Zakat as an instrument of Islamic Economic Development and a Barrier to Inflation

Abstract

This article aims to explain the importance of Zakat, its role in the economic system, its impact on individuals, and its relationship to the concepts of saving and investment behaviour, which ultimately affect the financial stability of society and the country, particularly in the context of ongoing Inflation. Zakat is not only a means of protection for the poor and needy, but also a means of achieving social solidarity and bridging the gap between social classes. This equitable distribution of wealth enhances social stability and mitigates the impact of Inflation on the most vulnerable groups. In writing this article, we conducted a literature review by collecting and analyzing books and articles using a qualitative approach. The results of the analysis are presented descriptively. For centuries, Zakat has played a vital role in maintaining economic stability. When people pay Zakat, a portion of their money is returned to society and distributed to the poor and needy. This increases the purchasing power of these groups, thus maintaining price stability. Zakat funds can be used to support small and medium-sized enterprises. If someone opens a new shop or expands an existing business, this increases local production and creates new jobs. When local production is sufficient, dependence on imports, which often leads to price increases, will decrease, allowing Inflation to be controlled by increasing production factors and reducing the use of imported products. People who pay Zakat will continue to be motivated, as paying Zakat continuously will prevent their savings from decreasing. They will also continue to develop their assets, enabling them to pay Zakat in larger amounts.