Definition
Sukuk are Islamic financial instruments comparable to bonds but structured to comply with Sharia law. Instead of paying interest, sukuk represent proportional ownership in an underlying tangible asset, usufruct, or service. Holders receive returns generated by the underlying asset rather than fixed interest payments. Common structures include ijara sukuk (based on lease income), musharaka sukuk (based on partnership profits), and wakala sukuk (based on investment agency). Sukuk provide governments and corporations with a Sharia-compliant method of raising capital.
Context in Oman
Oman entered the sovereign sukuk market in 2015 and has since become an active issuer in both domestic and international markets. The government has issued sukuk denominated in Omani rials for the domestic market and in US dollars for international investors. These instruments help diversify the government funding sources and attract Islamic investors. The Capital Market Authority (CMA) has developed a regulatory framework that supports corporate sukuk issuance as well, enabling Omani companies to tap Islamic capital markets for growth financing.
Key Data Points
| Metric | Value |
|---|---|
| First sovereign sukuk issuance | 2015 |
| Key sukuk structures used | Ijara, Wakala |
| Listing venue | Muscat Stock Exchange |
| Regulator | Capital Market Authority |
| International sukuk denominations | USD, OMR |
Vision 2040 Connection
Vision 2040 emphasises capital market development as a pillar of economic growth. Sukuk issuance supports this by deepening the bond market, attracting a wider investor base including Sharia-sensitive funds, and providing the government with a diversified funding toolkit that reduces reliance on conventional bank borrowing.
Further Reading
- [[What is Islamic Banking]]
- [[Oman Capital Markets Guide]]
- [[What is Fiscal Sustainability]]