‘When there is a need we will go to the market,’ Ali said. ‘The IDB sukuk was rated AAA as was IDB. That’s why any time the bank needs to go to the market with this good record, we can get a good price.’
Last year, the IDB launched a $1,000 million medium-term note (MTN) programme and in June 2005 staged the first five-year drawdown, priced at 12 basis points over Libor and listed in Luxembourg. In August 2003, the IDB launched its debut sukuk, which was heavily oversubscribed and closed at $400 million.
Plans are also moving ahead to set up a poverty alleviation fund to provide relief to IDB member countries following its approval at the bank’s annual meeting in Kuwait in May. ‘In Kuwait, some countries announced initial contributions, including $1,000 million from Saudi Arabia,’ Ali said. ‘The first assembly meeting will be in September to elect a board.’
Additional aid contributions to the Palestinian territories worth about $100 million were also agreed in Kuwait. The money has been committed by member countries and will be allocated to development projects through the IDB-managed Al-Aqsa fund, Ali said.
The establishment of the Jeddah-based IITFC, which will take over the IDB’s trade-related activities, was also approved by the vast majority of the bank’s 56 member countries at the Kuwait meeting.
The new body will promote member countries’ investments and intra-trade, Ali said. It is understood that at least $450 million out of the planned $500 million for the IITFC has been raised so far.
Ali also said that he expected Islamic banking to continue growing globally, with most regional banks set to continue using Islamic and non-Islamic systems in parallel. ‘Growth of the Islamic banking industry is estimated at 15 per cent,’ Ali said. ‘I expect both systems to be there side by side.’
Last June, the IDB and the Islamic Financial Services Board (IFSB) jointly launched a 10-year masterplan for the development of sharia-compliant finance.