The Design of Instruments for Government Finance in an Islamic Economy

Publication Date:

April 1, 1998

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper presents perhaps the most viable approach for the design of an instrument of government finance (and monetary management) in an Islamic economy where conventional transactions based on an ex-ante promise of a risk-free rate of return are forbidden. Resources to finance government infrastructural and development projects can be mobilized by issuing a national participation paper and this instrument can also serve as an instrument of monetary management. The paper discusses various conceptional issues underpinning the introduction of such an instrument and methods of calculating a corresponding rate of return. In principle, this approach has been accepted by the Islamic Republic of Iran.

Series:

Working Paper No. 1998/054

Subject:

Asset prices Banking Financial institutions Financial markets Government securities National accounts Prices Return on investment Stock markets Stocks

English

Publication Date:

April 1, 1998

ISBN/ISSN:

9781451847482/1018-5941

Stock No:

WPIEA0541998

Pages:

18

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