Turkey, Islamic Development Bank and Pakistan on Islamic Finance and Sustainable Development for Real Economy
In an International conference held in Istanbul on 14th to 16th June 2020 on the subject of Islamic Finance and Sustainable Development for Real Economy, President of Turkey Erdogan,, Islamic Development Bank (IsDB) Group’s Vice President Finance and CFO, Dr. Zamir Iqbal, and Adviser on Finance and Revenue of Pakistan Dr. Abdul Hafeez Shaikh gave their views as follows.
Turkey’s Erdogan said that Islamic economy can pull world ‘out of crisis’. He said that Islamic tools offer a “key” to get out of global economic woes triggered by corona virus pandemic, while vowing to make Istanbul centre of Islamic economy.
Over-financing has created a bloated economic model, which acts only over concern about unearned income, without considering social and human costs,” he said against the backdrop of economic fallout from the corona virus pandemic. Contrary to what has been promised, the distribution of income and wealth is gradually deteriorating all over the world, and the gap between the countries are widening he said.
President Erdogan said the loss of nearly 440,000 lives worldwide can’t be attributed to Covid-19 alone, saying many countries have an economic system that protects only strong and the rich.”In some countries, people without health insurance were left to die,” he said. “In recent days, behind the street events in some western countries, along with racism, there are injustices brought to light by the pandemic,” Erdogan said while questioning the economic model of some of the powerful nations. “Even the most prosperous countries have difficulty in providing masks to their citizens and cannot provide minimum health services,” he said.
Earlier this year, credit rating agency Moody’s announced that Turkey’s Islamic banking assets are set to double within a decade, as government initiatives drive growth in the sector. Turkey has positioned itself to be a hub for participation banking and Islamic finance. “We aim to make Istanbul centre of Islamic finance and economy,” Erdogan said.
Erdogan said Turkey is among the countries that has fought the pandemic with the least damage. “In addition to meeting the needs of our own people, we have provided medical assistance to 125 countries around the world,” he said. Pointing out the country’s first-quarter growth of 4.5 percent, Erdogan said that Turkey has shown that it distinguished itself positively from other countries not only in the health sector but also in the economy, during the Covid-19 pandemic. “With the realization of the normalization calendar, production, trade, and tourism [sectors] have started to revive,” Erdogan added.
Islamic Development Bank (IsDB) Group’s Vice President Finance and CFO, Dr. Zamir Iqbal, virtually addressed the 12th International Conference on Islamic Economics and Finance organized by Istanbul Zaim University.
In his speech to the participants at the webinar, the IsDB Vice President stated that the COVID-19 pandemic has practically derailed the progress towards Sustainable Development Goals (SDGs) triggering a chain of health, economic, and financial crises.
He then took note of the fact that under the Presidency of G20 of the Kingdom of Saudi Arabia, the IsDB Group is playing a vital role in building consensus amongst all Multilateral Development Banks (MDBs) on critical issues such as debt-sustainability and Debt Service Suspension Initiatives (DSSI) while touching upon the Bank’s collaborative efforts with the Heads of the Arab Coordination Group Institutions that have resulted in allocation of US $10 billion to support the developing countries recover from the COVID-19 economic recession.
Dr. Zamir Iqbal then elaborated that the President of the IsDB Group, H.E. Dr. Bandar Hajjar, as the current Chair of the Heads of MDBs has been spearheading collective efforts to coordinate the most impactful response to the health, economic, and financial challenges caused by the COVID-19 pandemic.
“The IsDB Group has launched the “COVID-19 Global Coordination Platform” enabled by block chain technology to support the Member Countries in the fight against the COVID-19 Pandemic. We are also contributing to containing the crisis through a US $2.3 billion package taking in to account short, medium, and long term requirements of its 57 member countries on the basis of a “RRR” framework focusing on “Respond,” “Restore,” and “Restart” tracks. And I am very pleased to share with you that the assistance commitments have reached US$ 1.86 billion for 27 member countries by mid May 2020”, the IsDB Vice President Finance explained.
“The IsDB Group is employing all financing tools, such as grants, soft loans, technical support, lines of financing, trade finance, investment insurance, capacity building of the public and private sectors, and activities related to economic empowerment in order to combat the pandemic and to set the Member Countries back on track to achieve the
Describing the current global crisis as an exogenous phenomenon, Dr. Iqbal went on to say that Islamic finance advocates risk sharing solutions to put the economy back on track just as Islamic social finance provides for developing strong social safety nets adding that best results are achieved only by formalizing and creating strong institutions.
In conclusion of his remarks, the IsDB Vice President Finance underlined the IsDB Group’s commitment to continue to work together with the global community to devise and implement solutions to support various countries especially those suffering the most expressing hope that the week-long conference would bring about theoretical and practical aspects of Islamic economics and finance fit for the era of the 4th industrial and technological revolution in a post COVID_19 world.
Adviser on Finance and Revenue of Pakistan Dr. Abdul Hafeez Shaikh Addressing international conference on Islamic Economics and Finance in Istanbul through video link, said Islamic Banking is growing at a fast pace in Pakistan.
He said global Islamic Finance industry is worth 2.4 trillion dollars and there are 1,400 Islamic Finance institutions in 60 countries. In Pakistan, growth of Islamic Finance coincides with global growth into this sector.
Dr. Abdul Hafeez Shaikh said corona virus has engulfed the whole world and global GDP is going to contract by 3 to 4 percent. In Pakistan, our GDP is taking a hit of about 3 percent. He said our exports and remittances have adversely been affected with manufacturing and other sectors also hurt. The Adviser said the government established a corona relief fund and transferred cash to 16 million vulnerable families to provide them support in this difficult time.