Red Sea land allocated for sukuk issuance, not sold: Egypt Finance Ministry - Economy

Al-Ahram Weekly

2 days ago

Egypt's Ministry of Finance confirmed on Thursday that the ownership of the prime plot of land allocated to the ministry in the Red Sea Governorate will not be transferred to any entity and will be used for issuing sovereign sukuk (Islamic bonds) to reduce government debt.
In a statement, the ministry confirmed that the land will not be sold but rather used as collateral for issuing sukuk, which will allow it to be developed and used.
It added that this initiative aims to secure financing under favorable terms to cover the needs of the state's general budget.
It also stressed that the land would remain under full ownership of the Egyptian state, which is represented by the ministry.
The statement further explained that the move aims to use part of the land to achieve optimal country development through partnerships and deals with financial sector entities and economic authorities within the government.
It said the strategy includes replacing some of the existing debt owed by budgetary agencies to these government bodies with joint investment ventures.
This strategy will first reduce budgetary agency debt and the overall debt servicing burden.
It will also help develop the land into productive, service-oriented tourism and real estate projects, generating long-term, sustainable economic returns and job opportunities for future generations.
The ministry noted that these measures will improve public finances, reduce government debt, boost economic activity, enhance the competitiveness of the Egyptian economy, and lower financing costs.
Moreover, they will create additional fiscal space to increase spending on social protection programmes for the most vulnerable and lower-income groups and raise allocations for human development sectors, particularly health and education.
Managing debt
The ministry statement followed President Abdel-Fattah El-Sisi's decision on Tuesday to assign 174 million square metres of state-owned land in the Red Sea Governorate to the Ministry of Finance as part of ongoing efforts to manage public debt and fund sovereign sukuk issuance.
The decision aligns with a broader government strategy to enhance debt sustainability.
Prime Minister Mostafa Madbouly recently emphasized Egypt's commitment to responsible borrowing, noting that recent bond issuances are designed to extend debt maturity timelines.
In its monthly statistical bulletin on Tuesday, the Central Bank of Egypt (CBE) said Egypt's external debt declined by approximately $111 million during the second quarter (Q2) of fiscal year (FY) 2024/2025. It reached $155.09 billion by the end of December 2024, compared to $155.20 billion by September 2024.
The CBE added that Egypt has paid approximately $13.354 billion in interest and installments on its external debt during Q2 of FY2024/2025.
The Tuesday bulletin also indicated that debt service burdens are divided into $1.861 billion paid in interest and $11.492 billion paid in installments.
Sukuk bonds are Shariah-compliant financial instruments that offer investors a share in a tangible asset rather than a debt obligation.
They rely on a profit-sharing or leasing structure, unlike traditional bonds that generate income from interest.
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