A meeting of the Senate Standing Committee on Finance presided over by Senator Saleem Mandviwalla has been informed by the Finance Division that in 2014, Islamabad-Chakwal section of the M-2 was pledged for issuance of Sukuk bond while in 2016 Hafizabad-Lahore section of the motorways was also pledged for issuance of Sukuk bond.
The meeting was further told that the present government issued $3 billion Sukuk bonds by pledging various sections of the motorways on a five-year tenor. The Finance Division officials added that on November 29, 2017, the government issued $1 billion Sukuk bond for a five-year tenor and $1.5 billion Euro bond at 5.6 percent and 6.5 percent rate of return respectively. They maintained that as Pakistan credit rating was improving, the government was able to acquire loans from international capital market at lesser interest rate.
The meeting was told that issuance of Euro and Sukuk bonds has been part of the government of Pakistan''''s financing plan since 1994 and 2005 respectively. It envisages regular presence of Pakistan in the international or domestic capital markets, as it provides alternative source of financing at a competitive rate. The Finance Division is mandated to arrange finances for meeting the current and development expenditure needs of the country.
The Finance Division stated that Sukuk is referred to as ''''Sharia Compliant'''' bond. The Fiqh Academy of the OIC legitimized the use of Sukuk in February 1988. Since interest bearing bonds are not permissible in Sharia, Sukuk is structured to comply by paying rent instead of interest. This is done by involving a tangible asset in the investment whereby Sukuk holders collect the profit as rent which is allowed under Islamic law.