ABU DHABI: Yemen’s government may issue a local-currency Islamic bond this year to finance its imports of petroleum products, its central bank governor Mohammed Awad bin Hamam said yesterday.
“We might issue a sukuk during the coming short period,” Hamam said on the sidelines of a meeting of Arab central bank governors in Abu Dhabi.
He said the sukuk could be worth about 50bn Yemeni rials ($233m) and use a salam structure, which resembles a forward contract in conventional finance.
“It will be around the prevailing interest rate, maybe even less. Maybe it will be around 10 percent, something like that,” Hamam said, adding that the maturity would be more than one year, perhaps three or five years.
Yemen’s economy has improved since 2012 after years of political instability and violence, but the recovery is fragile and the country remains the second-poorest Arab state after Mauritania.
Asked whether the central bank might cut interest rates again in coming months, Hamam replied: “Of course, yes, but we have to look at that. We have to watch inflation. Inflation is only one factor. We have look at more than one factor.”
The central bank last cut its key interest rate in February, by 3 percentage points to 15 percent, but inflation hit a 15-month high of 14.2 percent in May.
“I guess inflation when you look at it from the commodity aspect, it is not that high. By the end of the year it will amount to something around 6-8 percent, I guess,” Hamam said.
Reuters
