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Fiscal Policy and Islamic Finance: Malaysia

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Macroeconomic Policy and Islamic Finance in Malaysia

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Abstract

Malaysian economy has been experiencing economic growth, but at the same time inundated by a deterioration of overall fiscal balance and consequently a rise in national debt. The government is committed to strengthen public finances and achieve a balanced budget by 2020. Based on empirical analysis using fiscal sustainability test and fiscal sustainability indicator, the fiscal position of Malaysia under the existing fiscal framework is sustainable but this sustainability condition is a weak form of sustainability as compared to the stronger sustainability given by an alternative fiscal framework comprising a new tax structure of a flat rate tax on income and wealth and government financing through the issuance of equity participation shares to finance development projects.

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Authors and Affiliations

  1. Chartered Institute of Islamic Finance Professionals, Kuala Lumpur, Malaysia

    Azura Othman

  2. International Centre for Education in Islamic Finance, Kuala Lumpur, Malaysia

    Norhanim Mat Sari, Syed Othman Alhabshi & Abbas Mirakhor

Authors
  1. Azura Othman
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  2. Norhanim Mat Sari
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  3. Syed Othman Alhabshi
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  4. Abbas Mirakhor
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Correspondence to Azura Othman .

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Othman, A., Mat Sari, N., Alhabshi, S., Mirakhor, A. (2017). Fiscal Policy and Islamic Finance: Malaysia. In: Macroeconomic Policy and Islamic Finance in Malaysia. Financial Institutions, Reforms, and Policies in Muslim Countries. Palgrave Macmillan, New York. https://doi.org/10.1057/978-1-137-53159-9_6

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  • DOI: https://doi.org/10.1057/978-1-137-53159-9_6

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