IMF Working Papers

The Design of Instruments for Government Finance in an Islamic Economy

April 1, 1998

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The Design of Instruments for Government Finance in an Islamic Economy, (USA: International Monetary Fund, 1998) accessed December 21, 2024
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.

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

Keywords: Asset prices, Central bank, Government securities, Indirect monetary instruments, Islamic banking, Market, Market clearing price, Market rate of return, Middle East, NPP market, Price-earnings ratio, Rate of return, Return on equity, Return on investment, Risk premium, Stock markets, Stocks, Treasury bills, WP

Publication Details

  • Pages:

    18

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1998/054

  • Stock No:

    WPIEA0541998

  • ISBN:

    9781451847482

  • ISSN:

    1018-5941

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