Post by Bloom Pakistan

The federal government has unveiled a comprehensive roadmap to gradually transform Pakistan’s financial system into a fully Shariah-compliant, interest-free (Riba-free) model after 2027, aiming to preserve financial stability while avoiding economic disruptions. The strategy, titled “Post-2027 Financial System in Pakistan,” has been prepared by the Ministry of Finance in line with the 2022 Federal Shariat Court (FSC) verdict and the 26th Constitutional Amendment, which envisage the elimination of interest-based financing by January 1, 2028. According to the report, Pakistan will adopt a phased and gradual transition rather than an abrupt overhaul, allowing existing financial contracts to continue until maturity while ensuring that all new government borrowing after December 2027 is raised through Shariah-compliant instruments. Existing Debt Biggest Challenge The Finance Ministry identified the conversion of Pakistan’s existing public debt portfolio into Islamic financial instruments as the most significant hurdle in the transition. To address this challenge, the government plans to establish an Asset Registry Company (ARC) under the Finance Division. The entity will manage public assets backing sovereign Sukuk (Islamic bonds), while a regular Sukuk issuance framework and annual issuance calendar will also be introduced to deepen the Islamic capital market. SBP to Shift Monetary Policy The report states that the State Bank of Pakistan (SBP) will gradually redesign its monetary policy framework to comply with Shariah principles. The central bank, in collaboration with commercial banks, is also developing three-month and six-month Sukuk to facilitate liquidity management once conventional treasury instruments are phased out. Banks Preparing for Transition The Ministry of Finance said most commercial banks already possess much of the technological infrastructure needed for Islamic banking because of their existing Islamic banking operations. 🔗Link in Bio for Updates #Pakistan #IslamicBanking #ShariahCompliant #RibaFree