Amman Municipality to Issue JD400 Million in Islamic Sukuk to Cut Debt Costs, Fund Projects
12/10/2026 | 11:59:12
Amman, Oct. 12 (Petra) -- The Greater Amman Municipality’s planned issuance of JD400 million in Islamic sukuk marks a strategic shift in its approach to debt management and municipal financing, aimed at reducing borrowing costs, improving financial sustainability and freeing up resources for key development projects, Deputy City Director for Financial Affairs Ibrahim Zyoud said.
The Cabinet, chaired by Prime Minister Jafar Hassan on Sunday, approved the municipality’s issuance of Islamic financing sukuk worth JD400 million under a lease-to-own (Ijarah Muntahia Bittamleek) structure, carrying an annual return of 5.5 percent over a five-year term.
Speaking to the Jordan News Agency (Petra), Zyoud described the issuance as a first of its kind among municipalities and public institutions in the Kingdom, offering an alternative to conventional borrowing and broadening the municipality’s financing options.
He said the move would diversify funding sources and attract a wider pool of investors, while introducing a financing model that enables municipal and service-oriented institutions to meet development commitments through Islamic financial instruments rather than relying on conventional borrowing.
The issuance is intended to restructure the municipality’s financial obligations by replacing existing high-cost financing with Islamic sukuk. The principal will be repaid in full at the end of the five-year term, while returns will be paid periodically, Zyoud explained.
He said the new financing structure is expected to reduce financing costs, ease debt-servicing pressures, improve cash flow and strengthen the municipality’s financial position, supporting fiscal sustainability over the medium and long term.
Proceeds from the issuance will be used to repay part of the municipality’s existing debt, while savings from lower debt-servicing costs will help finance and complete capital and development projects included in its approved plans.
Priority projects include public transport development, traffic management solutions, infrastructure upgrades, digital transformation and environmental initiatives. The savings are also expected to improve municipal services for residents and accelerate the implementation of key projects across the capital.
On the wider economic impact, Zyoud said the issuance is expected to stimulate economic activity in sectors linked to capital projects, strengthen confidence in the financial market and help create a more attractive environment for strategic investment.
He added that the municipality is committed to high standards of governance and transparency by reducing existing debt-servicing costs and directing the resulting savings towards the projects and purposes specified in the securities prospectus.
The financing will also be subject to oversight and auditing in accordance with Islamic Sharia principles and government accounting standards.
//Petra//WH