In some countries, there is a permanent decline in the local currency. What is the solution regarding debt denominated in it?

The questioner : Here is a question, prompted by the mention of debt. Although it is late in the order, it is appropriate to mention it here. It says: In some countries, there is a permanent decline in the local currency. What is the solution regarding debt denominated in it?

The Shaykh : What we see, and this has happened in many countries in the modern era, is that the debtor must put himself in the creditor's place and remember the saying of the Prophet (peace and blessings be upon him): For example, when I came to this country more than ten years ago, I clearly remember that the Jordanian dinar was worth ten or eleven Saudi riyals. Now it is exactly half. If we assume that a person borrowed one hundred dinars from a Jordanian or a non-Jordanian—it does not matter—he borrowed one hundred when the dinar had full value, equal to ten riyals, for instance. Then the years passed and the value of the Jordanian dinars declined. It is not permissible for this debtor to say, "I borrowed one hundred from you, and this is one hundred." Rather, he must pay him what is equal to the value of the one hundred dinars at that time. This is undoubtedly among the meanings of his saying (peace and blessings be upon him): or as he (peace and blessings be upon him) said. This hadith and its like open the door for the Muslim debtor to honor his creditor when he presents his debt by increasing the repayment, because this is in no way riba (usury or interest), but rather it is the Sunnah of the Messenger (peace and blessings be upon him). With the note that the increase in repayment is prescribed at the time of repayment, and not before that, as is known among the scholars. This is my answer to the incidental question you asked.

The questioner : If, may I ask, Shaykh, if that currency were valued, for example, in gold or in another stable currency, and the debt was such that the debtor would deliver to the creditor a certain amount of the stable currency, even though he is only delivering that local currency? If this condition were placed, for example, at the time of the debt.

The Shaykh : I do not believe there is a stable paper currency. If repayment in gold were stipulated, that would be more secure for the future.