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IDB RAISES SUKUK ISSUANCE PROGRAMME CEILING FROM US$10BILLION TO US$25BILLION
IDB RAISES SUKUK ISSUANCE PROGRAMME CEILING FROM US$10BILLION TO US$25BILLION
Tuesday, 16 June 2015
The Board of Executive Directors (BOED) of the Islamic Development Bank at its 305th session which began on Sunday, 7/6/2015, in Maputo, capital of the Republic of Mozambique, under the chairmanship of H.E. Dr Ahmad Mohamed Ali, chairman of the Islamic Development Bank Group, approved the raising of the current limit of the Bank’s medium term sukuk issuance programme from US$10 billion to US$ 25 billion.
On this occasion the BOED commended the huge success recorded by this programme in all its previous issuances since it began in 2003. This is a reflection of the high status and confidence the Bank continues to enjoy in the international financial arena. The IDB is regarded as one of the few multilateral financing institutions that have been rated for more than 12 consecutive years with “AAA” , the highest international credit rating available, by the three major international credit rating agencies – Standard & Poor’s, Fitch and Moody’s. This is in addition to the designation of the IDB as “Zero-Risk Weighted” Multilateral Development Bank by the Basel Committee on Banking Supervision in 2004 and by the European Commission in 2007.
Consequently, the IDB’s sukuk programme has maintained the “AAA” rating, which is the highest rating by the three international credit rating agencies mentioned above, together a stable outlook.
The Bank has decided to reintroduce its medium term sukuk issuance programme which is in line with the provisions and principles of the Islamic Sharia, with the aim of mobilizing and injecting new financial resources from the international money market to meet the growing development needs in member countries. The US$ 10 billion so far raised as part of the IDB’s sukuk programme have been used to finance various development programmes in member countries, particularly infrastructure projects.
This is at a cost that is much lower than what it would have cost if they were financed through regular financing institutions.
The Board also approved participation in several development projects in member countries and some Muslim communities in non-member countries amounting to US$ 450 million. Details of this participation are as follows:
I:- Development Projects:
• Republic of Mozambique: US$200 million financing for participation in electricity transmission from Shimuwara village in central Mozambique to Nakala in the north to meet the growing demands for electricity. The project entails the expansion of the electricity network infrastructure to ease transmission of electricity from the proposed new production stations in the west-central of Mozambique by 2019.
• Republic of Kazakhstan: Provision of US$ 70 million to finance the importation of agricultural equipment as contribution to the development of the country’s agricultural sector.
• Republic of Senegal: Approval of participation in two power projects in the amount of US$ 71.5 detailed as follows:
- Provision of US$ 48 million in additional financing for regional electricity connection project. The project entails the installation of 225 KV electricity line between power generation plant in Nouakchott, Mauritania and Tobene power sub-station in Senegal. The IDB had provided €60 million for the same project, bringing its contribution in this vital project to US$ 114 million.
- Provision of US$ 23.5 million in financing as participation in rural electrification project in Senegal. This is aimed at improving the standards of living of those rural dwellers.
• Republic of Benin: Provision of US$ 30 million in financing as participation in the support of integrated micro-financing programmes (second phase). The programme is aimed at improving livelihoods for people with limited income by improving opportunities to access small financing facilities and market training. The majority of the beneficiaries of this programme are expected to be women (80%).
• Republic of Cameroon: Provision of US$ 28.5 million in financing as participation in the second phase of the Mont Mbapite rural development project. The project is aimed at improving living conditions of the rural population of the northern region by strengthening of agro-industries units, renovating feeder roads and establishing lasting infrastructure.
• Republic of Togo: provision of US$ 20.7 million in financing as participation in the Katchamba – Saduri road construction project. The building of this road would link the northern and western regions of Togo, consisting Kara and Savanes, thereby connecting the northern region of the country with the national road network, and reducing poverty and isolation of the inhabitants of the north.
• Republic of Bangladesh: Approval of participation in two projects at a total cost of US$16.3 million detailed as follows:
- Provision of US$ 8.3 million in loan as participation in the project to support the upgrading of technical teacher training institute, with the aim of training qualified manpower as well as strengthening the skills and capacities of teachers. Upon completion the project would accommodate about 2700 male and female students.
- Provision of US$ 8 million loan towards sustainable housing project for income earners. The project is aimed at easing the access of about 5,000 low income citizens to suitable and sustainable accommodation.
• Kyrgyz Republic: Provision of US$ 12 million concessionary loan as contribution for the reconstruction of the alternative 50 kilometre express way linking the northern part of the country with the south. The sector in which the IDB would contribute in financing is the one linking Balikshi and Jalalabad cities.
II:- IDB Waqf Fund’s Grants
1. Muslim community in Canada: Provision of US$ 200,000 grant to Maple Grove School owned by the Canadian Muslims League in Kitchener, Ontario Province.
2. Muslim community in Kenya: Provision of US$200,000 as contribution to the Taofeeq Hospital expansion project in Malindi.
3. Muslim Community in South Africa: Provision of US$120,000 as contribution to the establishment of Simuni primary school.
III:- Technical Assistance approved by the IDB President: Provision of technical assistance grant amounting to US$ 259,000 to prepare feasibility study for forest value chain projects.
The Board of Executive Directors will remain convened until the end of the proceeding of the 40th Annual Meeting of the IDB Board of Governors.
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