The Islamic Finance Research Institute Ghana (IFRIG) on Saturday held high-level engagements with stakeholders aimed at finding solutions to Ghana’s rising public debt through Islamic finance.

Islamic finance is a form of finance or banking system where investments are made in accordance with the Islamic law.

Themed, “Islamic Finance: A timely solution to the rising public debt in Ghana,” the conference brought together individuals and stakeholders from the finance and banking sector across the globe to Accra.

The Governor of the Bank of Ghana (BoG), Dr. Earnest Kwamina Addison in a statement read on his behalf by MrIshmail Adam, a representative from the BoG, noted that the conference was timely as it offered an opportunity to share ideas on how to reduce and sustain the public debt of the country.

He indicated that the debt to Gross Domestic Product (GDP) ratio increased by more than 10 per cent during the first quarter of 2020, therefore, there was the need for governments across the world to find innovative ways of dealing with public debt.

If not curbed or eradicated, Dr Addison said public debt could impedeeconomic growth, increaseunemployment, social deficit as well as political instability.

He further professed that the situation had become even more disturbing since the outbreak of the coronavirus disease (COVID-19), adding that, “the COVID-19 pandemic has stretched public finances out of the part of fiscal consolidation in the year 2020.”

Dr. Addison stated in recognising the merits of the Islamic finance system, its potential challenges should not be overlooked.

The Governor explained that issues such as transparency, disclosures and legal frameworks were some challenges likely to be faced when introduced in our jurisdiction.

Hence, he charged Islamic scholars in the financial sector to obtain a better understanding of the system in order to address those challenges.

Dr Addison also used the opportunity to commend the IFRIG for its tremendous role played in helping government to address the financial problems of the country through training programmes and conferences.

Director of Business Development, Mr Mohammed-FawziAmaduin an interview with the Ghanaian Times said that this model of finance was essential as it would help reduce the country’s debt in many ways and impact its socio-economic growth.

According to him, most Muslims in the country did not use the finance system because they believed it went against their doctrine on trade.

For this reason, MrAmadu stated that the Islamic finance which would allow investors not to pay interest would encourage the Muslim community and other individuals interested to join.

“Most Muslims in the country do not use our financial systems because they believe it goes against their religious beliefs of trade dealing with interest”, he said.

MrAmadu further noted that the government had amended the law to recognise the system, but there was no framework to oversee it as compared to other countries.

He therefore called on the government to come up with a framework that would help guide the operations of the financing system in the country.