KARACHI: Pakistan’s ministry of finance is all set to issue Ijara Sukuk in the domestic capital market in January 2020 to support the government's budgetary position, the ministry spokesman said on Tuesday.
“The size (of Ijara Sukuk) is undetermined. It will be approved soon after some clarifications,” Omar Hamid Khan, spokesperson of the ministry of finance, told Arab News.
The federal cabinet on Tuesday, chaired by Prime minister Imran Khan, was expected to approve the issuance of Ijara Sukuk but delayed the decision over certain reservations, Firdous Ashiq Awan, the de facto information minister of Pakistan, told media after the cabinet meeting.
The Sukuk would also provide investment avenues to the Islamic banking industry to utilize its surplus liquidity.
“Islamic banks have surplus liquidity of around Rs 500 billion (well over the determined size of Ijara Sukuk),” Ahmed Ali Siddiqui, Deputy convenor of Standing Committee of Federation of Pakistan and Chambers of Commerce on Islamic Banking told Arab News.
“Islamic banks’ deposits have grown to Rs 2.5 trillion”, Siddiqui, who is also the Director of Centre for Excellence in Islamic Finance (CEIF) at the Institute of Business Administration (IBA), said.
As the finance ministry is open to increase the size of the bond issue in response to market reaction, the Islamic finance experts are confident that the issue would be oversubscribed in the current situation where only one Sukuk is going to be mature in March 2020.
The Ijara Sukuk, which is backed by real assets, will be issued against the unencumbered land of Jinnah International Airport (JIA) Karachi.
Though the evaluation process of JIA Karachi’s assets continues, the expert awaiting final evaluation report says that it could be around Rs 500-600 billion, which means the Ijara Sukuk could not be issued more than the asset value.