ISLAMABAD: The Finance Ministry on Sunday clarified that Sukuk were Shariah compliant borrowing instruments backed by physical assets, and were structured so as to pay returns on investment as rent instead of interest by utilising an underlying asset.
“Sukuk are not only issued to support the government’s budgetary position, but also to promote Islamic banking finance in the country, which is a constitutional obligation,” the ministry said in a statement.
It said that the government of Pakistan has issued Sukuk several times, which were backed by assets such as motorways M1, M2, and M3 and also the Jinnah International Airport.
Other federal government assets such as the Islamabad Expressway, Allama Iqbal International Airport and F-9 Park have been identified, in consultation with experts in Islamic finance, as good potential candidates for Sukuk structures.
The statement emphasised that the benefits of Sukuk include lower financing cost for the government, provision of Shariah-compliant investment avenues, fulfilment of the constitutional requirement of eradication of Riba, and promotion of the Islamic financial industry.
The statement said that the Sukuk market was growing rapidly around the world, adding that till the close of 2019, Sukuk worth $1,247 billion have been issued globally.
Malaysia is known to be as a global leader in Sukuk market, while other important issuers include Saudi Arabia, UAE, Qatar, Oman, Jordan, Turkey, Morrocco and Indonesia, the statement concluded.