خلاصة:
Public debt is a prime source of government revenue to finance budget deficit. It is perceived as the accumulation of annual budget deficits, generally face twin deficit viz. With the emergence of Islamic banking and finance across the globe, Islamic economists sought to find transactions that fit and conform to the principles of Islamic religion.therefore, The present study aims to discuss the possibilities of introducing Sukuk as an alternative way of financing public expenditure by replacing other conventional modes of financing in the future and effect Sukuk on twin deficit hypothesis for selected countries using the dynamic panel a generalized methods of moments (GMM) approach during the annual period 2013-2021. In the absence of sukuk we find a significant positive effect of fiscal balances on the current account, supporting the twin deficit hypothesis and the results show that the size of the estimated coefficient on the budget balance is between 0.86 and 0.95. However, the existence of sukuk reduces the effect of budget balance on the current account balance (the coefficient is reduced to 0.1). In fact, the twin deficits relationship is reduced with the presence of sukuk. This innovation will increase a lot of strategic advantage and economic development of countries by utilizing sukuk as an alternative source of funding.
ملخص الجهاز:
Although many studies exist separately for the twin deficit and some of the foundations and dimensions of issuing Islamic financial instruments in the economic literature, however, only an example of the effect of Sukuk on the government budget deficit domestically and abroad has been presented, which is mentioned below, and so far, no research has been conducted that provides a comprehensive approach to the impact of Sukuk on the relationship between twin deficits.
By examining the advantages of Sukuk, its difference from bonds, and investigating the budget deficits of the countries under consideration during the studied period, researchers concluded that these tools, in addition to being used to strengthen infrastructure and causing growth in the real sector in many countries, also have an effective share in reducing the budget deficit; because it has turned into one of the monetary policy tools for controlling liquidity in society and one of the financial tools that plays an important role in supporting national financing.
Therefore, given the risks of conventional instruments at the economic and social levels of most governments, regulations related to Islamic banking were presented, including economic laws and measures from participatory processes and efforts to keep pace with global developments to increase the national savings rate, and the role of Islamic bonds in financing the budget deficit with the aim of reducing inflation and maintaining exchange rate stability, which can have greater effects on the current account by focusing on foreign exchange reserves through strengthening exports and reducing imports (Noureddine & Hanane, 2021, p.
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