RIYADH: Jordan has approved its first municipal Islamic sukuk issuance, worth 400 million Jordanian dinars ($564.2 million), offering a 5.5 percent annual return over five years to strengthen the Greater Amman Municipality’s financial governance.
The issuance will use an ijara muntahia bittamleek structure, an Islamic financing arrangement in which leased assets are eventually transferred to the lessee. It forms part of a broader plan to improve financial management, lower borrowing costs and tap into opportunities in the domestic Islamic finance market.
The municipality expects to save around 70 million dinars over five years, with total savings potentially doubling to 140 million dinars if the agreement is extended for another five years, the state-run Jordan News Agency, Petra, reported.
A Petra statement said: “Deputy Prime Minister and Minister of State for Economic Affairs Muhannad Shehadeh described the Cabinet’s approval of the GAM issuing Islamic Sukuk as a landmark step that gives the municipality significant flexibility in managing debt-service costs.”
Jordan expands Islamic financing
The issuance is the first phase of a wider plan to restructure the GAM’s debt of approximately 1 billion dinars through three sukuk tranches.
The plan calls for an initial 400 million dinar issuance, followed by two additional tranches worth 300 million dinars each, Petra reported in April.
The issuance comes as Jordan seeks to attract investment and strengthen domestic financing under its Economic Modernization Vision, which targets 41.4 billion dinars in investment by 2033.
Public-private partnerships are expected to account for 30.3 billion dinars, or 73 percent of the total, while government investment is projected to contribute the remaining 11.1 billion dinars, according to the Ministry of Planning and International Cooperation.
Issuance supports broader financing strategy
The newly released Petra statement said: “Deputy Prime Minister and Minister of State for Economic Affairs Muhannad Shehadeh described the Cabinet’s approval of the GAM issuing Islamic Sukuk as a landmark step that gives the municipality significant flexibility in managing debt-service costs.”
The Central Bank of Jordan will oversee the issuance, which is aimed at banks, insurance companies, and savings, investment and pension funds.
The sukuk will also be eligible for trading on the Amman Stock Exchange, in accordance with the approved terms and applicable regulations.
The project follows months of economic and financial studies conducted by GAM in collaboration with government bodies and private-sector partners, particularly Islamic banks.
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.
Government-backed Islamic sukuk issuances have totalled around 800 million dinars, reflecting efforts to diversify debt-management instruments, the minister said. The government is also considering extending their use to other sectors, including public universities, although no decision has been made.