Shariahnomics — Islamic finance

Posted in economics, institutions, micro by jrahman on February 5, 2013

In the last half decade of Hosni Mubarak’s rule, the Egyptian economy grew by healthy 5-7% a year.  Economic growth dipped to less than 2% a year after the revolution.  Currently, Egypt is on the brink of economic meltdown, and is negotiating an IMF rescue package.  The IMF package will probably involve tax reforms, privatisation, trade liberalisation, removal of subsidies, you know, the standard Washington Consensus neoliberalism.  The Muslim Brotherhood run government of Egypt does not particularly want to do any of these things.  As I speculated over a year ago, economic problems are giving anti-Brotherhood factions a political opening.

But this post is not about Egypt.

Islam is the solution — the Muslim Brotherhood used to say.  It will be interesting to see whether someone issues a fatwa declaring the IMF package as ‘Islamic’ or Shariah-consistent.  But as far as I can tell, the two things most commonly associated with Islamic economics — zakat and Islamic finance — have very little to say about Egypt’s current problems.

I’ll do a separate post or two about the origin of Islamic economics.  And there will be a post on zakat.  Over the fold, some thoughts on Islamic finance from the perspective of a mainstream economist (who may or may not be a believer).