Jordan’s Cabinet has approved a 400 million dinar ($564.2 million) Islamic sukuk for the Greater Amman Municipality, the first municipal sukuk the country has issued. The five-year certificates pay 5.5 per cent a year and are designed to put the capital’s finances on a firmer footing.
The deal is built on an ijara muntahia bittamleek structure, a form of Islamic lease under which ownership of the leased assets passes to the lessee at the end of the term. According to Petra, the state news agency, the municipality expects to save about 70 million dinars over five years, rising to roughly 140 million dinars if the arrangement is renewed for another five. Muhannad Shehadeh, Deputy Prime Minister and Minister of State for Economic Affairs, called the approval a “landmark step that gives the municipality significant flexibility”.
This issue is the opening phase of a plan, first reported by Petra in April, to restructure the municipality’s debt of about 1 billion dinars through three sukuk tranches. Two further tranches of 300 million dinars each will follow the first. The Central Bank of Jordan will supervise the sale, which targets banks, insurance companies, and savings, investment and pension funds, and the certificates can be traded on the Amman Stock Exchange under the approved terms. The municipality spent months on economic and financial studies with government bodies and private partners, Islamic banks in particular.
Shehadeh said the government was “actively engineering national debt management” by working on both the total stock of debt and the cost of servicing it. The goal, he said, is to reduce borrowing pressure, close financing gaps and slow the pace at which debt grows. Government-backed sukuk issuance has now reached about 800 million dinars, and officials are studying whether to use the same tool in other sectors, including public universities. No decision on that has been taken.
The transaction also feeds into Jordan’s Economic Modernization Vision, which aims to attract 41.4 billion dinars of investment by 2033 and to deepen domestic sources of financing. Figures from the Ministry of Planning and International Cooperation show public-private partnerships are expected to provide 30.3 billion dinars of that total, or 73 per cent, while government investment is projected at 11.1 billion dinars. For Amman, the two remaining tranches are the next step in moving the city’s borrowing onto Islamic finance terms.
