PHOTO
Algeria is pushing ahead with plans to issue its first sovereign Islamic bonds (Sukuk) in early 2025 to fund domestic projects covering infrastructure and other sectors.
Authorities are working on a new law to regulate the issuance of Sukuk in the local stock market as per the 2025 budget law that was endorsed by Parliament in late 2024, according to Director General of Algiers bourse Yazid Benmouhoub.
“This is a significant move by the Government because it will secure stable project finance and largely boost dealings in the stock market,” he told Algeria’s Arabic language Aljomhouriya newspaper on Tuesday.
“It will benefit local individual investors as well as Islamic banks and other Sharia-compliant financial and insurance institutions.”
Algerian officials said in October that key projects targeted by the Sukuk issuance involve infrastructure, schools, hospitals and facilities that will contribute to boosting growth and improving life quality for citizens in the North African OPEC producer.
They added that such a move would also strengthen investors’ confidence in the domestic market, attract foreign capital, lessen reliance on foreign debt and boost Algeria’s financial reputation.
“The issuance of government Islamic bonds as per the 2025 budget law is an important step that will support major domestic projects through innovative instruments…the decision is also compatible with the government policy of bolstering Islamic finance and expanding the investors’ base,” said Sofiane Mazari, head of Islamic finance at Crédit Populaire d'Algérie (CAP) bank.
In comments in November, Algeria’s Finance Minister Laaziz Fayed announced that the Finance Ministry would issue the Sukuk in early 2025 as part of the country’s budget which he said includes several projects in infrastructure and other sectors.
Fayed said the new bonds are part of the Ministry’s plan to diversify sources of public project finance, absorb swelling liquidity and attract as many investors as possible to fund domestic infrastructure projects without the need for borrowing or raising taxes.
“We are working to set new principles and regulations for such bonds in line with the Islamic Sharia (law),” the Minister said.
“We aim to make these bonds a safe means of investment to allow investors to make high profits…this will be possible through a package of incentives that we intend to issue including tax exemptions for Sukuk investors,” he added without specifying the value of the Sukuk or the exact date of issuance.
Algeria’s 2025 budget, which was endorsed by Parliament in late 2024, forecasts spending at around 16.79 trillion Algerian dinars ($124.5 billion) and revenue at DZD8.52 trillion ($63.2 billion).
(Writing by Nadim Kawach; Editing by Anoop Menon)
Subscribe to our Projects' PULSE newsletter that brings you trustworthy news, updates and insights on project activities, developments, and partnerships across sectors in the Middle East and Africa
