The government of Pakistan (GoP) has no immediate plans for issuing its debut green sovereign Sukuk although the groundwork is steadily being laid, Kashif Nisar, the head of product and Shariah structuring at BankIslami, told ISFI.
Last week, it was announced that the Islamic bank was appointed by the Ministry of Finance as the joint financial advisor for the issuance of sovereign Sukuk including green issuances.
According to Haris Munawar, the head of investment banking at BankIslami, the GoP’s green Sukuk, while having no immediate timeline in place, will contribute to the development of impact investing in the country.
“We understand that there is a lot of room where [a] public–private handshake is required to jointly play their part and bring some innovative green Sukuk and sustainable finance instruments to the market,” Haris told ISFI.
The head of investment banking further noted that BankIslami will be pitching infrastructure Sukuk, green Sukuk and social Sukuk structures to the GoP as part of its role as the joint financial advisor for the upcoming Islamic capital market issuances.
The appointment of BankIslami follows the Debt Management Office of Pakistan’s request for proposals in June this year to engage Islamic financial institutions for the issuance of Sukuk, green and otherwise.
The document outlines an initial engagement period of five years with a consortium of financial institutions for the project within the confines of the domestic capital market.
Following the publication of the GoP’s proposal request, Dr Irum Saba, the chairperson of the Securities and Exchange Commission of Pakistan’s committee for promoting Islamic finance in the non-bank financial sector, confirmed to ISFI that there were no plans for green Sukuk but they may be featured in a future issuance.
The GoP is a regular issuer of Sukuk with a total issuance of PKR1.6 trillion (US$5.27 billion) in 2022. Notably, its issuances last year constituted a substantial jump from its PKR467 billion (US$1.54 billion)-worth of Sukuk issued in the year prior.
Mirroring the sovereign Sukuk space, Pakistan has also yet to see the issuance of a corporate green Sukuk facility.
The country’s sustainable banking sector is considerably more developed. In the aftermath of the devastating floods last year, the top-down push for agricultural financing in particular has spurred growth in the sector.
ISFI reported on the 15th August 2023 that Pakistan has already met 97.6% of its agricultural financing target for this year with Islamic financial institutions contributing significantly.