Page 59 - CMA Journal (Mar-Apr 2025)

Focus Section

The above factual position confirms the Islamic call for the abolition of Riba, gambling, prostitution, and
philosophy about interest: that it does not grow the alcohol consumption in light of Islamic precepts. Just the
business but acts as a hurdle to development and brings implementation of Article 37 (promotion of social justice
economic instability. It appears to be a main cause of and eradication of social evils) and Article 38 (promotion
exploitation by lenders, as borrowers often return far of the social and economic well-being of the people)
more than the principal amount due to interest, yet would bring immense prosperity to the country, as has
occasionally the loan remains unpaid—and at times, already been demonstrated by developed nations.
borrowers are forced to forfeit their collateral, which is Pakistan Without Interest
often valuable property such as agricultural land or a
house. When Almighty Allah has declared that “interest Islam strictly prohibits Riba (interest), considering it a
will never increase your wealth,” how could it bring any form of exploitation and an unjust appropriation of
well-being to humanity? others’ wealth. There is no evidence that interest-based
systems lead to true prosperity—rather, they often
Consider the above comparison, where
increase inequality and economic instability. As already
Switzerland—one of the richest economies—has an
demonstrated, countries with low or near-zero interest
almost zero rate of interest. Most of the countries with
rates tend to be more prosperous and stable. When
low interest rates are non-Muslim and do not consider
Pakistan reduced its policy rate from 22% (June 2023) to
interest Haram, yet they are, perhaps unknowingly,
12% (March 2025), there were no negative
avoiding the deprivation declared in Islam by adopting
consequences; in fact, economic indicators began to
Islamic principles in their business dealings. Pakistan
improve. This is a clear indication that eliminating
recently reduced the interest rate gradually to twelve
interest can support national growth and development.
percent (March 2025) from twenty-two percent (June
2023), but the economy remained stable, and indicators
started showing improvement. Interest can be reduced
or eliminated through executive orders—as in the case of
Pakistan—and by implementing a judicious economic
system that promotes prosperity, leaving no room for
interest.
Pakistan, being an Islamic Republic, is constitutionally
obliged to be governed under the doctrines of Islamic
values. Its Constitution stipulates that Muslims shall be
enabled to order their lives, individually and collectively,
in accordance with the teachings and obligations of Islam
as set out in the Quran and Sunnah. The Constitution calls
for the observance of the principles of democracy, Sukuk: A Shariah-Compliant Financing Tool
freedom, equality, tolerance, and social justice as Sukuk offers a Shariah-compliant way to raise funds. It
enunciated by Islam. Furthermore, the State is directed to remains a smart financial instrument as long as it does
endeavor: not carry guaranteed repayment of the principal and
• To make the teachings of the Holy Quran and fixed profit, which would make it similar to interest-based
Islamiat compulsory, encourage and facilitate the debt. However, many Sukuk bonds are backed by such
learning of the Arabic language, and ensure the guarantees, which contradict the true spirit of Islamic
correct printing of the Quran. finance. To stay aligned with Islamic principles, Sukuk
should ensure risk-sharing and asset-backing without
• To promote unity and the observance of moral
fixed returns.
standards.
Zakat and Ushr
• To ensure the proper organization of Zakat, Ushr,
Auqaf, and mosques. In Pakistan, Zakat and Ushr are not compulsorily
collected by the government but are voluntarily paid at
• To eliminate Riba as early as possible.
2.5% of wealth, as prescribed in Islam. These do not
In Chapter 2 of the Constitution —Principles of Policy— contribute to the general government revenues but are
such principles are clearly laid out, requiring every organ managed by Zakat Councils under the Ministry of
and authority of the State, as well as all persons Religious Affairs. Zakat funds are primarily used for
performing functions on behalf of the State, to act in poverty alleviation, education, and healthcare. The core
accordance with these principles. They cover all aspects purpose is to reduce the gap between rich and poor,
of human life including democracy, equality, health, uplift the underprivileged, and purify one’s wealth.
education, security, justice, and employment, and also
ICMA’s Chartered Management Accountant, Mar-Apr 2025 57