The domestic Sukuk market has fetched the Pakistani government north of Rs. 760 billion (approximately $4.7 billion).
This amount has been collected with Islamic banks still maintaining enough liquidity to fill in the fiscal gap, a national daily reported.
Ijara Sukuk, based on variable and fixed rental rates, last year, brought Rs. 561 billion out of this total amount, while Rs. 200 billion were brought by Pakistan Energy Sukuk II.
The report by quoting a banking source stated that this higher issuance activity during the year has been brought on due to the growing demand for shariah-compliant financial instruments, along with the efforts of the government and the State Bank of Pakistan (SBP) to promote Islamic banking.
With Islamic financing, the government itself was able to get lower rates compared to conventional financing, using T-bills and PIBs. According to a banking professional quoted by the daily, the outlook seems bright for Sukuk with expectations of Rs. 800 to 900 billion of floating this year.
No Sukuk offerings were made by the Pakistani government between 2016 and 2019. They gained momentum after a gap of five years in 2020, after the first of its kind Sukuk I, was issued in March 2019, aimed at tackling circular debt.