This step was taken because Indonesia wants to become a stronger partner of IsDB to enhance IsDB's role, realize the reform agenda and carry out its mandate in helping member countries, especially poor and vulnerable member countries, as well as the Muslim community in the world.
"I hope that with this increase in shares, the cooperation between Indonesia and IsDB can strengthen and bring prosperity to all people," said Indonesian Minister of Finance Sri Mulyani at the IsDB Annual Session, quoted from Antara, Sunday, May 14, 2023.
At IsDB s 48th Annual Session on 10-13 May 2023 in Jeddah, Saudi Arabia, the IsDB Board of Governors unanimously approved the proposal to increase Indonesian shares.
With this agreement, Indonesia is ranked as the 3rd largest IsDB shareholder after Saudi Arabia and Libya, and is ahead of Iran, Nigeria, Qatar, Egypt, Kuwait, United Arab Emirates and Turkey.
Multilateral development bank
IsDB is a multilateral development bank that has a comparative advantage not only as the only multilateral development bank that applies sharia principles, but the majority of its members are developing countries so they can promote South-South Cooperation.IsDB is also committed to carry out reforms, including to increase low-cost financing for the development needs of its member countries, the majority of which are in the category of middle and low income countries.
When it became the 12th largest shareholder, Indonesia received equity participation of USD 1,511 million or 2.25 percent of IsDB's total issued capital.
With this increase in shares, Sri Mulyani said Indonesia would receive various benefits, both strategically and economically, starting from increasing Indonesia's bargaining position in IsDB to increasing IsDB's financing potential up to 3.5-4 times greater.
By becoming the 3rd largest shareholder, Indonesia will assert its position on the global stage by helping to determine the direction of world development through the influence of its membership in multilateral development banks such as IsDB.
Indonesia will also be able to play an active role directly in IsDB operations and contribute to improving welfare and poverty alleviation in IsDB member countries, which are generally countries with low-income Muslim communities.
On the other hand, Indonesia can also further encourage IsDB's role in various development activities in the country, including in the development of Islamic economics and finance.
Financial support for Indonesia
As of December 2022, IsDB has provided financial support for Indonesia amounting to USD 6.3 billion, especially for sectors such as agriculture, education, industry and mining, through various instruments such as project financing, trade finance and technical assistance.The Minister of Finance emphasized that Indonesia is committed to working closely with IsDB to have a long-term positive impact on Muslims and the global community. The global community and Muslims in particular, need to rebuild better and stronger cooperation.
"Strengthening cooperation, especially in facing various challenges in the world economy at this time. This is what will be realized through Indonesia's role which will increase in line with the increase in Indonesia's share position in IsDB," said Sri Mulyani. (Kevin Omar Schreiber)
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