Yemen plans to issue Islamic bonds

Yemen plans to issue Islamic bonds soon to finance government projects, Central Bank Governor Mohammad Awad Bin Humam said in an interview. "We have plans with the Finance Ministry to issue Islamic bonds to finance government projects and other sukuk," Bin Humam said in a telephone interview from Sana'a. "We will try to do so as soon as possible." Middle East and Asian governments are turning to local sukuk investors to finance infrastructure projects as European lenders reduce overseas exposure amid the region's sovereign debt crisis. Global issuance of sukuk, or Islamic bonds, increased to $84.5 billion in 2011, a 64.5 per cent rise on the previous year, S&P said in a report this month. Yemen last sold Islamic bonds at the start of last year. Bin Humam declined to elaborate on the size or timing of the next sale. Unrest last year cost Yemen more than $8 billion, former Industry and Trade Minister Hisham Sharaf said on November 13. Bin Humam said Yemen's foreign reserves now stand at $4.6 billion, down from $5.9 billion in December. "We used the money to finance petroleum products, government services and to buy wheat, flour and sugar," he said. Yemen's outgoing President Ali Abdullah Saleh will cede power this week after he signed a Gulf-brokered accord to end his three-decade rule. As part of the agreement, the vice-president for the past 18 years, Abdurabu Mansur Hadi, is running uncontested in an election this week. The World Bank forecast that Sana'a will be the first capital city to run out of water by 2025. More than half the country's population of 23 million is under 20 years old and about 40 per cent of the people live on the equivalent of less than $2 a day, according to the United Nations.