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Sukuk structure for deficit financing during COVID-19 crisis

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dc.contributor.authorAuwal Adam Sa'ad
dc.contributor.authorRazali Haron
dc.contributor.authorAnwar Hasan Abdullah Othman
dc.contributor.authorAishath Muneeza
dc.date.accessioned2022-10-28T02:17:28Z
dc.date.available2022-10-28T02:17:28Z
dc.date.issued2022
dc.description.abstractThis paper identified the sukuk structure suitable for deficit financing during the COVID-19 crisis. The study also explored the relevant Shari'ah contracts that could be utilized to issue sukuk that is suitable for various jurisdictions and corporations in handling deficit financing during the COVID-19 crisis. The authors have adopted a qualitative research approach in which primary and secondary sources available on the subject were reviewed, especially a number of cases related to sukuk structures prior to and during the COVID-19 crisis and analyzed their performances and drawn their conclusions. The outcome of this paper suggests that certain sukuk structures used during the COVID-19 crisis aimed primarily at financing deficit have been successful. Furthermore, these sukuk structures are relied very much on the obligator's/issuer's cash flow position. It has been revealed that if the sukuk is structured on equity-based contracts with lower repayment amount or no payment, it would not trigger default because the nature of this sukuk is the sharing of profit and loss, in accordance with a Shari'ah rule that there will be compensation for any loss only if deliberate and notable negligence is proven. However, if it is debt based or ijarah and wakalah contracts, then the payment to sukuk holders ought to be made as agreed and if not, it will trigger default. This payment is to be made from the cash flow of the issuer and if there is an issue in the cash flow of the issuer due to COVID-19, consent from the sukuk holders needs to be obtained to reschedule payment as found in the case of the Garuda Indonesia sukuk. However, as found in MASB's IMTN sukuk case, if the cash flow of the company is good, then the chances of default are very slim. However, so far, three new sukuk in the middle of COVID-19 were issued, one by a corporation and two issued by a sovereign, one of which addresses the liquidity issues during the pandemic, and all these proved that sukuk is definitely a viable alternative mode for deficit financing and a reliable option during the COVID-19 pandemic. This paper looked into the sukuk structure, especially the sukuk which are yet to mature and the new sukuk issued during the crisis caused by the COVID-19 pandemic.en_US
dc.identifier.citationSa’ad, A. A., Muneeza, A., Haron, R., & Othman, A. H. A. (2022). Sukuk structure for deficit financing during COVID-19 crisis. Islamic Economic Studies, 30(1), 23-41. https://doi.org/10.1108/IES-01-2021-0007en_US
dc.identifier.doihttps://doi.org/10.1108/IES-01-2021-0007
dc.identifier.issn1319-1616
dc.identifier.urihttps://ikr.inceif.edu.my/handle/INCEIF/3663
dc.languageEnglish
dc.language.isoengen_US
dc.publisherEmerald Publishing Limiteden_US
dc.rights2022. Auwal Adam Sa'ad, Aishath Muneeza, Razali Haron and Anwar Hasan Abdullah Othman
dc.sourceSEDONA
dc.subjectSukuken_US
dc.subjectCOVID-19 crisisen_US
dc.subjectDeficit financingen_US
dc.titleSukuk structure for deficit financing during COVID-19 crisisen_US
dc.typeJournal Articleen_US
dlc.maintopicCOVID-19en_US
dspace.entity.typePublication
ikr.doctypeScholarly Works
ikr.topic.maintopicCOVID-19en_US
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