Key Takeaways
- The federal government will launch hybrid Sukuk bonds for the first time this fiscal year.
- These bonds will allow the government to raise funds by selling commodities in addition to pledged assets.
- The Ministry of Finance plans to share the issuance plan with the International Monetary Fund.
The federal government has announced its intention to introduce hybrid Sukuk bonds for the first time during the current fiscal year, as part of a strategy to diversify financing sources. Unlike conventional Sukuk structures that rely solely on pledged assets, this new model will enable the government to raise funds by selling commodities in the market.
According to officials at the Ministry of Finance, a third party will be engaged to facilitate commodity sales, with the commodities being sold directly in the market as part of the financing mechanism. The Ministry of Finance has also asked the National Highway Authority (NHA) to provide details of its assets that could be used for the Sukuk structure.
Officials estimate the value of NHA’s assets at more than Rs. 7 trillion, compared with an estimated value of around Rs. 5.5 trillion in the previous fiscal year. This higher valuation is expected to increase the government's capacity to issue Sukuk bonds under the new financing framework.
The Ministry of Finance will share its hybrid Sukuk issuance plan with the International Monetary Fund (IMF) before proceeding with the offering, as part of ongoing international financial oversight and support mechanisms.
Sources at the Ministry of Finance stated that this move is aimed at diversifying the government's funding sources and enhancing its ability to manage public finances. The new structure will provide flexibility in raising capital while ensuring transparency and compliance with international standards.
