- Shehadeh: The government is seriously considering Islamic Sukuk as an important financial tool for reducing cost of debt.

- Shehadeh: The total value of Islamic Sukuk issued by the government is JD800 million, as part of a government initiative to diversify debt management tools.

- The government is looking to utilize concessional loans to redeem upcoming bonds.

Amman, Oct. 11 (Petra) -- Deputy Prime Minister and Minister of State for Economic Affairs Muhannad Shehadeh described the Cabinet's approval of the Greater Amman Municipality (GAM) issuing Islamic Sukuk as a landmark step that gives the municipality significant flexibility in managing debt-service costs.

In press statements Sunday evening, Shehadeh stated that the initiative could yield savings of approximately JD140 million for GAM over the 10-year lifespan of its existing debt, providing broader financial leeway to restructure and meet its commitments.

During a Cabinet session chaired by Prime Minister Jafar Hassan, the government authorized GAM to issue JD400 million in Islamic Sukuk using an Ijara Muntahia Bittamleek (lease-to-own) structure at an annual rate of return of 5.5 percent over a five-year tenor.

The decision is part of a strategy to improve financial management, reduce borrowing costs, and tap Islamic financing opportunities in the domestic market. The move marks the first issuance of its kind in Jordan for a public municipal entity, reinforcing the Kingdom's position in Islamic finance in line with the Economic Modernization Vision.

Shehadeh emphasized that the government is actively engineering national debt management by addressing both debt stock and debt service costs through diversified financing mechanisms to ease borrowing burdens, narrow financing gaps, and curb debt growth.

He noted that since its formation, the government has utilized Islamic Sukuk including for the redemption of Eurobonds in early 2025 alongside concessional loans, adding that the government intends to leverage further soft loans to settle upcoming bond maturities.

The minister pointed out that total government-backed Islamic Sukuk issuances have reached approximately JD800 million, reflecting a shift toward diversifying debt management tools. He added that the government is considering extending these financial instruments to other sectors, such as public universities, though no final decision has been reached.

Shehadeh urged public institutions and private sector entities to review debt service mechanisms and utilize available banking sector tools rather than relying solely on conventional borrowing. He affirmed the government's readiness to provide advisory support based on its expertise in Islamic Sukuk issuances, highlighting that private sector companies have also begun issuing tradable Sukuk.

//Petra// AF