A long-awaited law allowing Jordan to issue sukuk has been cleared by both houses of its parliament, paving the way for the government to tap strong global appetite for Islamic bonds as it tries to repair public finances. The law, which had been in development since 2010, was passed by the lower house of parliament earlier this month and approved by the upper house at the end of last week. It may take effect in about 30 days, after the government promulgates it, Sufian Elhassan, director of the research and information department of the house of representatives, said by telephone. A sovereign sukuk would broaden Jordan's sources of funding, giving it access to a huge pool of Islamic investment funds in the Gulf. Its need for external financing prompted it to agree with the International Monetary Fund in July on a $2 billion stand-by loan arrangement. State finances are under pressure after Jordan hiked subsidies and wages to limit social discontent in the wake of the Arab Spring uprisings, and because it is having to absorb tens of thousands of refugees from Syria's civil war. The government is struggling to keep its budget deficit to around 5 percent of gross domestic product this year. In July, Standard and Poor's said its BB credit rating for Jordan had a negative outlook because of the vulnerability of the economy to regional shocks and "limited fiscal flexibility".
It is not clear when Jordan might issue its first sovereign sukuk, and hurdles remain, including the choice of an asset pool for the sukuk and arranging for the central bank to manage payments on it, said a senior Islamic banker in Amman, who declined to be named because of his bank's briefing rules. Because of Islam's ban on interest, sukuk instead pay returns on funds invested in a pool of assets. The government is keen in principle to tap the domestic and international sukuk markets, the banker said. "The assumption is that Islamic banks (within the country) would buy 400 million dinars ($565 million) of government issuance."
Last week, Jordan's finance minister said the country was discussing the issue of a seven- to 10-year sovereign, conventional Eurobond worth between $750 million and $1.5 billion to foreign banks. Because global investor demand for sukuk exceeds supply, Jordan might be able to issue Islamic bonds more cheaply than it could sell conventional bonds. INDUSTRY
Jordan has a small but growing Islamic finance industry. Last year local company Al-Rajhi Cement issued an 85 million dinar, seven-year sukuk, the first in the country. Jordan Dubai Islamic Bank began operating in January 2010. In order to facilitate corporate issuance of sukuk in Jordan, the securities commission may seek amendments to the company law and set up a committee to study issues such as compliance with sharia law, a source at the commission said. The committee would include experts on both sukuk and finance in general as well as representatives from the securities commission, the central bank, the ministry of finance and the ministry handling awqaf (Islamic endowments), the source told Reuters.
Parents who are about to write big checks for summer camp deposits may want to pause and consider if they've made the best choice of camp so their kids have a great social experience - but don't get over-indulged. That's one of the messages in a new financial guide to raising kids, "The Opposite of Spoiled," by the New York Times's "Your Money" columnist, Ron Lieber. Among all the ways parents spend money on their kids, Lieber says summer camp provides a great opportunity to reinforce some solid values. Pick the wrong kind of camp, and you wind up spoiling your kids more, he says. Reuters spoke with Lieber about how to make sure you end up on the right side of the equation: Q: How do you find a camp that suits your family's values?A: Certainly ask around in your community. Resist the idea of going where all the other kids are going. You can also talk to camp consultants. Then take a look around on visiting day. How are the people dressed? What do they look like? What cars are they driving? And ask yourself: Are these the sorts of people who are demonstrating the kinds of values you have in your life? Q: You mostly refer to overnight camp in your book because it puts children in a completely new and separate environment. Do kids get the same financial lessons at day camp?
A: There are all sorts of things you can accomplish with day camp. I think of day camp as the outdoor variety at the local park - every community has a version of this - and not the high-end day camp with the heated swimming pool and air-conditioning everywhere. Q: What do you think of specialty camps - for drama or sports - that focus intensely on one interest rather than just general fun?A: For children with true passion who are pursuing it because they really love art or coding, that's something worth investing in - if it's really coming from the child.
One hint is that they are asking to do it. The context of the choices is useful to present in financial terms. They might institute a form of symbolic deprivation. Maybe it will be $3,000 for the summer, and the child can decide what's important to him or her. It forces kids to make trade-offs. Q: Should you tell your children how much summer camp costs, or does that put too much pressure on them?A: Tell them when they're able to do the math. But if there are sacrifices that the families have to make, it's worth bringing the kids in on that so they can be part of picking the trade-offs. Maybe they'd like to not go out to dinner to afford to go to a special camp.
Q: Summer camp is usually a moneyless micro-society, so what can kids actually learn about money?A: One of the nice things about camp is that everyone comes in with the same sets of things. Some may have slightly different clothes, but if you bring too much, they send it back. Nobody gets special food or has a special lunch unless they have allergies. It's not a way to learn about having less money, it's a way to learn about having less stuff - less of the regular urban or suburban upper-middle-class existence. Kids don't really need all of that stuff that surrounds them the other 10 months of the year. They don't need their own bathroom, they don't even need a door on the bathroom. They don't need electronic entertainment. They need one another and their imaginations. Those lessons are the ones that they carry with them. It helps give them perspective. See more Life Lessons here