l’Algérie à un stade « très avancé » pour l’émission de sukuks souverains
Summary of Sovereign Sukuk Initiative in Algeria
In Algeria, the Ministry of Finance is advancing towards its inaugural issuance of sovereign sukuk, as confirmed by Razika Megateli, the director of public debt. During a seminar focused on sovereign sukuk at the Islamic Development Bank (IDB) annual meetings held in Algiers from May 19 to 22 under the patronage of President Abdelmadjid Tebboune, she expressed optimism about completing the issuance by the end of June.
The momentum for this financial initiative aligns with directives from the country’s leadership. A recent amendment in the 2025 Finance Law empowers the Ministry of Finance to offer sovereign sukuk for the first time, allowing both individuals and legal entities to invest in public infrastructure through these financial instruments.
These sukuk come with significant tax benefits: a five-year exemption from personal income tax (IRG) and corporate tax (IBS), along with waivers on registration and real estate publication fees for those issued by the Treasury or traded on regulated markets.
To facilitate this launch, a dedicated commission comprising finance ministry officials and members from the financial sector has been established. This team is tasked with issuing "straightforward" sukuk instruments, such as sukuk ijara, which are primarily favored for their simplicity and understandability for both industry professionals and the general public.
Megateli highlighted the importance of technical collaboration with the IDB in refining the regulatory framework necessary for issuing sukuk. This financing mechanism aims to mobilize resources for public investments and strengthen the financial securities market.
Sofiane Mazari, president of the Islamic Finance Commission at the Professional Association of Banks and Financial Institutions (Abef), described sovereign sukuk as a credible alternative and an effective option to diversify funding sources while tapping into national savings. This initiative aligns with Algeria’s efforts to enhance Islamic financing and broaden the investor base.
Additionally, Mohamed Boujellal, a member of the High Islamic Council (HCI) and an expert in Islamic finance, emphasized that the sukuk mechanism represents a pivotal development for the national economy. He indicated that this initiative could successfully attract funds currently outside the official banking system.
Boujellal assured that the HCI would support the sukuk issuance process through careful compliance with Sharia principles, enhancing investor confidence in these financial tools.
Implications of Sovereign Sukuk for Algeria
The introduction of sovereign sukuk in Algeria holds several implications for the national economy:
-
Diversification of Funding Sources: By allowing individuals and entities to invest in government projects, sukuk can reduce dependency on traditional financing avenues.
-
Boost to Islamic Finance: This move is aligned with the country’s strategic goal of promoting Islamic financial principles, which may attract a new segment of investors who prefer Sharia-compliant investments.
-
Financial Inclusion: The sukuk could engage segments of the population that typically do not participate in the formal banking sector, thus increasing overall financial inclusion.
-
Infrastructure Development: The funds raised via sukuk will directly contribute to the development of public infrastructure, which is essential for economic growth.
- Encouragement of National Savings: With attractive tax incentives, sukuk can encourage saving and investment among the populace, potentially leading to greater economic stability.
Overall, Algeria’s efforts to launch sovereign sukuk represent a significant step towards modernizing its financial landscape and enhancing economic development through innovative funding mechanisms.
