The PRIMARY OIC ruling that a FIXED DEBT IS REPAID AT PAR — you cannot inflation-index a loan.
The PRIMARY OIC ruling that a FIXED DEBT IS REPAID AT PAR — you cannot inflation-index a loan. International Islamic Fiqh Academy (OIC), Resolution No. 42 (4/5), titled ‘The Changing Value of Currency’ in the Academy’s official English edition and ‘Currency Rates Fluctuation’ in the IRTI/IDB edition, adopted at the 5th session (Kuwait City, 1–6 Jumādā al-Ūlā 1409h / 10–15 December 1988). The direct sequel to Res 21 (9/3): having ruled that paper money is real money, the Academy here resolves the inflation question Res 21 deferred — a debt fixed in a specific currency is settled in that same currency at its like amount, not revalued for the changing price level, so a stipulated ‘inflation top-up’ on a loan is riba. Qualified by the Academy’s own later Res 115 (9/12), which permits choosing a stable unit of account up front and indexation only in exceptional hyperinflation.
What this source says
IF RES 21 IS THE CORNERSTONE, THIS IS THE FIRST STONE LAID ON TOP OF IT. Having ruled in 1986 that a banknote is money in the full Shariah sense, the OIC International Islamic Fiqh Academy had to answer the very next question it had deliberately left open: if paper money is real money, but its purchasing power keeps falling, does a debt fixed in that money still get repaid at its face amount, or must it be revalued for inflation? Res 21 (9/3) had EXPRESSLY POSTPONED that ‘changing value of currency’ question to a later session. Resolution No. 42 (4/5), adopted at the Academy’s 5th session (Kuwait City, 10–15 December 1988), is the sequel that resolves it — and it is the primary-source answer to the single most common modern objection to interest-free lending: ‘but inflation eats the lender’s money, so surely he can charge a top-up.’
THE ONE RULE THAT DOES THE WORK. Verbatim (official edition): ‘The norm in the settlement of debt incurred in a specific currency is that it should be settled in the same (currency), rather than in value terms, for debts must be settled in an identical resource, and fixed debts, whatever their origin, are not permissible to be tied to the level of prices.’ The IRTI/IDB edition renders the same ruling: ‘It is significant that a fixed debt is repaid in its own currency and not by its countervalue, because debts are settled in the same currency. Thus it is not permitted to attach fixed debts, whatever their source, to currency fluctuation.’ Two independent translations, one rule: if you owe 10,000 of a currency, you repay 10,000 of that currency — not ‘10,000 adjusted upward for the year’s inflation.’ A fixed debt is a claim to a like amount of the SAME thing, and it may not be indexed to the price level.
WHY THIS IS THE KEYSTONE UNDER INTEREST-FREE LENDING. The everyday defence of interest runs: money loses value over time, so a lender who gets back only the nominal amount has lost real wealth, and the interest merely compensates him. Res 42 answers that head-on at the level of principle. Because paper money is ribawi money (Res 21), a surplus stipulated on a loan of it is riba regardless of the reason offered — and ‘to protect against inflation’ is one such reason. The debt is settled in its own like-for-like amount; the erosion of purchasing power does not convert into a lawful claim for more. This is the primary-source basis for the corpus’s repeated line that a qard (loan) is repaid at par and that inflation-indexing a loan repayment is not a permitted work-around.
IT RESTS OPENLY ON RES 21 — AND SAYS SO. Res 42 does not assume the money question; it recalls it by name. Verbatim (official edition), its preamble reads: ‘Having recalled the Academy resolution no. 21 (9/3) which agreed that banknotes, such as legal currencies, possess all characteristics of valuables, and are therefore subject to the rulings of Shariah relating to gold and silver, with regard to Ribā, Zakāh, Salam, and all their transactions.’ So the chain is explicit in the primary text: paper money is money (Res 21) → a fixed money-debt is settled in that same money at par, not revalued (Res 42). The IRTI edition carries the same recall, though with a disclosed typographical slip in the number (see below).
