After its presidential ratification, on 10 June 2026, the Official Gazette published Law No. 222 of 2026, allocating a state-owned plot of land on the Red Sea to the Ministry of Finance for issuing sovereign sukuk, with an area of about 26,690.45 feddans (112,122,142 square metres).

Sovereign sukuk are defined under Law No. 138 of 2021 as “registered government securities of equal value, tradable on the stock exchange, issued for a specified period not exceeding 30 years, and representing undivided shares in usufruct rights over assets”. Unlike conventional bonds, sukuk rely on Sharia-compliant contracts such as ijara and murabaha instead of interest, while they are used to finance projects, cover the budget deficit or support the economy.

As the state turns to issuing sukuk backed by land, it is also targeting the issuance of international bonds worth about $4 billion during the 2026-2027 fiscal year to meet its external financing needs, according to statements by Minister of Finance Ahmed Kouchouk. It also recently completed the issuance of international sovereign sukuk worth $1.5 billion, in a programme targeting issuances of about $5 billion over 3 years.

The issuance of sovereign sukuk backed by land on the Red Sea raises questions about whether these assets will turn into a guarantee instrument for creditors, or whether it is the other face of selling state assets, in a more splendid guise and in finer-sounding terms.

The Ministry of Finance denied that the issuance of sovereign sukuk aims to sell assets; rather, according to the ministry, it is meant to create new financing instruments to diversify the investor base, achieve financial, economic and development targets, and provide allocations for investment projects to spend on improving citizens’ living standards.

Dr Hazem Hassanein, a member of the Egyptian Society for Political Economy, says the debate on the state’s exit from economic activity must first start by defining the state’s role and its economic identity, explaining that the world no longer knows the model of “the pure free-marketeconomy“, since governments in major economies must intervene through subsidies, social welfare, industrial policies and labour laws.

He adds to Zawia3 that developing countries often adopt the prescriptions of international institutions “without assessing how suitable they are for their local conditions”, asking: “Does the model of the state’s exit from economic activity really suit the Egyptian case?” He points out that Egypt implemented the economic stabilisation and structural adjustment programme from the early 1990s until 2008, with privatisation as one of its main pillars, noting that the experience calls for a review of its economic results before expanding policies of exiting current assets.

Commenting on the use of public assets in issuing sovereign sukuk, Hassanein says the state’s foreign currency needs have become a major factor in steering these instruments towards foreign investors, pointing out that the most important question concerns how the proceeds of these issuances will be used, and whether they will be directed to repaying debts or to financing productive investments that generate future returns for the economy.

Hassanein considers that the state’s exit from its assets should not be viewed as a goal in itself, but must be built on a clear assessment of the reasons for the state’s withdrawal from any economic activity, and whether this will improve efficiency and strengthen market competition. He points out that some countries’ past exit experiences did not, in his view, lead to positive results, such as Romania, citing what he described as the transformation of some local markets into more monopolistic conditions and the absence of alternatives in a number of industries such as steel.

He adds that the foreign investor is not attracted solely by the sale of assets or the state’s exit, but looks for macroeconomic stability, the availability of competition, and low exchange-rate, inflation and geopolitical-tension risks. He points out that exit policies in recent years have been linked only to the sale of public assets, considering that their main goal is to provide dollar resources for the state, not development.

For his part, economic researcher Dr Ahmed Khattab says allocating land to the Ministry of Finance to be used as assets supporting sovereign sukuk issuances is a step he described as one that “aims to strengthen confidence in government financing instruments and send a reassuring message to investors about the state’s ability to meet its financial obligations and pay sukuk holders their dues”.

He explains to Zawia3 that the presence of fixed assets, such as land, as cover for sukuk raises their credibility and investment value, as investors view these assets as a guarantee that strengthens the financing instrument and reduces the risks associated with it.

He describes this step as “an additional incentive for foreign and Arab investors to enter as strategic partners in state projects, especially given the investment opportunities available in the tourism sector, which still has large absorptive capacity for growth and expansion”.

He continues that the North Coast areas stretching from El Alamein to Matrouh, alongside Marsa Alam, Sharm El-Sheikh, Hurghada, Nuweiba, Ayoun Moussa and Ain Sokhna, still hold wide opportunities to attract more foreign direct investment in hotels, resorts and tourist rooms, away from archaeological destinations such as Luxor and Aswan, which attract categories of tourists interested in heritage and antiquities.

On assets: is the state a failed manager?

Dr Hazem Hassanein explains that sovereign sukuk are a financial instrument widely used in many countries, especially in Southeast Asia and the Gulf, and are distinguished by their ability to provide good returns for investors, but they differ from the idea of selling assets directly.

He explains that the distinction must be made between ordinary assets, which can be invested for a specific period of time and then recovered, and strategic or vital assets, which represent basic pillars of the national economy, pointing out that the essential question is whether sukuk are being used as a genuine investment mechanism or as an indirect means of disposing of public assets.

