Yemen plans to issue Islamic bonds soon

Islamic bonds will finance government projects says Central Bank Governor
By Bloomberg
Sun 19 Feb 2012 04:07 PM

Yemen, the Arab world’s poorest country, plans to issue Islamic bonds soon to finance government projects, Central Bank Governor Mohamed Awad Bin Humam said in an interview.

“We have plans with the Finance Ministry to issue Islamic bonds to finance government projects and other sukuk,” Bin Humam said in a telephone interview from Sana’a. “We will try to do so as soon as possible.”

Middle East and Asian governments are turning to local sukuk investors to finance infrastructure projects as European lenders reduce overseas exposure amid the region’s sovereign debt crisis. Global issuance of so-called sukuk, or Islamic bonds, increased to $84.5bn in 2011, a 64.5 percent rise on the previous year, S&P said in a report this month.

Yemen last sold Islamic bonds, which pay profit rates to adhere to the religion’s ban on interest, at the start of last year. Bin Humam declined to elaborate on the size or timing of the next sale

Unrest last year cost Yemen, the poorest Arab country, more than $8bn, former Industry and Trade Minister Hisham Sharaf said Nov. 13.

Bin Humam said Yemen’s foreign reserves now stand at $4.6bn, down from $5.9bn dollars in December. “We used the money to finance petroleum products, government services and to buy wheat, flour and sugar,” he said.

Yemen’s outgoing President Ali Abdullah Saleh will cede power this week after he signed a Gulf-brokered accord to end his three-decade rule. As part of the agreement, the vice president for the past 18 years, Abdurabu Mansur Hadi, is running uncontested in an election this week.

The voting will make Saleh the fourth leader to succumb to unrest that spread through the Middle East in 2011, after those in Tunisia, Egypt and Libya. The 69-year-old, who survived a bomb attack as he clung to power for more than nine months, is the only one to negotiate the terms of his departure, even as allies deserted him and a crackdown on protesters left almost 900 people dead.

The World Bank forecast that Sana’a will be the first capital city to run out of water by 2025. More than half the country’s population of 23m is under 20 years old and about 40 percent of the people live on the equivalent of less than $2 a day, according to the United Nations.

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