The government is set to generate funds of Rs. 1.5 trillion
through Ijara Sukuk against various assets, mainly public sector projects in
the current financial year 2022-23 (FY23).
According to industry sources, the government is exploring
new concepts such as asset-light structure, green Sukuk (for renewable
projects), and sustainable Sukuk to increase the share of Sharia-compliant
instruments in government securities by the end of FY23.
The government identified six key assets for utilizing the
domestic and international Ijara Sukuk in order to meet budgetary needs and
promote Islamic banking in Pakistan.
These assets include the unencumbered portions of GT Road
and Islamabad Expressway, Makran Coastal Highway (N-10), Indus Highway (N-55),
and Islamabad Sports Complex. Other assets include the unencumbered portions of
West Wharf and East Wharf, Karachi, land, hotels of Pakistan Tourism
Development Corporation, and infrastructure of Islamabad Metro.
Islamic banks and financial institutions will get benefit
from these Sukuks including Meezan Bank, Faysal Bank, BankIslami, and Dubai
The government of Pakistan first entered the global Sukuk
market in 2005 with the issuance of $600 million Sukuk, while the domestic
Sukuk program was launched in 2008. According to the State Bank of Pakistan
data, till June 2022, the government has successfully issued Ijarah Sukuk
amounting to Rs. 3.25 trillion in the domestic market.
In 2020, the Ministry of Finance aggressively revived the
Sukuk program after almost three years. As a result, from April 2020 to June
2022, the government issued Ijarah Sukuk of more than Rs. 2.315 trillion
(approximately $13 billion) in the domestic market. These issuances not only
helped the government reduce its borrowing cost compared to conventional
instruments but also helped develop Sharia-compliant avenues for the government
in the domestic Islamic capital market.