THE HONESTY HEADLINE — THIS IS THE NORM, NOT AN ABSOLUTE FOR EVERY CASE. It would be easy to over-read Res 42 as ‘the Fiqh Academy banned all inflation-indexing forever.’ The Academy itself did not leave it there. Its own later Resolution No. 115 (9/12) RECONFIRMS Res 42 verbatim (‘Reconfirmation of Resolution No. 42 (4/5) of the Council, which states … It is therefore impermissible to link the already existing debts, whatever their source might be, to price level’) and then adds two honest riders that Res 42 alone does not give you: (1) parties MAY, as a precaution against expected inflation, agree from the OUTSET to denominate the debt in a more stable means than the currency expected to fall — a choice made when the debt is created, not an indexing bolted on afterwards; and (2) in EXCEPTIONAL hyperinflation, the official edition records that ‘the principle of indexation to the living cost shall be applied in such exceptional cases (taking into consideration the purchasing power of currencies).’ So the accurate statement of OIC law is: the NORM is repay-at-par, no indexing of an existing fixed debt; the narrow, later-carved exception is exceptional hyperinflation; and choosing a stable unit of account UP FRONT is a separate, permitted precaution. Anyone citing Res 42 as a blanket ‘inflation is irrelevant in all cases’ is quoting the norm without its own Academy-issued qualifications.
GENUINE DIFFERENCES BETWEEN THE TWO EDITIONS (disclosed, not smoothed). The two translations diverge in wording throughout — title (‘The Changing Value of Currency’ vs ‘CURRENCY RATES FLUCTUATION’), the operative clause (‘The norm in the settlement of debt incurred in a specific currency…’ vs ‘It is significant that a fixed debt is repaid in its own currency and not by its countervalue…’), and the closing invocation (official ‘Indeed, Allāh is All-Knowing.’ vs IRTI ‘Verily, Allah is All-Knowing’). ONE GENUINE SOURCE DEFECT DISCLOSED NOT HIDDEN: in the preamble’s recall of the paper-money resolution, the official edition prints ‘resolution no. 21 (9/3)’ while the IRTI edition prints ‘resolution n° 2 (9/3)’ — an evident dropped digit (the ‘21’ mis-set as ‘2’), since the session code ‘(9/3)’ is identical in both and unambiguously identifies Res 21 of the 3rd session (the very resolution Res 42 was convened to complete). Reported as a print/OCR slip, not silently corrected. Both editions carry the same single substantive rule (a fixed money-debt is settled in its own currency at par and may not be tied to the price level) and the same recall of the paper-money resolution identically — the differences are translation wording and one typographical digit, not substance.
WHERE IT LANDS FOR A WESTERN MUSLIM. If a friend lends you $10,000, you owe $10,000 back — not $10,000 plus an inflation adjustment; a lender may not stipulate such a top-up, because on a loan of ribawi money any stipulated surplus is riba (Res 21 + Res 42 together). If you are the LENDER and you genuinely fear a currency will collapse before you are repaid, the lawful move is not to index the repayment after the fact but to agree the unit of account up front (e.g. denominate the debt in a more stable currency or in gold when you make the loan) — the precaution Res 115 permits — or to structure the arrangement as a real profit-and-loss investment rather than a loan. And the rare hyperinflation exception exists but is exactly that: exceptional. This resolution is short, but it is the primary text behind ‘a loan is repaid at par’ everywhere else on this site.
Wording inside quotation marks is quoted from the source. The rest is this notebook’s summary of it — read the original before relying on it.
Provenance
- Compiled from
- Compiled from TWO genuinely different English translations of the SAME primary resolution, cross-read 2026-07-11, every load-bearing quote machine-verified verbatim against both source PDFs (line-wrap and hyphenation aware, whitespace-normalised, 29/29 OK across this entry and its corroborating recalls): [1] the INTERNATIONAL ISLAMIC FIQH ACADEMY (OIC) OFFICIAL ENGLISH EDITION, ‘Resolutions and Recommendations of the International Islamic Fiqh Academy’ (official edition, October 2021), printing the ruling as ‘Resolution No. 42 (4/5) / The Changing Value of Currency’; and [2] the IRTI/IDB PRINTED EDITION, ‘Resolutions and Recommendations of the Council of the Islamic Fiqh Academy 1985-2000’ (Islamic Research and Training Institute, Islamic Development Bank, Jeddah), printing it as ‘RESOLUTION N° 42 (4/5) CONCERNING CURRENCY RATES FLUCTUATION’. Both editions carry the same 5th session (Kuwait City, 1–6 Jumādā al-Ūlā 1409h / 10–15 December 1988), the same recall of the paper-money resolution Res 21 (9/3), and the same single operative rule (a fixed debt is settled in its own currency at par and may not be tied to the price level).
