Erdogan lauds Islamic fin. as solution to debt crises

ANKARA (AA) - An Islamic finance-based economic system driven by risk/profit participation rather than interest rates can be the solution for a debt challenged global economy, Turkish President Recep Tayyip Erdogan said Friday.

Speaking at the Capital Markets Congress held in Istanbul, Erdogan said overindebtedness and interest rates were serious burdens for both individuals and states.

“For example now there are only a few countries in EU that comply with the Maastricht criteria. Almost all of them are in a debt spiral.” Erdogan said.

“Earning money from investments rather than interest is not only fair, it is sustainable,” Erdogan said.

Erdogan also called companies to actively use finance instruments such as bonds and sukuk (Islamic bonds).

Reminding despite the economic crisis which global economy still fights against to overcome Erdogan said Turkey managed to show a respectable performance during a period of global economic crisis.

“When we took office in 2003 we reduced public debt to gross domestic product ratio -- which was 73 percent -- down to 32 percent. Likewise, the interest expenses to GDP rate was down to below 3 percent from 15 percent. Also we cut the share of interest expenses in the budget to 11 percent from 43 percent.” Erdogan said.

“The average of our country’s growth rate stood at 4.7 percent between 2003 and 2015. Although we experienced serious challenges in the last three years, our growth rate was above the average. We achieved 4 percent growth rate even in 2015 when we had two elections and terror attacks,” he added.

With regards to assets that could be used for the financing of big investments requiring low-cost long-term loans, Erdogan said currently there were 110 billion liras ($35 billion) in pension and investment funds, and 100 billion liras in the unemployment insurance fund, to which Turkey’s sovereign Wealth Fund is expected to have access.