Minister of Economic Affairs and Finance Ali Tayyebnia said expanding cooperation among regional economies is among the strategic plans of the Islamic Development Bank over the next 10 years.
The minster, who was addressing the 40th Annual Meeting of the Islamic Development Bank Group in Maputo, Republic of Mozambique, said an important part of the alliance concerns devising a blueprint for Central Asian countries.
He was speaking in the opening ceremony on behalf of the Asian member states of IDB on June 10. The annual meeting was held June 7-11 at Joaquim Chissano International Conference Center.
Tayyebnia drew attention to the challenges facing Asian economies, including price instability and slow growth, but said “despite the unsettling facts, the medium-term growth expectations for these countries look promising.”
“Asian countries have demonstrated a high level of commitment for adopting comprehensive reforms to achieve renewed growth in the shortest period,” he said.
“A commitment to encourage economic and social prosperity in poor countries is a top priority of IDB.”
Cutting-Edge Projects
The minister stressed new growth for Asian economies saying: “In line with this strategy, the innovative measures by IDB, including promoting interactive relations between the member states, have led to enhanced trade ties between Islamic countries.
“Another innovation has been the launch of Gateway Office Country-IDB regional branches in Turkey and Indonesia, and future plans to launch another office in Bangladesh, which is praiseworthy,” he said in comments posted on the economy ministry’s official website.
Unity of Purpose
Tayyebnia said although investment in infrastructure has seen a decline in Asian countries, “commendable measures” by the IDB, including the financing program known as “Buy Down Facility,” has helped Asian states to get the much-needed help for their development projects.
The Islamic Development Bank recently increased the ceiling of its Islamic bonds (sukuk) program to $25 billion from $10 billion, as it aims to expand its financing across member states.
IDB’s sukuks are highly sought after by banks since the lender is designated a zero risk-weighted institution by the Basel Committee, the international banking supervisory body. This means its paper can be used to manage capital adequacy on bank balance sheets.
Tayyebnia touched upon IDB’s motto of “unity and solidarity” and said Islamic banking tools could ideally be used to finance projects and provide guidelines for matters such as investment, money supply and risk management, as well as the fair distribution of wealth and income.
The Way Forward
The Iranian finance minister deemed the access of private sector to financial resources as necessary to foster growth, saying that enhancement of trade ties among IDB member states would pave the way for realizing the goal of an Islamic Common Market.
He continued: “Embracing easy and straightforward policies to support innovation and technology, and turning those ideas into enterprises are crucial to the formation of science-based economies. This would stir hope in the hearts of the educated youth and intellectuals in Islamic countries.
“Tapping into the capabilities and potentiality of commerce between Islamic nations by enhancing banking relations through IDB and a review of the educational powers of the bank and familiarizing member states with advanced technologies are among proposals for improving IDB.”
Tayyebnai offered to establish similar aid projects for South and Southeast Asian nations and said these projects could be implemented in collaboration with other international institutes like the Association of Southeast Asian Nations and Economic Cooperation Organization.
His other proposal for the bank was to expand the Member Country Partnership Strategy–a new business model designed to strengthen alliance and partnership between the IDB Group and its member countries–to include other members as well.
The minister hailed the project that currently involves Turkey, Bangladesh, Indonesia, Kazakhstan, Malaysia and Pakistan.
The Islamic Development Bank, which operates to promote economic development in Muslim communities, has 56 member countries, including Iran, Saudi Arabia and Libya, as its largest shareholders.
In 2013, the IDB more than tripled its authorized capital to $150 billion. It provides financing, loans and technical assistance for development schemes that follow Islamic principles, such as bans on interest payments and pure monetary speculation. The bank is based in Jeddah, Saudi Arabia.
