LONDON, 4 June 2008 — The British government took a step nearer yesterday toward the eventual issuance of a debut sovereign Sukuk (Islamic securities) in the wholesale sterling market. Following a meeting of the Islamic Finance Experts Group (IFEG) at the Treasury yesterday, Economic Secretary and City Minister Kitty Ussher, who also chaired the above meeting, announced that the UK government favored a ‘bill-like’ Sukuk program which could be fully integrated with the conventional Treasury bill program.
Subject to some remaining barriers to be surmountable, a rolling program of up to around £2 billion of ‘bill-like’ Sukuk issuance would be achievable over time. “Today’s discussion has emphasized both the importance of the Islamic finance sector to the City and the government’s commitment to ensuring the continued growth of this important sector in the future. The government is determined to maintain its momentum on work on Islamic finance and to make clear to stakeholders its commitment to this industry,” stressed Minister Ussher.
The Treasury, she further revealed, plans to publish a paper detailing the UK strategy on Islamic finance by the end of 2008 and an update of the Sukuk initiative in the Pre-Budget Report in autumn 2008. This paper would clarify the role of the government in the development of this sector and, importantly, the steps that industry will need to take to ensure that Islamic finance becomes one of the UK’s success stories. “Our hope is that the strategy paper will provide government, industry and the third sector with a definitive assessment of the areas that need to be addressed to facilitate the development of the sector in the UK,” said Ussher.
On Monday at a seminar on Islamic finance at Thomson Reuters, the UKTI and British Expertise announced a strategy to export accredited British vocational qualifications on Islamic finance to Muslim countries in the Middle East, Africa and Asia. Several entities in the UK now offer basic Islamic finance skills qualifications, which are accredited by professional bodies and universally recognized.
Between 14th November 2007 and 21st February 2008, the UK Treasury and the Debt Management Office consulted on the feasibility of issuing sterling-denominated Sukuk. The response was very encouraging especially from a range of institutions, including investment banks and their ‘Islamic windows.’