18 June 2021: Can Islamic Finance help Pakistan?
As a student of finance and economics, I have long wondered how Pakistan will be able to achieve the desired growth rate while managing debt. The sanction imposed by IMF and FATF on Pakistan which bars the federal government from borrowing from the State Bank of Pakistan puts the country in a delicate position.
The imposition of the aforementioned sanction can be attributed to the heavy capitalisation of the unsustainable space of conventional borrowing to finance fiscal deficit and circular debt. Domestic banks have remained a major source of funds for the federal government to bridge deficits. However, PIBs, the general form of raising funds, have become costly.
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