Sudan to sign $50 million loan agreement with Kuwait development fund
July 15, 2014 (KHARTOUM) – The Sudanese legislative and executive bodies are considering a $50 million loan offered by the Kuwait Fund for Arab Economic Development (KFAED) to finance development projects of the private sector.
Last February, the Sudanese government and the KFAED signed a 13.5 million KWD ($47.2 million) loan agreement to finance establishment of integrated laboratories for the mining sector in Sudan.
The two sides also signed a 25 million KWD ($85 million) loan agreement in July, 2013 to finance the heightening of Rossaires Dam. The loan was offered at a 2% annual interest rate in addition to 0.5% for administrative fees and a repayment period of 21 years including a 4 year grace period,
It was approved by the Sudanese parliament following a heated debate on the issue of violating Islamic Shar’ia law which prohibits borrowing money that has interest terms attached.
52 MP’s voted in favour of the loan with 46 against and 9 abstentions.
At the time, MP Suad al-Fatih from the ruling National Congress Party (NCP) said that god’s wrath will befall on Sudan for agreeing to this loan and started chanting “God is Great” and “There is no God but Allah”.
But the former parliament speaker Ahmed Ibrahim al-Taher said he had asked the Islamic Fiqh (Jurisprudence) Council for an opinion in light of the necessity and also sought finance ministry input which emphasized the lack of alternatives.
Islamic law prohibits accepting the collection and payment of interest, also commonly known as ’Riba’. However, very few Muslim countries enforce this rule. The doctrine of necessity in Islamic legislation allows recourse to loans with forbidden interest in certain conditions.
The deputy chairman of the parliamentary subcommittee for economic affairs, Babikir Mohamed Tom, said in press statements on Tuesday that the $50 million loan was approved from Islamic Shar’ia perspective.
He said the loan, which is administered by the Central Bank of Sudan (CBoS) is offered at a repayment period of 8 years including a 3 year grace period.
Tom said his committee made a recommendation to the CBoS to direct the loan to finance rural development projects in farming and livestock besides employment projects for college graduates.
Sudan’s finances have tightened since oil-rich South Sudan seceded from the north in July 2011.
Furthermore, Sudan’s $41 billion foreign debt makes other countries reluctant to extend credit.
(ST)