Amman:Deputy Prime Minister and Minister of State for Economic Affairs Muhannad Shehadeh has announced the Cabinet's approval for the Greater Amman Municipality (GAM) to issue Islamic Sukuk, marking an unprecedented decision that provides the municipality with enhanced flexibility in managing debt-service costs.
According to Jordan News Agency, Shehadeh emphasized that this initiative could potentially save GAM approximately JD140 million over the next decade, offering greater financial leeway for restructuring and meeting its financial commitments.
The Cabinet session, chaired by Prime Minister Jafar Hassan, authorized GAM to issue JD400 million in Islamic Sukuk under an Ijara Muntahia Bittamleek (lease-to-own) structure, with a 5.5 percent annual return over a five-year term. This strategic move aims to improve financial management, cut borrowing costs, and explore Islamic financing opportunities in the domestic market. It is the first of its kind in Jordan for a public municipal entity and aligns with the country's Economic Modernization Vision.
Shehadeh highlighted the government's active role in national debt management, focusing on diversifying financing mechanisms to ease borrowing pressures and reduce debt growth. The government has previously utilized Islamic Sukuk for purposes such as redeeming Eurobonds and plans to use soft loans for future bond maturities.
The total government-backed Islamic Sukuk issuances have reached approximately JD800 million, indicating a strategic shift toward varied debt management tools. The government is also considering extending these instruments to other sectors, like public universities, though no final decision has been made.
Shehadeh encouraged public institutions and private sector entities to explore debt service mechanisms available through the banking sector rather than relying solely on conventional borrowing. He affirmed the government's commitment to providing advisory support in Islamic Sukuk issuances, noting that private sector companies are also starting to issue tradable Sukuk.