Islamic finance could be answer to funding Scotland’s capital infrastructure
9 October 2008 Scottish First Minister Alex Salmond is to seek loan funding from the Middle Eastern state of Qatar to invest in infrastructure projects such as a new Forth Road Bridge, according to press reports. The First Minister reportedly plans to visit oil-rich Qatar next year to discuss borrowing for major infrastructure projects in what critics have called ‘Middle Eastern PFI’. The deal could replace ‘private finance initiative’ type funding, which the Scottish National Party administration in Scotland has long criticised, with loan finance from Qatar’s sovereign wealth fund. A likely structure for the package would be a ‘sukuk’ bond which meets the requirements of ethical investment under the Islamic Shariah code. Scottish ministers and officials are reported to have discussed the plan with the Islamic Finance Council, a Scottish-based body set up to promote and develop Islamic finance. High oil prices have boosted the value of the sovereign wealth funds of the Middle Eastern states, with Qatar’s alone being valued at around $60 billion (£33.3 billion). The Scottish Government recently unveiled its plans for the Scottish Futures Trust which will oversee ‘PFI’ type funding in Scotland and look for alternatives.
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