The movement of money for the purpose of investment,trad or business and production Capital flows accur within corporation

n in the form of investment capital spending on business operation A large scale GOVT direct capital flows from tax recipt into program and operation

Finacial flows of credit and ownership claim between countries How physical capital,goods are traded as ordinary trade

Definition of the International Capital Flow and the International Financial Assets Flow
Gross inflow on the basis of loans Principal payment = = Loans repayment Net capital flow on the basis of loans Interest payment = Net financial funds flow on the basis of loans + FDI, portfolio ownership inv., grants = Net capital flow Interest and profit payment = Net financial funds flow

International Finance Mojmir Mrak

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according to duration:

short-run long-run

according to the motivation:

financing international trade financing foreign direct investment financial arbitrage speculative transactions portfolio diversification

International Finance Mojmir Mrak

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With elimination of riba Eliminates Interst based foreign currency Foreign exchange Bear certificates Dollar bonds These following have no place in the islam

Replacement Profit loss sharing accounts and certificates Pre Fixation of sharing ratio In the shariah does not recognize that are not aimed at actual exchange and also ban of speculative transactions. There is no need to rewiew all future and option contract in the foreign currency on these as well as riba counts Isamization is expect to help,rather than direct investment

In islamic principles, a governament of the muslim can neither enter into a riba based nor be a riba based system The government of pakistan is involved transactions for the following reason Debt servicing, defence procurement,project Finance,and balance of payments needs. The government of pakistan is member of international financail organization IMF and World bank

For defence procurement and project financing .islamically admissible options are available. The government can not borrrow on behalf of private parties or offer state guarantees to cover transaction between its subject and foreign nationals.

Any transaction which is against the shariah are void implies Pakistan and other muslim countries have the right to demand dealing on interst free basis and moral ground.there is nothing in the charater of the World Bank or the IMF that obligates the member to deal on on any particlar method developed by these institution