Cairo: Egypt is preparing to enter Islamic finance industry with proper regulations as the Egyptian government has released a sovereign sukuk law which aims at organizing the financing of the government, state budget, national projects and public institutions.
According to the Head of the Egyptian Financial Supervisory Authority (EFSA), Ashraf ElSharkawy, the final draft of a sukuk law has been sent to the finance ministry before it will be examined by the parliament.
ElSharkawy said that social dialogue with political parties and economic associations is the aim of the government and not the EFSA, which is an independent entity and can be approached by political entities but not vice versa.
The Head of EFSA explained that the sovereign sukuk law released by the government is intended to organize the financing of the government, state budget, national projects and public institutions.
The corporate sukuk law, on the other hand, was put forward by the Financial Supervisory Authority and assigned by the government. Its main purpose is to organize the financing of firms and private institutions, said ElSharkawy, noting that it is up to the parliament to merge the two proposed laws.
He said that current stock market law regulations allow the trading of sovereign and corporate sukuk as ordinary financial instruments. If their trading required any modifications to the registry rules, he wouldn’t mind doing that, he added.
Any amendments to the draft law that was also sent to the Central Bank, the stock market authority, Misr for Central Clearing and a number of financial associations in the stock exchange should be addressed to the government, continued ElSharkawy.
The project law called “sukuk law compliant with Islamic Shariah” defines sukuk as nominal financial instruments of equal values representing a common share in the property of assets, services or projects as outlined by the public offering bulletin, in compliance with Islamic Shariah rulings.
The Egyptian Association for Financing and Investment Studies has presented a number of proposals pertaining to the sovereign sukuk law that was drafted by the government but opposed by Al-Azhar and Islamic parties. The suggested changes were intended as a compromise over the objections raised on some articles that define the percentage of foreign ownership in national projects.
The jurisprudential studies committee in the Islamic studies congregation affiliated to Al-Azhar has twice opposed a law drafted by the Ministry Of Finance on sovereign sukuk compliant with Islamic Shariah because it was deemed harmful to the economy and the country’s national security. It was also considered detrimental to the rights of future generations as it would allow the ownership of sukuk by foreigners and would open the door for the manipulation of fixed assets without real regulation.
The matter was referred to the senior scholars’ body that will convene before the end of the week to give a final opinion.