Tunisia may delay sukuk issue to next year
Tunis, June 19, 2013
Tunisia's first issue of a sukuk (Islamic bond) is likely to be postponed to next year, adding to pressure on government finances, because of disruptions to legislative business, said a top government official.
Finance Minister Elyess Fakhfakh told Reuters in April that Tunisia planned to issue a sovereign sukuk this July to raise $700 million. He said the government was in the final stages of pushing through legislation to permit the issue, and hoped parliament would approve the bill by end-April or early May.
But so far parliament has not begun considering the legislation because it has been occupied with the controversial task, still uncompleted, of drafting a new constitution that would permit elections expected later this year.
"So far, the finance committee has not discussed the sovereign sukuk law. There will be a delay due to a large number of concerns," Ferjani Dhogman, chairman of parliament's finance committee, told Reuters. He did not give a date for when discussions might start.
Two sources in the central bank and the finance ministry, declining to be named because of the sensitivity of the issue, told Reuters they believed it would not be possible to issue sukuk before next year, because of delays in parliament.
"It is impossible to issue Islamic bonds this year because the law is not ready and will need a long time for discussion and debate in the constituent assembly," an official in the central bank said.
He added that postponing the $700 million issue "will increase pressure on the country's budget this year". Tunisia is running a large state budget deficit, which it has projected at about $3.2 billion this year, and the sukuk was intended to help fill that gap.
The government, led by moderate Islamists, is keen to develop Islamic finance, which was neglected for ideological reasons by the regime before the 2011 revolution. A Tunisian sukuk issue could potentially attract large amounts of Islamic funds from the wealthy Gulf.
But the sukuk legislation may prove controversial, partly because the Islamic bonds will have to be backed by streams of income from individual state assets. As Egypt found when it drafted its own sukuk bill, the choice of assets and the way in which the government handles them can be politically sensitive.
Tunisia this year signed a $1.7 billion standby loan agreement with the International Monetary Fund, and a finance ministry official told Reuters that the government might have to use more IMF funds to fill the gap left by the sukuk delay. – Reuters
More Finance & Capital Market Stories
- Insurance House posts second year of profit
- ETF global assets hit record $2.44 trillion
- Bahrain firms plan IPOs
- Serbia wins $1bn Abu Dhabi loan
- Key equity banker resigns from Saudi Fransi
- DMCC to boost Islamic commodity trade with tie-ups
- IDB, KIA units to invest in Morocco
- First Gulf to set up $1bn sukuk in Malaysia
- Singapore’s UOB Bullion and Futures joins DGCX
- Infrastructure investment ‘key to growth’
- BKIC declares 30pc dividend
- StanChart profit falls 16pc in 2013
- Veteran Saudi banker to head AMF
- Dubai World prepays $284m to creditors
- EFG-Hermes sells Damas stake to Mannai
- Ultra rich number to grow 35pc in Mideast
- Saudi IPO market 'set for big year'
- RAK 'exploring' ceramics unit stake sale
- Bahrain Bourse wins key UK award
- Alba backs Euromoney forum
- URC bond rating upgraded to stable outlook
- GCC urged to set up onshore financial centres
- Consolidation push paying off for Bahrain banks
- Mubadala to focus more on US, Europe
- Six banks join plan for shared customer data register
- UAE economy grows 4pc in 2013
- Egypt foreign reserves up to $17.3bn
- StanChart opens second branch in Iraq
- Oil below $90 to hit GCC economies
- Payfort offers zero deposit scheme to SMEs