International Monetary Fund managing director, Ms. Christine Lagarde concluded her recent visit to Kuwait by emphasising, “the potential for Islamic finance to contribute to higher and more inclusive economic growth,” according to a statement released by the IMF.
Speaking at the Global Islamic Finance Conference, which is co-organised between the IMF, the Central Bank of Kuwait, and the Middle East Centre for Economic and Finance (CEF), Ms. Lagarde addressed the potential for the growth of Islamic finance while outlining the IMF’s future plans for better integrating Islamic finance into its surveillance work.
“My main message there was that Islamic finance has the potential to contribute to higher and more inclusive economic growth by increasing access to banking services. Islamic finance has also shown its value in infrastructure investment and promoting financial stability.
“Despite these important benefits, there is still a long way to go. Unlocking the potential of Islamic finance requires cooperation among all stakeholders, including the Islamic financial institutions, policymakers, regulators, and international institutions, such as the IMF. The IMF’s engagement has been longstanding. Over the last several decades, the Fund has provided policy advice and technical assistance to its member countries in Islamic banking regulation, the development of Sukuk markets, and monetary policy implementation.
“We have worked closely with key Islamic finance standard setters and other important stakeholders in the establishment of the Islamic Financial Services Board. Islamic finance industry has grown in recent years not just in the Middle East, but also in Asia and Africa, and the considerable interest in Sukuk issuance has risen in other financial centres such as the U.K, Luxembourg and Hong Kong. This growth has put an even greater premium on the Fund’s ability to provide consistent policy advice to our members in the context of our regular surveillance, our financial stability assessments and our technical assistance.
“Going forward, we will be working toward taking an institutional view on better integrating Islamic finance into our surveillance work. This will help our membership better appreciate the developments in this fast growing area while providing comfort that any risks to financial stability are being monitored.”
During her visit to the Gulf state, Ms. Lagarde met with His Highness Sheikh Sabah Al-Ahmad Al-Sabah and the Crown Prince Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, as well as Speaker of Parliament Ali Al-Ghanim, First Deputy Prime Minister and Minister Finance, Anas Al-Saleh; and Central Bank of Kuwait Governor, Mohammad Al-Hashel, where they discussed the economic reforms that were initiated by the government, and welcomed by The Emir.
Commenting in the statement, Ms Lagarde said, “Kuwait needs to build on the momentum of these reforms to ensure that the fiscal situation remains solid, while continuing its efforts to diversify the economy.”