The Ministry of Finance has clarified that Sukuk are Shariah-compliantborrowing instruments backed by physical assets and are structured so as topay returns on investment as rent instead of interest by utilizing anunderlying asset.

A statement by the ministry read: “Sukuk are not only issued to support theGovernment’s budgetary position but also to promote Islamic banking financein the country, which is a constitutional obligation. The Government ofPakistan has issued Sukuk several times, which were backed by assets suchas Motorways (M1, M2, M3) and Jinnah International Airport”.——————————

Other federal government assets like the Islamabad Expressway, Allama IqbalInternational Airport, and the F-9 Park have been identified inconsultation with experts in Islamic finance as good potential candidatesfor Sukuk structures.

It must be emphasized that the benefits of Sukuk include:• Lower the financing cost for the government• The provision of Shariah-compliant investment avenues• The fulfilment of the constitutional requirement of eradication of Riba• Promotion of the Islamic financial industry——————————

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The Sukuk market is growing rapidly around the world. Sukuk worth USD 1,247billion have been issued globally until the close of 2019. While Malaysiahas been the global leader in the Sukuk market, the other important issuersare Saudi Arabia, UAE, Qatar, Oman, Jordan, Turkey, Morrocco, and Indonesia.