Historical Islamic Fiscal Solutions in Times of Crises and Its Contemporary Equivalences

Abstract

The COVID-19 crisis led to great pressure on the world governments’ fiscal budgets as governments scrambled to find new ways to finance and expand social protection and health programs. In order to provide for their populace, many Islamic countries had to pursue loans from international institutions. These loans have been observed to be followed by a phase of austerity that affects the access of the populace to health and education services. In this paper, the researchers seek to put forward a number of fiscal policies to finance the fiscal needs of the countries inside the Organization of Islamic Cooperation (OIC) by utilizing countries’ own internal resources. By surveying the fiscal tools used by past Islamic empires during the times of plague and famine, we find that past Islamic empires used different policies that shared a distinctive characteristic, this characteristic is the voluntary and mandatory just redistribution of resources. Based on this concept, the researchers recommend the redistribution of the community resources through the early payment of zakat, extrabudgetary funds, wealth tax and the utilization of excess bank reserves.

Keywords

• fiscal policy
• organization of islamic cooperation (oic)
• islamic economics
• islamic history
• covid-19