– Shehadeh: The government is seriously considering Islamic Sukuk as
an important financial tool for reducing cost of debt.

– Shehadeh: The total value of Islamic Sukuk issued by the government
is JD800 million, as part of a government initiative to diversify
debt management tools.

– The government is looking to utilize concessional loans to redeem
upcoming bonds.

Amman, Oct. 11 (Petra) — Deputy Prime Minister and Minister of State
for Economic Affairs Muhannad Shehadeh described the Cabinet’s
approval of the Greater Amman Municipality (GAM) issuing Islamic
Sukuk as a landmark step that gives the municipality significant
flexibility in managing debt-service costs.

In press statements Sunday evening, Shehadeh stated that the
initiative could yield savings of approximately JD140 million for GAM
over the 10-year lifespan of its existing debt, providing broader
financial leeway to restructure and meet its commitments.

During a Cabinet session chaired by Prime Minister Jafar Hassan, the
government authorized GAM to issue JD400 million in Islamic Sukuk
using an Ijara Muntahia Bittamleek (lease-to-own) structure at an
annual rate of return of 5.5 percent over a five-year tenor.

The decision is part of a strategy to improve financial management,
reduce borrowing costs, and tap Islamic financing opportunities in
the domestic market. The move marks the first issuance of its kind in
Jordan for a public municipal entity, reinforcing the Kingdom’s
position in Islamic finance in line with the Economic Modernization
Vision.

Shehadeh emphasized that the government is actively engineering
national debt management by addressing both debt stock and debt
service costs through diversified financing mechanisms to ease
borrowing burdens, narrow financing gaps, and curb debt growth.

He noted that since its formation, the government has utilized
Islamic Sukuk including for the redemption of Eurobonds in early 2025
alongside concessional loans, adding that the government intends to
leverage further soft loans to settle upcoming bond maturities.

The minister pointed out that total government-backed Islamic Sukuk
issuances have reached approximately JD800 million, reflecting a
shift toward diversifying debt management tools. He added that the
government is considering extending these financial instruments to
other sectors, such as public universities, though no final decision
has been reached.

Shehadeh urged public institutions and private sector entities to
review debt service mechanisms and utilize available banking sector
tools rather than relying solely on conventional borrowing. He
affirmed the government’s readiness to provide advisory support based
on its expertise in Islamic Sukuk issuances, highlighting that
private sector companies have also begun issuing tradable Sukuk.

//Petra// AF