Hassanein believes that resorting to selling assets or using sukuk proceeds to repay debts raises questions about the economic role of public assets, noting that borrowing is supposed to be directed to productive projects capable of generating future returns that help service the debt, rather than relying on disposing of assets to repay existing financial obligations.

He adds that the Ras El-Hekma deal represented a financial success in terms of the volume of resources obtained, but in his view it raises economic questions about the loss of assets of strategic value and the possibility of repeating this approach with other assets in the future.

For his part, Dr Abdel Moneim El-Sayed, director of the Cairo Center for Economic Studies, says the most prominent shift in the new State Ownership Policy Document lies in the state’s move from the idea of “exiting the economy” to “redefining its economic role”.

He explains to Zawia3 that the state’s goal is no longer limited to selling public assets, but extends to managing them more efficiently while giving the private sector wider space to lead economic activity and growth.

He adds that the state is moving towards focusing on the role of regulator and stimulator of the market, while maintaining its presence in strategic and sovereign sectors linked to national security and the vital interests of the state.

Dr Hazem Hassanein, meanwhile, points out that exiting economic activity in developing countries is often linked to the conditions of international financing programmes, but it should not become a fixed policy or a goal in itself, stressing that building a sustainable economy requires expanding the productive base and reducing dependence on borrowing and external financing.

He explains that confronting economic crises requires a relatively independent development strategy, aimed at raising the economy’s capacity to meet its basic needs and increasing local production rates, instead of continued reliance on external resources and international financing.

He explains that the success of any exit programme depends on the existence of a strong private sector capable of competing and on removing the bureaucratic and administrative obstacles that hinder investment, pointing, for example, to the length and complexity of licensing procedures, which push local and foreign investors to look for other, more attractive and easier markets.

He adds that attracting foreign investment starts with improving the conditions of the local investor, explaining that the foreign investor will not venture into a market in which the national investor suffers difficulties in establishment, operation and expansion, pointing out that the government is required to send messages of confidence to investors instead of entrenching the impression of a state withdrawing from economic activity.

Selling amid looming fears

Professor of economics and political science Dr Alia El-Mahdi says that issuing sovereign sukuk on state-owned land opens the door for foreigners to own Egyptian assets belonging to the people, while this should not be considered investment in any form, and she poses a question: “Will Egyptians own any of that land?”

She adds to Zawia3 that the state is expanding the sale of land, while this represents a danger to national security, as she described it, pointing out that the state, instead, could grant usufruct rights over some land for a period of between 30 and 50 years, never exceeding this limit, while prohibiting the holder of the usufruct right from ever selling it.

She believes that selling land under any name is an infringement of the rights of future generations, asking: “What will we leave for our children and grandchildren after us if we sell all the prime land?” She adds: “We cannot continue borrowing against land as collateral, because this paves the way for non-repayment while guaranteeing sukuk holders their rights to own the land”.

Dr Ahmed Khattab responds on the nature of ownership of the land allocated for sukuk, saying ownership of the land does not pass to sukuk holders but remains with the state, while it is used as an asset guaranteeing the issuance. He explains that sukuk are tied to a specific period of time, at the end of which the investor recovers his principal and the agreed return, or he may dispose of the sukuk by selling them if their market value rises, earning him additional profits compared with some traditional savings instruments.

He expects the maturities of Egyptian sovereign sukuk to range between 3 and 5 years, according to the state’s financing needs, pointing out that a longer sukuk term gives the government greater opportunities to employ the funds, which is usually reflected in the level of return the investor receives. He points out that most investors in these issuances are foreigners and Arabs who are not looking for quick liquidity, but rather tend to lock up their money for specific periods in exchange for benefiting from the rise in the value of the assets or projects linked to the sukuk.

Dr Hazem Hassanein, meanwhile, agrees with Dr Alia El-Mahdi and warns against repeated reliance on selling assets or using sukuk proceeds to repay debts, as this may, in his view, entrench an economic model based on borrowing and then disposing of assets to cover financial obligations, instead of building sustainable sources of production and growth.

He believes that the planned exit from some service or social assets, such as the Nasser Institute Hospital for example, must be preceded by clear alternatives that guarantee the continued provision of services to citizens, stressing that the state’s role is not limited to the economic side only, but also extends to its social role in providing basic services and protecting the most vulnerable groups.

Hassanein points out that the problem of the Egyptian economy is linked less to a shortage of financing instruments than to the absence of a long-term productive vision, explaining that the financial sector is achieving great successes and profits, but these successes have not been sufficiently reflected in building a real economy based on production and exports.

He notes that in recent years the Egyptian economy has moved towards real estate and financial activities, while the importance of productive sectors capable of creating added value and sustainable jobs has declined, pointing out that the future of economic development is linked to rebuilding the productive bases and the industries in which Egypt has comparative advantages.

