In Search of Debt Free Development: A Theoretical Study
Nor Asmat Ismail

Abstract
Financing public expenditure is one of the most important challenges faced by the policy makers of most countries. In most Islamic countries, the government requires a huge amount of resources for financing basic programmes such as poverty reduction and human development. In order to meet these requirements, Islamic countries borrow from developed countries which charge them interest on the borrowing. Therefore, large external debts have become a severe and chronic problem in these Islamic countries. This paper reviews the relevant literature regarding alternatives ways of financing public expenditure that are compatible with Shariah. This paper also reviews the relevant literature regarding traditional sources of financing public expenditure from an Islamic economic viewpoint.

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