Tunisia Eyes Islamic Finance

The Tunisian government has set up a working group that will study how to develop Islamic finance in the country, a finance ministry official said.

The group, which includes representatives from the central bank, stock exchange and private sector institutions including Bahrain-based Al Baraka Banking Group, will look at the country’s legal framework, said Karima Rezk, a director at the ministry.

Before last year’s uprisings, authoritarian governments in Tunisia and other North African countries restricted or refused to promote Islamic finance for ideological reasons. A moderate Islamist party dominates the government which took power through last October’s elections.

Islamic finance, which operates according to religious principles such as a ban on paying interest, is seen as “an important initiative that is accepted by all major political parties”, Rezk told Reuters in a telephone interview this week.

She added that the government did not intend to inhibit conventional banking in the country, but merely wanted to “make the market more dynamic and add choice to consumers”.

The working group aims to meet weekly and come up with proposals for action within a few months, Rezk said. It is under the purview of the finance ministry’s director-general Chaker Soltani, whose responsibilities include debt management and financial cooperation.

The group has been studying the Islamic banking experience of countries where the industry is well-developed, including Malaysia and Bahrain, as well as Jordan and Oman, which are more recent entrants into the industry.

“We need more details,” Rezk said, on both the structures of Islamic financial products and how to regulate them.

Soltani told Reuters earlier that the Tunisian government hoped eventually to issue Sukuk (Islamic bonds), but did not expect to make an issue this year since the legal framework to support it was not yet in place.

“Before issuing Islamic bonds, or sukuk, we must put a law in place,” he said.