Despite the announcement that Egypt’s government, which is in desperate need for an economic relief, is using the interest free Islamic bond, also known as sukuk to save the ailing Egyptian economy, global economy experts appear far less enthusiastic about the idea.
Sounding like an emergency plan for an economic recovery, the country’s Muslim Brotherhood has recently passed a Sukuk as well as promoting the Sharia-compliant measures which would help pick up the country’s sluggish economy.
Analysts are uncertain that issuing the Sukuk would resolve Egypt’s budget deficit, believing the inkling as not workable enough to materialize into the desired results.
According to David Mikhail, a banking analyst at Beltone Financial, he said that the government has counted their money-bearing chickens before they have hatched when they expected the Islamic bond sales or Sukuk sales to ring in more than US$10 billion in investments on an annual basis.
David Mikhail, a banking analyst at Cairo-based Beltone Financial, has said that Egypt’s credit rating is the lowest it has been in years and to be asking for investor confidence in terms of Sukuk or any other tool is unrealistic although the demand for Sukuk is high.
After witnessing a tremendous slashing on Egypt’s foreign and domestic ratings, which were cut down to ‘CCC+’ and its local and foreign short-term rating to ‘C’ by Standard & Poor’s and while the country has increased its currency reserves with financing from Qatar and Libya, experts predict that it is doubtful that the Egyptian economy will be able to rebound in the nearest future.
The country’s former Finance Minister, Al Mursi Al Sayed Hegazy have convinced the local media that the law under which the Sukuk issuance is enacted, would bring in as much as $10 billion each year.