Govt Amends Rules for Treasury Bonds and IJara Sukuk

The Federal Cabinet has granted its approval to the summary presented by the Ministry of Finance, making amendments aimed at enhancing efficiency hence providing flexibility for the issuance, registration, trading, and transfer of Government Securities through any institution. These amendments will enable the Government to launch its securities through other Capital Market Institutions including the Pakistan Stock Exchange (PSX), Central Depository Company (CDC), and National Clearing Company Pakistan Limited (NCCPL), which will bring more transparency and accessibility for investors, aligning with global best practices. The Finance Division moved a summary for the Cabinet for amendment in the existing Government of Pakistan Market Treasury Bills 1998 and Government of Pakistan Ijara Sukuk Rules 2008. Now approved, these rules will not only make participation in Government securities auctions/issuance simpler but will also expand the investor base. It is also expected that these amendments will help in reducing the cost of borrowing as greater diversification will significantly enhance the subscription in government securities. The Ministry of Finance, in collaboration with relevant stakeholders, will ensure the effective implementation of these amendments. The changes are expected to have a positive impact on Pakistan’s financial markets and contribute to the overall economic development of the country. The government raised funds aggressively in the past two years mainly through the Sukuk issue. According to an estimate, Sukuk of Rs. 1 trillion have been issued in 2023 since January and the total value of the Sukuk issues surged to Rs. 4 trillion. The government saved an estimated amount of Rs. 40 billion raising the overall Sukuk in Pakistan as compared to securities of the conventional banking system. According to the experts, the amendments were mainly done in response to the increasing demands of the financial market in general and Islamic financial institutions in particular for introducing new Sharia-based instruments.