Dr. Md. Touhidul Alam Khan :
As the global financial landscape continues to evolve, Sukuk-Islamic financial certificates akin to bonds-are emerging as a vital financing option for governments and corporations globally.
In 2025, several nations, particularly in the Middle East and South Asia, are set to make substantial advancements in Sukuk issuance. This article delves into the plans of Oman, Bahrain, and Bangladesh to raise funds through Sukuk, examining their strategies and the broader economic implications.
Oman’s strategic Sukuk issuance
The Omani government has outlined its intention to raise OMR750 million (approximately US$1.94 billion) through a combination of bonds and two sovereign Sukuk issuances in 2025. This initiative is part of a larger strategy to meet the country’s pressing financing requirements, particularly in light of ongoing economic challenges and the imperative for infrastructure development.
Oman’s decision to engage with the Sukuk market signifies a growing acknowledgment of the importance of Sharia-compliant financing options. The capital raised through these Sukuk is expected to support a range of public projects, thus spurring economic growth and development in the country.
Moreover, this proactive approach highlights a larger trend in the region where Islamic finance is being increasingly integrated into national financial strategies, allowing for a symbiotic relationship between religious principles and economic requirements.
Bahrain’s ambitious plans
Bahrain, too, is preparing for a significant year in 2025, planning to issue between US$2 billion and US$3 billion in international bonds and Sukuk. This issuance is primarily aimed at refinancing existing debts, as the Kingdom faces external bond and Sukuk payments estimated at US$2.4 billion in 2025.
The Bahrain government’s strategy to utilize Sukuk plays a critical role in its fiscal management, allowing it to efficiently address refinancing needs while adhering to Islamic finance principles. The anticipated Sukuk issuance is expected to attract a diverse array of investors, both from the region and internationally, thereby enhancing Bahrain’s visibility and competitiveness in the global Sukuk market.
S&P Global Ratings has noted that Bahrain’s sovereign issuance is likely to be positively received, given the increasing appetite for Sukuk among investors seeking Sharia-compliant investment opportunities. By diversifying its funding sources through Sukuk issuance, Bahrain is expected to bolster its financial stability and support ongoing economic reforms essential for sustainable growth.
Bangladesh’s infrastructure development through Sukuk
In South Asia, Bangladesh is making notable strides in the Sukuk market with the announcement of its fifth Bangladesh Government Investment Sukuk.
The Bangladesh Bank has disclosed plans to issue this Sukuk to mobilize funds directed specifically towards public infrastructure development. Slated for issuance on February 15, 2025, the Sukuk Ijarah is anticipated to carry a five-year tenor.
This focus on infrastructure development through Sukuk issuance aligns seamlessly with Bangladesh’s broader economic objectives as the nation strives to enhance its infrastructure capabilities to support sustainable growth.
The funds raised from this Sukuk are expected to be allocated to critical projects that enhance transportation, energy, and public services, thus significantly contributing to the nation’s overall development.
Bangladesh’s approach to Sukuk issuance reflects a growing trend among emerging economies that seek to leverage Islamic finance for developmental purposes.
By engaging with the Sukuk market, Bangladesh not only addresses its financing needs but also promotes financial inclusion and attracts a broader spectrum of investors interested in ethical investment opportunities.
The broader implications of Sukuk issuance
The upcoming Sukuk issuances in Oman, Bahrain, and Bangladesh are indicative of a larger trend within the Islamic finance sector. As nations endeavor to diversify their funding sources and meet urgent financial requirements, Sukuk is swiftly becoming the preferred option due to its compliance with Sharia law and capacity to engage a diverse investor base.
Moreover, the global Sukuk market is poised for continued growth, with projections suggesting it could exceed US$50 billion in outstanding Sukuk by 2025.
This expansion is driven by an increasing demand for Sharia-compliant investment products and growing recognition of Sukuk as a viable means of financing infrastructure and developmental endeavors.
The rise of Sukuk issuance also emphasizes the necessity of robust regulatory frameworks that support Islamic finance. As countries like Oman, Bahrain, and Bangladesh enhance their regulatory environments, they are likely to witness increased participation from both domestic and international investors, further cementing the role of Sukuk in the global financial ecosystem.
As we look ahead to 2025, the Sukuk issuance strategies in Oman, Bahrain, and Bangladesh highlight the burgeoning relevance of Islamic finance in addressing government financing needs and propelling economic growth.
With deliberate initiatives aimed at harnessing Sukuk for infrastructure and refinancing goals, these nations are positioning themselves to capitalize on the expanding global Sukuk market.
As the realm of Islamic finance matures, the effective execution of these Sukuk issuances will be pivotal in shaping the trajectory of economic development in the region while aligning with ethical finance practices.
Dr. Md Touhidul Alam Khan is the Managing Director & CEO of NRBC Bank PLC and fellow cost & management accountant from Institute of Cost & Management Accountants of Bangladesh (ICMAB).
