Federal Minister Stresses Islamic Finance’s Role in Pakistan’s Economic Stability
Karachi, December 13, 2024 – Federal Minister for Finance and Revenue, Muhammad Aurangzeb, emphasized the pivotal role of Islamic finance and capital markets in steering Pakistan towards macroeconomic stability and sustainable growth.
Speaking virtually at the inaugural session of the Second International Islamic Capital Markets Conference & Expo in Karachi, Aurangzeb highlighted Pakistan’s recent economic challenges and its determined efforts to address them. “The country is on the right trajectory towards macroeconomic stability and sustainable growth,” he remarked.
The Finance Minister underscored the transformative potential of Islamic finance, particularly in capital markets. Instruments like sukuk, equity funds, and Shariah-compliant investment vehicles, he noted, not only attract investment but also reduce reliance on interest-based borrowing.
Shariah-Compliant Market Growth in Pakistan
Aurangzeb shared Pakistan’s strides in Islamic finance, revealing that as of June 30, 2024:
- 56% of market capitalization at the Pakistan Stock Exchange comprises Shariah-compliant securities.
- 48% of mutual funds’ assets, 66% of voluntary pension funds, and 95% of REITs are aligned with Shariah principles.
“These figures reflect the significant progress made in aligning the financial system with Shariah principles,” he stated. He reiterated the government’s commitment to developing an economic system that is both faith-compliant and conducive to inclusive, sustainable growth.
Mobilizing Resources for Key Sectors
Aurangzeb described Islamic financial instruments as crucial tools for mobilizing resources in critical sectors, including infrastructure development and poverty alleviation. He expressed confidence that Pakistan has the potential to become a leading global hub for Islamic finance.
He further noted the rising demand for Shariah-compliant investment products globally, attributing this to a shift towards ethical and sustainable financial systems. “This demand is contributing to the creation of a comprehensive Islamic finance ecosystem, engaging market participants across various sectors,” he added.
Collaborative Efforts for Growth
The Minister called for collective efforts by scholars, financial institutions, regulators, and industry practitioners to overcome challenges, develop innovative Shariah-compliant financial products, and enhance public trust. “Islamic finance must be practical, transparent, and capable of meeting the evolving needs of our people,” he asserted.
Commendation for SECP’s Role
Aurangzeb lauded the Securities and Exchange Commission of Pakistan (SECP) for its initiatives to advance Islamic finance. He cited efforts such as:
- Establishing Shariah-compliant indices.
- Introducing Shariah governance frameworks.
- Developing guidelines for offering Islamic financial services.
He urged the SECP to continue innovating and ensuring inclusivity in the Islamic capital markets sector.
The conference was attended by notable figures, including Shaikh Ebrahim Bin Khalifa Al-Khalifa, Chairman of AAOIFI Board of Trustees, Dr. Sami Al-Suwailem, Acting Director General of the Islamic Development Bank Institute, Akif Saeed, Chairman SECP, Saleemullah, Deputy Governor SBP, and other senior delegates.
The event reflects Pakistan’s growing commitment to fostering a robust Islamic capital market and integrating Shariah-compliant principles into its financial ecosystem.
