Ahmed Al-Naggar, advisor to Egypt's Finance Minister for Islamic bonds, said the ministry was close to completing drafting the legal bylaws for the country's sukuk law, which would enable it to sell Shari'a-compliant debt both internationally and locally. The law, which stirred significant controversy prior to and following its ratification by the Shura Council in March, exempts capital gains and coupon payments from taxation. Both the government and the upper house pushed forth with the law despite criticism from the Al-Azhar, the main Sunni reference in the country, in hopes it would bring in foreign currency to an economy that has been aggressively expending its foreign reserves since the 2011 revolt. Al-Azhar Council of Senior Scholars refused to approve the sukuk draft law last December, saying it would grant sukuk holders ownership of state assets and allow foreigners to subscribe to IPOs without a maximum ceiling, adding that some articles defied Shari'a edicts. Al-Naggar said official statements were released and sent to various government institutions detailing the vision for the new law, including the Central Bank of Egypt, the Egyptian Financial Supervisory Authority, and the Egyptian Stock Market. He added that a number of public and private agencies will take part in the drafting of the law's new regulations, including the Central Bank, which will help determine the role of banks as promoters and subscribers for such bonds, both in the public and private sector. Egypt's EGX stock market and Capital Market Authority will be responsible for putting in place laws regulating the trade of such bonds on Egypt's stock market, in addition to amending the country's accounting laws, particularly those concerned with Islamic bonds and their returns. Naggar stated that the new draft law will be posted on the ministry's website, in order to promote dialogue on the issue. In a recent interview with Al-Borsa newspaper, Al-Naggar said that he expects the first sukuk issuance to take place before Ramadan, and that some sukuk sales would be restricted to Egyptians for national security purposes. He added that the Islamic debts were being marketed to the Egyptian diasporas in the Arabian Gulf, including Qatar and Kuwait, which amount to approximately 5 million citizens. Proceeds of the sale will be used to finance national projects such as the construction of wheat silos, and developing parts in the Suez Canal, he said. Al-Naggar also said that training courses on the application of the Shari'a-compliant bonds conducted by the ministry in cooperation with the Islamic Development Bank (IDB) were attended by 25 representatives from the Ministry of Finance, 20 from the country's various governorate offices, 20 commercial bank representatives, 8 from securities associations and investment organisations, 7 from various Egyptian holding companies, in addition to representatives from Egyptian regulatory agencies such as the Central Bank, Egyptian Financial Supervisory Authority, the Egyptian Stock Market and Misr for Central Clearing Depository and Registry. He added that the training courses demonstrated the extent of investors' interest in Egypt's new Islamic bonds programme, which he described as one of the country's most important new financial tools, whose popularity has been increasing rapidly in recent months, and will enable Egypt to achieve rapid growth and ensure the coverage of future Islamic bonds throughout the country. Al-Naggar went on to say that Egypt's Finance Ministry has been cooperating with the IDB in hosting these training courses, and will continue to do so in order to advertise the release of Egyptian Islamic bonds, in addition to help oversee the country's IPO's. He stated that the Ministry was also in the process of conducting meetings with representatives from Egypt's expatriate community living abroad in order to explain and discuss the benefits of Islamic bonds. Such meetings began last week, first in Qatar during the World Economic Forum in Doha, with additional meetings set to be held next Thursday in Saudi Arabia during the Annual Meeting of the Forum for Arab Investors in Riyadh, during which government representatives will attempt to promote Egypt's Islamic bonds law.
