The government is set to move forward with its plan to issue the first sovereign sukuk denominated in EGP at the beginning of FY 2025-2026 “despite current events,” Finance Minister Ahmed Kouchouk told EnterpriseAM.

Kouchouk declined to disclose the size of the issuance, but expressed optimism over its success. We were told last month that the Finance Ministry was working to complete an issuance of USD 1.5-2 bn worth of sukuk that will help repay some USD 1.5 bn of maturing ten-year bonds issued back in June 2015, with the issuance expected to come before the second half of this month.

What we know so far: The issuance will be done in tranches and will be directed toward government entities that are part of the sovereign sukuk program, a senior government source told EnterpriseAM. The issuance aims to finance public investments outside of the general budget, the source said. The issuance also comes as part of the Finance Ministry’s strategy to avoid a rise in interest rates, Kouchouk told us.

Different types of sukuk are being considered to finance the state’s development projects, including ijara (leasing), murabaha (cost-plus financing), and istisnaa (construction/manufacturing).

“We aim to create a balanced sovereign financing framework with lower costs than traditional borrowing, whether domestic or external, to support the comprehensive structural reform plans targeting deficit reduction, continued development efforts, and a rapid decline in public debt levels through the use of various tools,” our source said.

AND- The country has managed to reduce the external debt of budget entities by an estimated USD 1-2 bn annually, according to an Ittihadeya statement, citing preliminary indicators.

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