The federal government has given a green signal to the launch of Ijarah Sukuk worth Rs. 700 Billion against Jinnah International Airport for a period of three years. The Sukuk will generate additional funds in the coming weeks for the government to meet its budgetary expenses for the financial year.
The cabinet approved to pledge Jinnah International Airport Karachi’s land as the guarantee to launch Islamic denominated Sukuk issue. It is over 1,500 acres of prime land with a current market value of around Rs. 750 billion.
In this regard, the State Bank of Pakistan will carry out the modalities and exercises whereas three banks – Meezan Bank, Dubai Islamic Bank, and Alfalah Islamic Bank will be Joint Financial Advisors for GOP Sukuk Program.
The Sukuk witnessed a delay as it was planned to get launched in December or January. However, the spread of COVID-19 in the country raised additional demand for funds which could be supported by the Sukuk issue along with other avenues.
Previously, Sukuk of Rs. 300 billion was raised against Karachi airport in three separate issues that matured in November 2019. The government had issued its last GIS more than two years ago. Meanwhile, it raised funds in two transactions of Rs. 4.6 billion and Rs. 2.8 billion against the mode of Bai-Muajjal (deferred payment) to meet its budgetary deficit or expenses for development projects.
The Sukuk will benefit Islamic banks with excessive unutilized liquidity that will also reflect positively on their balance sheets.