Monday, October 2, 2023

Pakistan’s Economy will be Interest-Free by 2027: State Bank’s Governor

The Governor of the State Bank of Pakistan (SBP), Jameel Ahmad, stated that the Islamic capital market has contributed to the country’s economic growth. Over the past decade, there has been a 24% expansion in Pakistan. The SBP and the Securities and Exchange Commission of Pakistan (SECP) have been collaborating to introduce reforms in Islamic financing, with the aim of making the country’s economy free from interest-based systems.

Pakistan has already issued sukuk bonds worth Rs2.8 trillion, and a committee has been formed within the SBP to convert government debt into Islamic sukuk. Talks are also underway to obtain Sharia-compliant funding from the capital market, and sukuk bonds could be utilized to meet the government’s financial needs. The ultimate objective is to eliminate interest from Pakistan’s economy by 2027.

According to the SBP Governor, Islamic banking in Pakistan has witnessed significant growth, reaching 20% of the banking sector. The Islamic capital market has grown to approximately $3 trillion, reflecting positively on the overall state of the country’s economy. The SECP Chairperson, Akif Saeed, supported the Governor’s remarks and emphasized the importance of promoting the Islamic finance sector.

Following a ruling by the Federal Shariat Court, which directed the implementation of a riba-free banking system in Pakistan by the end of 2027, measures have been taken to foster an Islamic financial system within the country. This includes promoting the capital market and issuing sukuk bonds. The government has endorsed the court’s ruling, while some banks are planning to appeal it.

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