The cabinet approved the issuance of Islamic Sukuk bonds and leases on Tuesday.
The move comes in a bid to promote Islamic banking (IB) in the country. The Ministry of Finance had proposed pledging of Islamabad-Peshawar Motorway, Pindi Bhattian-Faisalabad Motorway, and Islamabad Expressway along with two major airports, Islamabad and Lahore for issuance of domestic and international Sukuk bonds.
The cabinet approved the proposal and suggested that the ministry may fix more assets in it.
To date, the Finance Division has undertaken 32 domestic and four international ljara Sukuk transactions amounting to Rs. 1,573 billion and $3.6 billion, respectively.
The continuity in the issuance of domestic Sukuk will enable the government to meet its target of having 10 percent Shariah-compliant instruments in domestic securities by the end of the fiscal year 2023. As of December 2020, this stood at 3.8 percent.
For the upcoming fiscal year, the need for raising Rs. 1.2 trillion and $3.5 billion have been proposed from domestic and external financing plans, respectively. Therefore, the Finance Division would prefer to undertake Sukuk transactions as much as possible as this would help in obtaining better pricing as compared to other avenues of raising domestic and external resources such as T-bills, PIBs, and conventional Eurobonds.