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Gov’t to float $500m in bonds - Abu Hammour
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AMMAN – Minister of Finance Mohammad Abu Hammour on Tuesday said the government plans to issue bonds worth half a billion dollars in international financial markets to provide the treasury with needed funds.
In a statement made available to The Jordan Times yesterday, Abu Hammour said these bonds would be paid at once after five years, while the interest on them will be paid semi-annually.
He indicated that several banks and specialised international financial institutions were contacted to manage and market the bonds on behalf of the government, noting that an ad hoc committee was formed comprising members of the ministry and the Central Bank of Jordan to study the offers and choose the best bidder in terms of the cost of issuance and interest rate expectations.
The minister pointed out that the name of the bank or bank consortium that will be in charge of the issuing process will be announced soon.
Abu Hammour underlined that the government's decision to resort to such a financial tool seeks to strike a balance between the Kingdom's internal and external debts and close the budget deficit, which reached JD1.5 billion last year, indicating that projections show global interest rates rising during the coming period.
Highlighting the importance of tapping a new financial mechanism, Abu Hammour said obtaining external credit through bonds or Islamic sukuks in the international market will enhance the national economy, sparing the country a competition between the government and the private sector for domestic credit. By achieving this balance between domestic and external borrowing, he stressed, the government allows local banks to finance more private investments and thus improve the economic growth in the Kingdom.
The minister underlined that the idea of issuing Islamic sukuks is still being studied, explaining that the issuance of such financial instruments requires legislative amendments to the State Property Law in a way that allows the sale or lease of the government-owned assets.
He added that the issuance of sukuks might require the establishment of a private company to manage the government’s assets and use the proceeds to repay the dues, noting that work is under way to overcome the challenges in this regard.
Source: Jordan Times
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