Country’s Sukuk draft bill under fire (By IFN)

Country’s Sukuk draft bill under fire

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EGYPT: The Egyptian government has been under fire following the release of its Sukuk draft bill on the 19th December 2012; which has been contested over its legitimacy and its alleged disregard for the country’s sovereignty. The Islamic Research Academy (IRA) of Al-Azhar University claimed on the 2nd January 2013 that the bill is not Shariah compliant and threatens the republic’s sovereignty by allowing foreigners to own Egyptian land. Two days later, the Shura Council’s economic committee made a public statement backing the IRA’s claims. Earlier this week, the finance ministry refuted both the organizations’ claims. In an email response to Islamic Finance news, Professor Dr Shahinaz Rashad, chairperson and CEO of the Egyptian Leasing Association (ELA) noted that the IRA might have refuted the bill on two main reasons: “First, they believe that it violates Shariah law. I agree with this statement in light of the government’s initiative to introduce sovereign Sukuk for the main purpose of bridging the budget deficit gap, without having a clear purposeful objective for how they would use these funds,” she said. She went on to explain that issuing Sukuk should not just be a process of replicating conventional treasury bills to compensate for the budget deficit and a drop in foreign reserves; but should be used to finance specific infrastructure and development projects, thus adding value to the economy. “Second, they believe that sovereign Sukuk at this stage could endanger the state's sovereignty by authorizing the government to deal in Egyptian assets and lands without any constraints.” “There are no reservations about Sukuk as a product; but there are serious concerns about to what extent its application would be Shariah compliant,” she said. It remains to be seen whether the government will stand by its draft law or make the necessary amendments in light of the criticisms.