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Wednesday, February 21, 2024

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Head of Egypt’s Financial Regulatory Authority confirms plans for sustainable Sukuk

In a bid to attract foreign investment and further accelerate growth, the head of Egypt’s Financial Regulatory Authority (FRA), Mohamed Farid, and the chairman of the Egyptian Exchange, Rami El-Dokany, have confirmed the launch of a sustainable Sukuk issuance “in the near future”.

The confirmation comes a mere month after the country’s long-awaited sovereign US$1.5 billion Sukuk facility was issued on the 21st February 2023. The plans for the sovereign Sukuk were first announced over a decade prior in 2012.

Over the past year, Egyptian regulators have made several regulatory efforts toward cultivating fertile soil for the issuance of sustainable capital market instruments.

Earlier this year on the 3rd January, Egyptian Minister of Finance Dr Mohamed Maait announced the Sovereign Sustainable Financing Framework, an update of its green financing framework launched in 2020, under which it issued MENA’s first green sovereign bonds worth US$750 million in 2020.

The updated framework added new categories of green projects with a social dimension to Egypt’s sustainable portfolio to reflect the Egypt 2030 Vision, a statement from the Ministry of Finance detailed.

Last year on the 3rd October, the prime minister of the North African nation, Dr Mostafa Madbouly, issued a decision to amend the provisions of the executive regulations of the Capital Market Law No. 95 of 1992.

According to the head of the FRA, the amendments include articles regulating the development of sustainable development bonds, sustainable development-related bonds, social bonds, women empowerment bonds, climate bonds as well as transitional infrastructure bonds.

Mohamed noted at the time of the amendments that the proceeds of the sustainable capital market instruments will finance projects of policies and initiatives related to the SDGs.

The issuances are expected to strengthen basic infrastructure such as drinking water, sanitation, electricity and energy as well as enhance basic services including education, vocational training and healthcare.

The upcoming developments were discussed at a workshop on investment opportunities in Egypt attended by a delegation of Egyptian financial sector leaders and members of the Saudi investment community. The workshop was held by financial services company GTN Group.

The delegates in attendance included the deputy governor of the Central Bank of Egypt, the chairman of Mubasher Financial Group, the vice-chairperson of the Saudi–Egyptian Business Council and the Egyptian ambassador and deputy ambassador to Saudi Arabia in addition to Mohamed and Rami.

Also at the workshop, the regulators confirmed the upcoming launch of a Shariah compliant index.

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