Federal Minister for Finance and Revenue Senator Ishaq Dar has declared that the interest-based system will be eliminated in five years as there was 20 percent rise in the Islamic finance market, and the government is going to borrow “most” from that market, reported 24NewsHD TV channel.
Delivering his address at the inaugural session of the International Conference on Islamic Capital Market in Islamabad on Monday, Ishaq Dar said Islamic finance is one of the most rapidly growing sectors of global financial system, stressing it has the potential to take on the challenges of extreme poverty and boost shared prosperity.
The minister said major financial markets exhibit solid evidence that Islamic finance has already been mainstreamed parallel to the global financial system.
Ishaq Dar said Islamic finance has emerged as an effective tool for financing and development worldwide.
He reaffirmed the government's firm resolve to promote Islamic finance industry and eliminate interest-based system in Pakistan. He said they were committed to achieve the goal of this transformation within the timeframe of five years given by Federal Shariat Court. He said Pakistan has a strategic plan in place to develop Islamic finance.
Ishaq Dar announced that the national savings have been directed to launch Shariat compliant products for investors. He said the products shall cater to the persistent public demand for safe investments in line with the principles of Shariat. He said the products will be in the forms of saving accounts and term accounts of one, three and five years.
The minister said the finance division has constituted a steering committee for providing strategic guidelines regarding implementation of Federal Shariat Court's judgment on Riba. He said the committee will monitor the progress of the implementation of the judgment and remove the bottlenecks.
He said the committee has so far made significant progress and five working groups have been formed to overcome technical issues and decide on the way forward for full implementation of Islamic financing in Pakistan. These working groups are actively deliberating to formulate a comprehensive set of proposals to ensure seamless transition of the system into a Shariat-compliant system.
He pointed out that the size of Islamic finance Industry in Pakistan is estimated to have surpassed 42 billion dollars last year and assets and deposits stand at 7.2 trillion and 5.2 trillion rupees respectively. He said assets of Islamic banking industry posted year-on-year growth of 29 percent in the fiscal year 2022.
Ishaq Dar said the network of Islamic banking industry consists of 22 Islamic banking institutions, of these six are full-fledged Islamic banks and 16 conventional banks having stand-alone Islamic banking branches.
The minister said they firmly believed that Islamic finance with its ability to fight poverty and enhance prosperity could play the role of a catalyst for the future development of Pakistan and the Muslim Ummah. He emphasized the need for designing innovative Islamic products catering to the varying needs of different segments of the society.
Addressing the ceremony, State Bank Governor Jamil Ahmed highlighted the importance of Islamic banking, telling the participants that the volume of Islamic capital market assets in the world is $3 trillion, adding a share of the Islamic capital market in the international conventional market is 31pc.
The SBP chief admitted that there is a lack of regulatory framework, education, and awareness in the promotion of the Islamic capital market, adding the government has set up a steering committee for an interest-free economy by 2027.
He went on to say that Sukuk can play an important role in the development of the Islamic capital market.
SECP Chairman Akif Saeed speaking on the occasion said after the decision of the Federal Shariah Court, important steps have been taken to promote the Islamic financial system in the country. He added that SECP has established a new window for the promotion of Islamic finance products as their aim is to promote the Islamic capital market in the next 2 years. “Government support is needed for the development of the Islamic capital market,” said SECP chief.
Question about IMF enrages Dar
Later, Ishaq Dar became enraged when a journalist inquired about the inability of the government to uphold the terms of the agreement with the International Monetary Fund (IMF).
The journalist asked the minister whether it was his failure not to have a deal with the IMF, to which he asked had Pakistan defaulted? “Pakistan has made every international payment,” he added.
‘No compromise on dignity, honour’
Ishaq Dar Monday said that the civil and military leadership were on the same page against miscreants involved in the 9 May incidents who will be brought to justice.
Talking to a private TV news channel, Dar said such incidents should be condemned, adding that the government was committed to strengthening the national economy and all stakeholders should play their role in this regard.
While criticizing the Pakistan Tehreek-e-Insaf (PTI), he said the Khan’s government had “brought the country to the brink of default”, but the current rulers “preferred” to save the nation instead of its votes.
The finance minister said that we all have to work together to get the country out of the crisis due to the wrong policies of the previous government.
PTI must realize that its dirty politics was not in the interests of Pakistan and was also alarming for its future as well, he mentioned.
He said that if Khan was serious about prioritizing national interests, he should win the trust of the nation, state institutions and armed forces and to prove himself that he was not following any foreign agenda.