Public Disclosure Authorized DISCUSSION PAPER MFM Global Practice Public Disclosure Authorized No. 18 June 2017 Emre Balibek Public Disclosure Authorized Public Disclosure Authorized This series is produced by the Macroeconomics and Fiscal Management (MFM) Global Practice of the World Bank. The papers in this series aim to provide a vehicle for publishing preliminary results on MFM topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations, or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. For information regarding the MFM Discussion Paper Series, please contact the Editor, Ivailo Izvorski, at
[email protected]. © 2017 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved ii MFM DISCUSSION PAPER NO. 18 Abstract A strong legal framework that forms the basis for the activities of debt managers is crucial for enabling an effective public debt management function. This paper aims to complement discussions on the legal foundations of debt management by detecting and discussing essential elements that allow the government to issue sukuk, the equivalent of bonds, in Islamic finance. Drawing on the cases of recent sovereign issuers, these discussions begin with outlining the clear provision of a mandate to issue and to employ certain public assets in the execution of underlying transactions, as well to establish, engage with, and administer Special Purpose Vehicles used in structuring these issuances.