Breakfast Wrap: Islamists And Modernisation, Saudi Gas Troubles, Tunisia Soft Loan

Well, well, well.

One of Egypt’s biggest ultra-orthodox Islamist parties has signalled it would not oppose a loan to the government from the International Monetary Fund, even though Islamic law normally bans the paying of interest.

The ultra-orthodox Nour Party believes the government can take out such loans if there is no other option, Tarek Shaalan, head of its economic committee told Reuters.

Here’s the reasoning:

“In Islam, if you are ‘mudtar’, which means you are under severe conditions, then yes it is acceptable to do it,” said Shaalan, a bright, young guy who speaks fluent English.

So Egypt’s “severe conditions” allows the $4.8 billion loan to go ahead and be negotiated.  That is a coincidence, considering the government has already said it is expecting the loan package to be signed by the end of the year.

But we agree – there is little alternative now to an IMF loan, despite many arguments to the contrary.  In fact, an IMF package by virtue of it being run by the IMF encompasses many of the alternatives that critics have presented, including writing off billions of dollars in debt.

The question is whether the Nour Party actually believes Egypt has no other options, or whether the pressure for political consensus is coming down hard on those that have blocked a deal in the past.


That doesn’t stop the political parties lobbying hard for more Islamic-friendly financial instruments.

Especially because these Islamists must somehow reconcile their faith with their newly important role in Egypt.

Egypt’s Freedom and Justice Party is consulting with other political parties and the financial industry about the possibility of introducing rules allowing the issue of sukuk (Islamic bonds), a party official said.

The FJP wants to promote the issuance of sukuk, which were neglected for ideological reasons during the regime of Hosni Mubarak, who was ousted last year.

Now, this isn’t a new idea that has just been discussed in the last few weeks, contrary to the story linked to this segment.

Government officials, especially the head of the Egyptian capital markets regulator, Ashraf Sharkawy, has regularly updated the press on the legislation that allows the issuance of sukuk.  In fact, he has been saying the same thing for at least 2 years. 

The difference today is that there is political will to lobby and implement the legislation. 

It will allow Egyptian companies to raise financing through sukuk and open up Egypt’s market to the international world.  Sukuk is a valuable instrument that more rich, Gulf investors are also tapping into.


As part of Egypt’s scramble for wheat supplies amid amid concerns that drought-hit Black Sea nations such as Ukraine and Russia, Egypt’s top supplier, may have little to offer later this year, the country’s wheat buyer GASC has purchased  300,000 tons of French and Romanian wheat.  

Egypt has had seven wheat tenders this year already to make sure its reserves are full (at a cost of course – food subsidies aren’t as wasteful as energy subsidies, but they still make up about 14% of the budget).


Nice feature from Reuters on how Qatar’s modern developments ahead of the 2022 World Cup is worrying conservative Qataris about how it will affect the Islamic nature of the Gulf state.  


The Arab Monetary Fund has lent Tunisia 276 million dinars ($176 million) to help shore up its current account balance and reforming the banking system in the cradle of Arab Spring revolts. 

The Abu Dhabi-based fund offered the loans at very favourable rates indeed – an interest rate under 1% and a grace period of between 18 and 24 months.

Just what Egypt needs.


General Electric Co’s power and water division said on Wednesday it won $1.2 billion in contracts from power producers in the United States, Japan and Saudi Arabia for newly-developed heavy-duty gas turbines.

Focusing on the KSA deal – GE will supply eight gas turbines for a Saudi Electric Co project in Riyadh.

Though GE did not break down the value of the Saudi and Japan orders, it said they represent a significant GE export to those countries.

It shows how serious the Kingdom’s domestic demand for natural gas really is and shows that Citi’s warning that KSA could become an oil importer by 2030 is not that far-fetched.  

The country already consumes all its natural-gas production.


  • Posted October 1, 2012 at 9:39 am | Permalink

    Just a quick comment, Qatar is hosting the 2022 worldcup and not the olympics!

  • Posted October 1, 2012 at 9:43 am | Permalink

    Woops. It has been updated – thanks for letting us know. (P.s. the editor is British and London Olympic fever may have taken over)

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