• Algeria issued its first sovereign sukuk worth about $2.3bn to fund development projects.
• The 7-year sukuk offers a fixed annual return of 6%, paid as rent and tax-exempt.
• Authorities aim to tap domestic savings and ease pressure on public finances.

Algeria launched its first sovereign sukuk on January 27, raising 296.65 billion dinars, or about $2.3 billion, to finance development projects across several strategic sectors.

According to a note from the Ministry of Finance, the sukuk has a maturity of seven years and offers a fixed annual return of 6%. The return will be paid to investors in the form of rent, in line with Islamic finance principles, and will be exempt from tax.

The subscription is open to Algerian individuals, whether resident or non-resident, as well as to legal entities governed by Algerian law.

The subscription period will remain open until the target amount is reached, according to the Public Treasury. The Islamic certificates are backed by public real estate assets, which serve as collateral under the sukuk structure. These certificates will be freely tradable between investors and may also be listed on the stock exchange when held in accounts with banks.

The inaugural sukuk issuance is intended to mobilize financial resources to fund major public projects in infrastructure, equipment, and services, contributing to the country’s economic and social development, the Ministry of Finance said.

The operation also marks a key step in the development of the national financial market and in the consolidation of Islamic finance in Algeria.

Beyond diversifying state budget financing sources and reducing dependence on hydrocarbon revenues, the government is seeking to mobilize domestic savings. Authorities estimate that savings circulating in the informal sector amount to nearly 10,000 billion dinars.

The sukuk issuance comes amid mounting budget pressure. Projections under the 2026 finance law point to a budget deficit of 12.4% of gross domestic product in 2026, while the Revenue Regulation Fund, which previously served as a financial buffer, was fully depleted in 2024.

Walid Kéfi