Cairo: Egypt has approved a draft law to allow sovereign Islamic bonds, known as sukuk, as a new way to finance an unsustainable budget deficit. Finance minister Al-Mursi Al Sayed Hegazy has told the media that Islamic Development Bank, a multilateral institution, has indicated it could buy around $6 billion of sukuks. Egypt has never issued a sovereign sukuk. An international issue would help the government replenish dangerously low foreign reserves.
The Muslim Brotherhood, which controls the presidency, also wants to promote sukuk for religious reasons. Hegazy, an economist who is an expert on Islamic finance, said he expected the new law to attract fresh investment to Egypt, said Reuters in a dispatch.
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