Economist Medhat Nafea, meanwhile, says the allocation of Red Sea land to the Ministry of Finance cannot be viewed as a purely administrative measure, since it represents a shift in the philosophy of managing state assets from keeping them as a strategic reserve to employing them as instruments supporting public financing.

He adds to Zawia3 that this approach aims to maximise the economic value of the assets and use them to improve borrowing terms and attract financing from international markets, especially through instruments such as sovereign sukuk, according to his statement.

He believes that this approach may provide financial breathing room in the short term and ease pressure on the general budget, but, in his view, it raises questions about guaranteeing that the economic and strategic rights linked to these assets are not compromised in the future, which calls for the highest degrees of transparency, disclosure and institutional oversight.

Dr Ahmed Khattab, for his part, rejects fears about foreign investors entering projects based on assets or land inside Egypt, pointing out that the main goal is to attract investments that contribute to development and employment instead of leaving land unused, and pointing out that coastal and tourist land can be turned into centres of production, services and projects that provide jobs and cash flows for the economy.

He continues that the state is already adopting a broader approach to involving the private sector, citing the State Ownership Policy Document, which defined the government’s roles and the mechanisms for investors’ participation in various economic activities. He states that the presence of Arab or foreign investors in Egyptian projects is not a threat to national sovereignty, reasoning that land ownership is in all cases subject to Egyptian laws, with the state possessing the legal and regulatory tools capable of protecting its assets and preserving its sovereignty.

Debt in exchange for assets

Responding to fears about linking government financing instruments to public assets, Dr Ahmed Khattab says he sees no danger in this approach, considering that the priority now must be to strengthen investor confidence and attract foreign capital amid regional and international competition for investments, pointing out that many countries, including the Gulf, have in recent years expanded policies of foreign ownership and investment.

The economic researcher considers that current developments reflect a natural shift in the way public assets are managed, explaining that economic policies cannot remain fixed for long decades in a rapidly changing world. He points out that Egypt is not inventing unprecedented financial models, but is benefiting from the experiences of other countries that have achieved success in the fields of financing and investment, by readapting these instruments to suit Egypt’s economic and demographic specificity.

He adds that economic strategies need periodic review and updating to keep pace with global and technological transformations and development requirements, pointing out that the success of countries is linked to their ability to adapt quickly to international changes and adopt the most efficient instruments for attracting investment and achieving growth.

Dr Hazem Hassanein, meanwhile, says the success of any programme for the state’s exit from economic activity requires a clear alternative and an investment map that gives the local investor the confidence and incentives needed to expand productive activity, noting that weak confidence in the business environment has a negative impact on both local and foreign investment decisions.

Hassanein continues that investors have come to prefer directing their money to real estate, gold and assets capable of preserving value and achieving quick returns, which raises a fundamental question about the future of the real economy and its ability to attract capital towards production and manufacturing.

He adds that Egypt possesses two basic factors of production, land and labour, while the main problem remains in the factor of organisation and the efficiency of economic management, pointing out that capital naturally flows to environments capable of providing stability, clarity and the ability to generate returns.

He states that improving the business environment must precede any expansion of exit policies, by guaranteeing fair competition, reducing administrative complexities and strengthening trust between the state and investors, allowing the building of a productive and technological base capable of achieving sustainable growth.

He warns that continued reliance on rentier and real estate activities without developing the productive sectors may lead to a decline in the role of real investment in the economy and make economic growth dependent on limited sectors that do not provide a sufficient basis for long-term development and improved living standards.

He states that the evaluation of exit policies must be linked to their ability to achieve macroeconomic goals, foremost among them increasing domestic output, generating jobs and curbing inflationary pressures, pointing out that these criteria must be the basis for judging any programme for exiting economic activity.

He adds that the state has great opportunities in industries such as glass, oils, metal industries, the automotive industry and its feeder industries, calling for the adoption of a model based on partnership between the state and the private sector instead of settling for exit policies or searching for quick financial solutions.

He warns against prioritising financial considerations over real economic considerations, as this leads to the erosion of returns through inflation without achieving sustainable development, according to Hassanein, adding that “the absent duty” in the economy is building modern productive bases that rely on technical education and the sectors linked to natural resources, tourism and manufacturing industries, considering that the focus on attracting foreign currency should not come at the expense of stimulating local demand and production.

Thus, the experience of selling assets in developing economies has not achieved the desired results because of the weak productive base; moreover, an unproductive economy cannot compete, and the success of any policy of economic liberalisation requires a strong productive sector capable of competing locally and internationally. In addition, the Egyptian business environment suffers from bureaucracy, corruption and administrative and logistical obstacles, and these problems must be addressed before talking about the success of private investment, which is linked to an effective business environment.

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