- Source
- PRIMARY RULING (full title, session/city/dates, preamble recalling Res 21 (9/3), and the full single-paragraph operative text — a fixed debt incurred in a specific currency is settled in the same currency, not in value terms/countervalue, and fixed debts of whatever origin may not be tied to the price level / currency fluctuation; plus the closing invocation) from [1] the INTERNATIONAL ISLAMIC FIQH ACADEMY (OIC) OFFICIAL ENGLISH EDITION, ‘Resolutions and Recommendations of the International Islamic Fiqh Academy’ (official edition, October 2021), printing it as ‘Resolution No. 42 (4/5) / The Changing Value of Currency’, ‘holding its 5th session in Kuwait City, State of Kuwait, on 1–6 Jumādā al-Ūlā 1409h (10–15 December 1988)’ — extracted verbatim from the published PDF (https://iifa-aifi.org/wp-content/uploads/2021/12/Resolutions-Recommendations-of-the-IIFA-Official-Edition-Oct-2021.pdf), read 2026-07-11. CONFIRMING SECOND, GENUINELY DIFFERENT TRANSLATION from [2] the IRTI/IDB PRINTED EDITION, ‘Resolutions and Recommendations of the Council of the Islamic Fiqh Academy 1985-2000’ (Islamic Research and Training Institute, Islamic Development Bank, Jeddah), printing the same ruling as ‘RESOLUTION N° 42 (4/5) CONCERNING CURRENCY RATES FLUCTUATION’, same 5th session / Kuwait-City / 1st to 6th Jumada al-Oula 1409 H (10 to 15 December 1988), same recall of the paper-money resolution and same operative rule — extracted verbatim from the published PDF (https://zulkiflihasan.wordpress.com/wp-content/uploads/2009/12/majma-fiqh.pdf), read 2026-07-11. CORROBORATION that Res 42 is settled, load-bearing OIC law, quoted verbatim only for the recall/reconfirmation lines: the Academy’s own later Resolution No. 115 (9/12) opens its operative text ‘Firstly: Reconfirmation of Resolution No. 42 (4/5) of the Council, which states … It is therefore impermissible to link the already existing debts, whatever their source might be, to price level’ (IRTI edition) and then adds the precaution and the exceptional-hyperinflation qualifications (official edition: ‘Such exceptional cases also fall under the Academy resolution no. 42 (4/5) issued at its fifth session stipulating: “The norm in the settlement of debt incurred in a specific currency is that it should be settled in the same (currency)…”’; and ‘The principle of indexation to the living cost shall be applied in such exceptional cases (taking into consideration the purchasing power of currencies)’). THE TWO EDITIONS ARE GENUINELY DIFFERENT RENDERINGS that converge on the same rule; genuine wording differences reported rather than smoothed: title ‘The Changing Value of Currency’ vs ‘CURRENCY RATES FLUCTUATION’; operative ‘The norm in the settlement of debt incurred in a specific currency is that it should be settled in the same (currency), rather than in value terms’ vs ‘It is significant that a fixed debt is repaid in its own currency and not by its countervalue, because debts are settled in the same currency’; closing ‘Indeed, Allāh is All-Knowing.’ (official) vs ‘Verily, Allah is All-Knowing’ (IRTI). ONE GENUINE SOURCE DEFECT DISCLOSED NOT HIDDEN: the preamble’s recall of the paper-money resolution reads ‘resolution no. 21 (9/3)’ (official) vs ‘resolution n° 2 (9/3)’ (IRTI) — an evident dropped digit in the IRTI print (the identical session code ‘(9/3)’ unambiguously identifies Res 21 of the 3rd session), reported as a print/OCR slip, not silently corrected. Every verbatim quote used above was machine-checked against both source PDFs (line-wrap and hyphenation aware, 29/29 OK including the two corroborating recalls). Trust: high (two independent verbatim primary editions of the same OIC resolution, plus verbatim internal reconfirmation).
