment at maturity.
Sukuk can play a key role in funding the state budget deficit, infrastructure projects, and corporate finances, experts say, urging the government to draw on this untapped financial instrument.
The Capital Market Law contains a full chapter on corporate sukuk in a bid to push Islamic finance as a whole ahead.
The Capital Market Law is aimed at striking a balance between investor protection and business facilitation. It is designed to lure types of investors who consider fixed-income instruments are not compliant with Islamic sharia.
Premiums jump 9.8% in Q1
Premiums rose by 9.8 per cent to LE13.2 billion in the first quarter (Q1) of 2022, data from the Financial Regulatory Authority (FRA) showed. Non-life premiums increased by 2.6 per cent to LE5.5 billion, in 2022 Q1, compared to LE5.3 billion in 2021 Q1.
Life premiums jumped 15.5 per cent to LE7.7 billion in 2022 Q1, against LE6.7 billion in the same quarter a year ago, according to FRA data. Meanwhile, paid claims surged by 23.6 per cent to LE7.5 billion in 2022 Q1, up from LE6.1 billion in the same period in 2021.
Paid life claims soared by 63.4 per cent to LE5.1 billion in 2022 Q1, compared to LE3.1 billion in the same period in 2021, according to FRA data. However, paid non-life claims fell by 18.8 per cent to LE2.4 billion in 2022 Q1, down from LE2.9 billion in the same period a year earlier.
Paid claims rose to LE3 billion in March 2022, compared to LE2.9 billion in the same month the previous year, according to FRA data. Paid life claims jumped by 50.3 per cent to LE2.1 billion in March 2022, up from LE1.4 billion in the same month in 2021.
Non-life premiums rose by 4.3 per cent to LE1.8 billion in March, up from LE1.7 billion in the same month the previous year, according to FRA data.
Life premiums increased by 12.1 per cent to LE3 billion in March, up from LE2.7 billion in March 2021.
