Egypt’s Muslim Brotherhood party is working on draft legislation to allow for the sale of Islamic bonds to help address a budget deficit and dwindling reserves.
“There’s a big budget deficit and the government is borrowing through treasury bills and bonds with high yields,” Ashraf Badreldin, a lawmaker with the Muslim Brotherhood’s Freedom and Justice Party, said by phone from Cairo on April 30. “The goal is to enable the government to issue sukuk to finance infrastructure and other projects.” The target is to complete the draft law by July, he said.
The North African country under toppled President Hosni Mubarak banned political parties based on religion and didn’t develop Islamic debt markets. Egypt, which is paying near-record yields on local-currency debt after last year’s uprising, may follow sovereigns in the six-member Gulf Cooperation Council in selling Shariah-compliant bonds, which pay returns to comply with the religion’s ban on interest.
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