- School / basis
- Comparative / monetary-law with a PRIMARY OIC collective-ijtihad ruling (a fixed debt incurred in a specific currency is settled in that SAME currency at its like amount — not by countervalue and not tied to the price level — so an existing money-debt may not be inflation-indexed; a stipulated surplus on a loan of ribawi paper money is riba whatever reason is offered, ‘to offset inflation’ included). Builds directly on Res 21 (9/3) — paper money is real money subject to the gold/silver ribawi rulebook — which Res 42 recalls by name in its preamble. Qualified by the Academy’s OWN later Res 115 (9/12), which reconfirms Res 42 and adds two riders: parties may agree a more stable unit of account UP FRONT as a precaution against expected inflation, and indexation to the living cost applies only in EXCEPTIONAL hyperinflation. The norm (repay-at-par, no indexing) is the load-bearing rule; the exception is narrow and separately sourced.
- Captured
- 2026-07-11
- Added
- 2026-07-11
- Trust
- Primary or near-primary source with a stable public URL.
Compiler’s note
Added 2026-07-11 (auto-run). Corpus’s TWENTY-FIRST primary-OIC anchor and the direct SEQUEL to Res 21 (9/3): where Res 21 established that paper money is real money and EXPRESSLY DEFERRED the ‘changing value of currency’ (inflation/rate-fluctuation) question, Res 42 (4/5) is the resolution that answers it — the explicit NEXT candidate named at the close of the Res 21 entry. Primary-source basis for the site’s recurring line that a loan (qard) is repaid at par and that inflation-indexing a loan repayment is not a lawful work-around: a fixed money-debt is settled in its own like amount, not revalued to the price level. HONESTY built into the entry (not smoothed): Res 42 states the NORM; the Academy’s OWN later Res 115 (9/12) reconfirms it and adds the only two qualifications that exist — parties may pick a more stable unit of account UP FRONT (precaution, not after-the-fact indexing), and indexation applies only in EXCEPTIONAL hyperinflation — so the entry refuses to overstate Res 42 as a blanket ‘inflation is always irrelevant’ ruling. GOLD-STANDARD pairing: two genuinely different English translations cross-read — the Academy’s OWN OFFICIAL ENGLISH EDITION (Oct 2021 PDF, authoritative) + the IRTI/IDB printed edition (1985-2000), both pdftotext-verbatim, both carrying this 1988 resolution in full; wording differs in title, the operative clause and the closing invocation, plus ONE disclosed print/OCR defect (IRTI’s preamble mis-sets the recalled ‘resolution no. 21 (9/3)’ as ‘resolution n° 2 (9/3)’ — a dropped digit, the identical (9/3) session code confirming it means Res 21; reported, not silently corrected). All 29 load-bearing quotes machine-verified against both source PDFs (29/29 OK, whitespace/hyphenation aware), including the two corroborating recalls in Res 115 (9/12). DROPPED per no-fab: madhab tally; vote count; Qur’an verse / hadith number (Res 42’s operative text cites none); any inflation-rate / CPI / money-supply figure; any named currency product/app; any product graded; and the CONTENT of Res 21 / Res 115 beyond the structural links and the verbatim recall/reconfirmation lines. Articles 84->85. Clean build 208/208 + lint 0/0. NEXT candidate (in both editions, finance-relevant, not yet covered): Res 22 (10/3) muqaradah/investment-bonds sibling of the existing Res 30 (5/4), or Res 44 (5/6) on leasing/hire; the post-2000 Res 137 (3/15) and Res 157/158 (17th session) still await a genuinely-different second source (IRTI 1985-2000 stops before the 17th session).
Topics
islamic-financeislamic-contract-lawusul-al-fiqhribausuryqardloandebtdebt-settlementfixed-debtrepay-at-parnominalisminflationinflation-indexationindexationcurrency-fluctuationchanging-value-of-currencypurchasing-powercountervalueprice-levelmoneyfiat-currencybanknotesribawi-moneyhyperinflationunit-of-accountstable-currency-precautionoicinternational-islamic-fiqh-academyiifaresolution-424-55th-sessionkuwait1988primary-sourcecollective-ijtihadzakahsalamgold-and-silverres-21-sequel
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