Islamic Finance - the remedy to rising inflation in Pakistan
Abstract/Description
Pakistan is at a skyrocketing inflation rate of 31.5% (Feb 2023) which is highest since 1973. Since 1957 until 2023, the average inflation rate recorded in Pakistan is 8.08%. With PKR depreciating against USD, highest interest rate globally and a 3 weeks’ worth of USD reserve remaining to pay for imports, Pakistan is at highly risky arena financially.
However, many global financial analysts suggest that adopting the Islamic financial system can be an antidote for the rising inflation in Pakistan.
The principles of Islamic Economics states that the sovereign authority of wealth belongs to Allah (s.w.t) and therefore must be equally distributed amongst the individuals. Through the framework of Charity, Zakaat and Waqf, the wealth is passed on to underprivileged. Islam prohibits Riba (interest) while it encourages business through trading and partnership, keeping money supply intact. Furthermore, Islam discourages any unethical practices of conducting business such as hoarding of assets and corruption. Historically, countries like Malaysia, Jordan and Turkey have successfully dropped their inflation rates by practicing Islamic financial systems.
Through primary research of interviews from industry professionals and literature review, this research paper determines whether adopting Islamic Financial systems would successfully deaccelerate rising inflation in Pakistan.
Keywords
Economy of Pakistan, Policy Development, IIBOR, Shared Services, Sukuk
Track
Finance
Session Number/Theme
2B
Session Chair
Dr. Ashraf Khan ; Dr. Mohsin Sadaqat
Start Date/Time
27-5-2023 11:30 AM
End Date/Time
27-5-2023 1:30 PM
Location
MCS-4, AMAN-CED, First Floor
Recommended Citation
Ali, N. (2023). Islamic Finance - the remedy to rising inflation in Pakistan. 3rd IBA SBS International Conference 2024. Retrieved from https://ir.iba.edu.pk/sbsic/2023/program/29
COinS
Islamic Finance - the remedy to rising inflation in Pakistan
MCS-4, AMAN-CED, First Floor
Pakistan is at a skyrocketing inflation rate of 31.5% (Feb 2023) which is highest since 1973. Since 1957 until 2023, the average inflation rate recorded in Pakistan is 8.08%. With PKR depreciating against USD, highest interest rate globally and a 3 weeks’ worth of USD reserve remaining to pay for imports, Pakistan is at highly risky arena financially.
However, many global financial analysts suggest that adopting the Islamic financial system can be an antidote for the rising inflation in Pakistan.
The principles of Islamic Economics states that the sovereign authority of wealth belongs to Allah (s.w.t) and therefore must be equally distributed amongst the individuals. Through the framework of Charity, Zakaat and Waqf, the wealth is passed on to underprivileged. Islam prohibits Riba (interest) while it encourages business through trading and partnership, keeping money supply intact. Furthermore, Islam discourages any unethical practices of conducting business such as hoarding of assets and corruption. Historically, countries like Malaysia, Jordan and Turkey have successfully dropped their inflation rates by practicing Islamic financial systems.
Through primary research of interviews from industry professionals and literature review, this research paper determines whether adopting Islamic Financial systems would successfully deaccelerate rising inflation in Pakistan.
