ICD backs $200 million Senegal sukuk project

Updated 13 October 2013
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ICD backs $200 million Senegal sukuk project

The Islamic Corporation for the Development of the Private Sector (ICD), a member of the Islamic Development Bank Group (IDB), and the government of Senegal and have announced the African state’s plan to relaunch a XOF 100 billion ($200 million) sukuk project next year.
This project, the first of its kind in the West African Economic and Monetary Union (WAEMU), aims to promote Islamic finance as an alternative instrument to finance the economies of the member states of the union. The announcement came during the annual meetings of the World Bank Group (WBG) and the International Monetary Fund (IMF), according to a press release received here.
Amadou Ba, Senegal’s minister of economy and finance, has reaffirmed the interest of his government of Senegal to diversify its financing instruments by exploring the possibilities offered by Islamic finance. This project is the beginning of an ambitious program which could lead to the financing of innovative infrastructure and energy projects through sukuk issuances, he said.
He also thanked the Joint Lead Managers (JLM), the ICD and Citi, the regional regulators, the Regional Council for Public Savings and Financial Markets (CREPMF) and the Central Bank of West African States (BCEAO), as well as the West African Development Bank (BOAD) and all of the parties involved in the project formulation, for their efforts, which have resulted in an innovative structure that reconciles the prevailing regulations and the requirements of Islamic finance.
The minister reaffirmed his determination and the availability of the relevant services of the State of Senegal for the success of the project.
Khalid Al-Aboodi, CEO and general manager of the ICD, welcomed Senegal’s initiative in launching this first sukuk.
On behalf of the JLM, the ICD and Citi, he congratulated the legal counsels and the experts who participated in the project preparation as well as the regulators and the BOAD, a strategic partner in the transaction through its securitization subsidiary.
The ICD, as highlighted by its CEO, is committed to promoting and substantially increasing the volume of Islamic financing transactions for the economies of the WAEMU, in accordance with its mandate, the directives of the conference of heads of state and government of the WAEMU, and the Memorandum of Understanding signed between the BCEAO and the IDB Group.
Al-Aboodi, while welcoming the significant assistance of BCEAO, which has accepted in principle the Repo eligibility of the sukuk, said the project is the beginning of a series of regional programs which will be offered to all the WAEMU member states.
Peter M. Sullivan, managing director, head of Africa public sector who represented Citi at the ceremony, declared: “True to its longstanding commitment to providing innovative and best-in-class solutions to governments globally, Citi is delighted to support the Republic of Senegal’s financing requirements and to work with the ICD, the BOAD and the regional regulators on this ground-breaking Sukuk transaction in the WAEMU region.”
He said: “Having been associated with numerous ‘first’ transactions in the Islamic finance industry, Citi is proud to contribute to the expansion of Islamic finance to the Republic of Senegal and to the members of the WAEMU. We are convinced of the future success of this transaction for Senegal and strongly believe this will open the path for numerous additional issuers.”
ICD is a multilateral organization and a member of the Islamic Development Bank (IDB) Group established in 1999 with a paid-up capital of $2 billion.
The mandate of ICD is to support economic development and promote the development of the private sector in its member countries through providing financing facilities and/or investments which are in accordance with the principles of Sharia.
ICD also provides advice to governments and private organizations to encourage the establishment, expansion and modernization of private enterprises.
Citi has around 200 million customer accounts and does business in more than 160 countries and jurisdictions.
Citi is the only international bank to have a dedicated Islamic banking subsidiary — Citi Islamic Investment Bank, incorporated in Bahrain.


Jordanian cabinet approves new IMF-guided tax law to boost finances

Updated 21 May 2018
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Jordanian cabinet approves new IMF-guided tax law to boost finances

AMMAN: Jordan’s cabinet on Monday approved major IMF-guided proposals that aim to double the income tax base, as a key part of reforms to boost the finances of a debt-burdened economy hit by regional conflict.
“When only 4 percent of Jordanians pay (personal) income tax, this may not be the right thing,” Finance Minister Omar Malhas said in remarks after the cabinet meeting, adding the goal was to push that to eight percent. The draft legislation was submitted to parliament.
The IMF’s three-year Extended Fund Facility program aims to generate more state revenue to gradually bring down public debt to 77 percent of GDP in 2021, from a record 95 percent.
A few months ago Jordan raised levies on hundreds of food and consumer items by unifying general sales tax (GST) to 16 percent — removing exemptions on many basic goods.
In January subsidies on bread were ended, doubling some prices in a country with rising unemployment and poverty among its eight million people.
The income tax move and the GST reforms will bring an estimated 840 million dinars ($1.2 billion) in extra annual tax revenue that will help reduce chronic budget shortfalls normally covered by foreign aid, officials say.
Corporate income tax on banks, financial institutions and insurance companies will be pushed to 40 percent from 30 percent. Taxes on Jordan’s phosphate and potash mining industry will be raised to 30 percent from 24.
The government argues the reforms will reduce social disparities by progressively taxing high earners while leaving low-paid public sector employees largely untouched.
“This is a fair tax law not an unfair one,” said Malhas, who shrugged off criticism the law is lenient on many businesses connected to politicians whose transactions are not subject to tax scrutiny.
Husam Abu Ali, the head of the Income and Sales Tax Department, said a proposed IMF-recommended Financial Crime Investigations Unit will stiffen penalties for tax evaders. Critics say it will not tackle pervasive corruption in state institutions.
Abu Ali said the government could be losing hundreds of millions of dollars through tax evasion, which is as high as 80 percent in some companies.
The amendments lower the income tax threshold and raise tax rates. Unions said the government was caving in to IMF demands and squeezing more from the same taxpayers.
“It is penalizing a group that has long paid what it owes the state,” the unions syndicate said in a statement.
“It imposes injustice on employees whose salaries have barely coped with price hikes rising madly in recent years.”