Kazakhstan's parliament has approved legislative amendments to facilitate Islamic finance, paving the way for Central Asia's largest economy to issue its first sovereign sukuk next year, a government official said.
The amendments, which still require the president's signature, would also allow for the conversion of conventional banks into Islamic ones, said Yerlan Baidaulet, an adviser to the Investments and Development Ministry.
«We expect the sovereign sukuk in early spring of next year. Probably in March, it depends on the decision of the Ministry of Finance as it has its own budgetary process», Baidaulet said on the sidelines of an industry conference in Kuwait.
The legal amendments to the banking services and securities laws are the latest steps by the majority Muslim state to help develop Islamic finance. A dedicated Islamic banking law is also currently in preparation, Baidaulet said.
Lawmakers have also passed a law to establish an offshore centre in the capital Astana, which is partly aimed at attracting Islamic finance business, he added.
The government announced plans for a sovereign sukuk, or loan, at the end of last year, which would follow a 240 million Malaysian ringgit ($73 million) sukuk issued in 2012 by the state-owned Development Bank of Kazakhstan.
The National Bank of Kazakhstan plans to sell an inaugural $1 billion sukuk next year as part of a $3 billion programme, a central bank official told the Interfax news agency last week.
The government sold $2.5 billion worth of conventional eurobonds in October of last year.
Kazakhstan, which gets over half its budget revenues from oil sales, has been hit hard by a collapse in world oil prices and the weakening of the currencies of Russia and China, its major trading partners.