Tunisia's first issue of a sukuk (Islamic bond) is likely to be postponed to next year, adding to pressure on government finances, because of disruptions to legislative business.
Finance Minister Elyess Fakhfakh told Reuters in April that Tunisia planned to issue a sovereign sukuk this July to raise $700 million. He said the government was in the final stages of pushing through legislation to permit the issue, and hoped parliament would approve the bill by end-April or early May.
But so far parliament has not begun considering the legislation because it has been occupied with the controversial task, still uncompleted, of drafting a new constitution that would permit elections expected later this year.
"So far, the finance committee has not discussed the sovereign sukuk law. There will be a delay due to a large number of concerns," Ferjani Dhogman, chairman of parliament's finance committee, told Reuters. He did not give a date for when discussions might start.
Two sources in the central bank and the finance ministry, declining to be named because of the sensitivity of the issue, told Reuters they believed it would not be possible to issue sukuk before next year, because of delays in parliament.
"It is impossible to issue Islamic bonds this year because the law is not ready and will need a long time for discussion and debate in the constituent assembly," an official in the central bank said.
He added that postponing the $700 million issue "will increase pressure on the country's budget this year". Tunisia is running a large state budget deficit, which it has projected at about $3.2 billion this year, and the sukuk was intended to help fill that gap.
The government, led by moderate Islamists, is keen to develop Islamic finance, which was neglected for ideological reasons by the regime before the 2011 revolution. A Tunisian sukuk issue could potentially attract large amounts of Islamic funds from the wealthy Gulf.
But the sukuk legislation may prove controversial, partly because the Islamic bonds will have to be backed by streams of income from individual state assets. As Egypt found when it drafted its own sukuk bill, the choice of assets and the way in which the government handles them can be politically sensitive.
Tunisia this year signed a $1.7 billion standby loan agreement with the International Monetary Fund, and a finance ministry official told Reuters that the government might have to use more IMF funds to fill the gap left by the sukuk delay.