Sharia Banking and the Financial Industry

The Organization of the Islamic Conference (OIC) on August 18, 2010 called on member states and the international community to deliver aid to Pakistan, which is grappling with devastating floods.

The OIC called in a statement for the “international community in general and Islamic world in particular, at the level of individuals and states, to provide urgent material and financial aid to Pakistan.” The appeal was issued at an emergency meeting for representatives of member states of the pan-Muslim organization. An OIC spokesman confirmed on Wednesday that the Islamic Development Bank has allocated $11.2 million for assistance to Pakistan. Oil-rich Saudi Arabia raised $20.5 million of aid on the first day of a national campaign, official SPA news said.The kingdom has also pledged to provide $100 million in government aid to Pakistan. Also on Tuesday, Kuwait’s cabinet announced a $5 million relief assistance donation.

Pakistan’s worst-ever humanitarian disaster has ravaged an area roughly the size of England, affected 20 million people, exacerbated a crippling energy crisis and raised fears of social unrest. OIC secretary general Ekmeleddin Ihsanoglu told the meeting that Pakistan’s plight is “very grave and unprecedented in modern history.” Ihsanoglu said after the current meeting that the OIC will hold a meeting in Pakistan for Islamic Red Crescent societies and relief bodies to coordinate aid. Floods have inflicted widespread damage on infrastructure, and destroyed electricity installations, roads and phone lines. The World Bank, which has announced a $900 million loan for Pakistan, in anticipation of the disaster’s economic impact.

Source : Agence France-Presse

Indonesia will cut its remaining 2010 debt issue by 26 percent, including scaling back a global sukuk, or Islamic bond, offering after lowering its deficit forecast in light of expected faster growth and stronger revenue. The move to trim Rp 15 trillion ($1.7 billion) off the Rp 58 trillion worth of debt still to be issued spurred longer-dated bond prices as investors bet the deficit cut could lead to a much-sought-after investment-grade credit rating.
Foreigners have bought a record amount of Indonesian bonds this year, drawn by the country’s robust economic growth, hopes of a credit upgrade and expectations that the rupiah will continue to appreciate. The government had a budget surplus in the first half, so it would be reluctant to push a huge global issue this year. The government has raised about Rp 120 trillion in bonds this year, or two-thirds of its original target of Rp 178 trillion.
Its higher-yielding local currency sukuk has seen less demand than conventional bonds, with the Finance Ministry again raising less-than-targeted in an auction on Tuesday because of fears the sukuk market lacks liquidity. The global sukuk will be downsized because up to now the government has still booked a budget surplus. Indonesia has cut its financing by about Rp 37 trillion ($4.1 billion) this year — a cut of 28 percent, including the debt issuance cut — because the government now expects a budget deficit of just 1.5 percent of GDP, versus an earlier projection of 2.1 percent. The cut is equivalent to 3.3 percent of its planned expenditure.