The Islamic Development Bank (IDB) said it may raise the size of its Islamic bond program to $6 billion to soften the impact of global financial turmoil on its members, which include some of the world's poorest nations. “The bank is in great need to issue these Sukuk (Islamic bonds) to attract resources from the market and respond to the growing demands it is getting from its member states,” Chairman Ahmed Mohammed Ali told Reuters. The Saudi-based triple-A rated lender will set within a few weeks a date for the first of two $500 million issues of Islamic bonds that will take place this year. “The date for the first issue has not been fixed yet for technical reasons but it will be announced within a few weeks... We should have two Sukuk issues this year,” Ali said. The bank had initially hoped to raise an annual $1 billion in the five years to 2013. “This can increase to $6 billion, depending on the market response and also depending on the demands we get from member states,” Ali said. The Sukuk issue plans are part of efforts to increase lending to member states struggling to cope with the financial crisis, he said. IDB granted to its poorer member states loans worth $4.8 billion in 2008. The global credit crunch and the slowing of economies in key Islamic financial centers are putting pressure on the $1 trillion Islamic bond industry, its biggest test since it began 30 years ago. The value of Sukuk issued globally in 2008 has fallen more than 56 percent from 2007 to $14.9 billion, according to Standard & Poor's. IDB board of governors, which comprises finance ministers and central bank governors of its 56 member states, will meet next week in Turkmenistan to approve the bank's future plans. “This is a special governors' meeting since it's the first to be held in a central Asian state,” Ali said. Development funds from IDB's richest member states, such as Qatar, the United Arab Emirates, Kuwait and Saudi Arabia, are keen to boost relations with Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, Ali said. “Arab financing organizations, that have close ties with IDB, such as the Saudi Development Fund and Kuwait`s Development Fund ... have been cooperating closely with IDB to support these states,” Ali said, adding that Gulf Arab funds were financing mainly hydropower projects and the building of roads.
