KARACHI: Planning Minister Ahsan Iqbal on Tuesday emphasised the critical role of Islamic finance in driving sustainable economic growth and addressing global challenges such as climate change.

He was speaking as the chief guest at the 4th World Islamic Finance Forum, organised by the Institute of Business Administration (IBA), which brought together experts to explore the theme, “Islamic Finance, Innovation, Climate Finance and Sustainable Growth.”

The minister noted the projected growth of the Islamic finance industry to over $6 trillion by 2027 as per the 2023 Islamic Finance Development Report, and highlighted its foundation in the ethical and sustainable principles of Sharia law.

These principles, he explained, ensure an equitable and just economic system through practices such as profit and loss sharing (Mudaraba and Musharaka), the prohibition of interest (Riba) and social responsibility through zakat and waqf.

Unlike conventional systems, he stressed that Islamic finance ties economic activities to real assets and promotes shared risk, social justice, and poverty alleviation, with global estimates indicating that Zakat and Waqf contributions exceed $1 trillion annually.

Mr Iqbal also underscored the growing relevance of Islamic finance in addressing environmental issues, citing the example of green sukuk. He pointed out that global issuance of green sukuk surpassed $20 billion in 2023, financing projects in renewable energy, sustainable agriculture, and green infrastructure. He referenced Indonesia’s issuance of $2.5bn in green sukuk and Malaysia’s leadership in this sector.

PSX robust performance

Speaking at a gong striking ceremony at the Pakistan Stock Exchange, Mr Iqbal lauded the exchange’s performance. On behalf of the prime minister, he congratulated the PSX on achieving over 60pc growth in 2024.

The minister emphasised the importance of four key factors for national development: peace, political stability, consistent policies, and commitment to reforms. He noted that without creating a conducive ecosystem, even the best intentions would be futile. “Pakistan needs these four pillars more than ever,” he stressed.

He highlighted the shift from the political ideologies of the 20th century to the economic competition of the 21st century. The minister also announced the forthcoming National Economic Transformation Plan, emphasising the need for export-led growth and the branding of “Made in Pakistan” products.

He noted that no Pakistani company currently exceeds a $2 billion valuation, stressing the importance of connecting with global supply chains for economic survival.

Thanking political parties for their support, Mr Iqbal pointed to the results of these reforms, including reduced inflation, rising IT exports, and improved international ratings.

Published in Dawn, December 4th, 2024