Funding development infrastructure without leverage: a risk-sharing alternative using innovative sukuk structures
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Muslim developing countries like many of their conventional counterparts suffer serious indebtedness. Amongst the 57 OIC countries, only the six Gulf cooperation Council countries have positive fiscal balances. The other 51 OIC nations have government budget deficits. Nineteen of these 51 countries are classified by the World Bank/IMF as HIPC (heavily indebted poor country). That government expenditure exceeds government revenues is a fairly common characteristic of developing economics. It is typically the result of the need to fund development. As matters now stand, there are two key problems with this. First, the budget shortfall is typically met by way of interest-based borrowing. Second, as domestic capital accumulation is usually insufficient, governments have to resort to borrowing in foreign currency.
Sukuk , Risk sharing , Funding development
Bacha, O. I., & Mirakhor, A. (2018). Funding development infrastructure without leverage: a risk-sharing alternative using innovative sukuk structures. The World Economy, 41(3), 752-762. https://doi.org/10.1111/twec.12512
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