Oman grand mufti hails Erdogan for slashing interest rates, urges Muslim countries to follow suit

Oman grand mufti hails Erdogan for slashing interest rates, urges Muslim countries to follow suit
The Grand Mufti of Oman, Sheikh Ahmed bin Hamad Al-Khalili, hailed Erdogan for slashing interest rates and urged all Muslim governments to follow his lead.
3 min read
22 November, 2021
The grand mufti said others should follow President Erdogan's lead [Getty]

The grand mufti of Oman praised Turkish President Recep Tayyip Erdogan's move to reduce interest rates in the country's banking system, calling on all Muslim governments to follow his lead on this.

His tweet referenced a quote by the Prophet Muhammad, in which he said anyone who is involved in dealing with interest rates "is cursed".

Many Muslim scholars argue that interest rates for loans are banned under the religion.

"We salute the brotherly Turkish Muslim government, represented by its resolute leadership, in its direction to purify its economy from the abomination of high-interest rates, which God cursed its recipient and issuer, the one who records it and the two witnesses to the transaction," Mufti Sheikh Ahmed bin Hamad Al-Khalili tweeted on Saturday.

"We demand all Islamic governments [...] cooperate on this," he added.

He requested the Organisation of Islamic Cooperation to "adopt this project with determination and diligence" to aim for a purely Muslim financial system.

Oman's grand mufti has made a number of controversial comments in the past, including calling for a ban on alcohol in the sultanate and congratulated the Taliban for their takeover of Afghanistan.

The Turkish lira sank to a record low against the dollar on Thursday after the Central Bank slashed interest rates for the third consecutive month following pressure from President Recep Tayyip Erdogan.

The bank cut its policy rate from 16 to 15 percent despite rising inflation and a fast-depreciating currency.

The beleaguered lira, the worst-performing emerging market currency in 2021, sank to an all-time low of 11.30 against the dollar, but later pared down losses.

Erdogan, an outspoken opponent of high-interest rates in order to promote investment and economic growth, on Wednesday pressed for a rate cut.

"As long as I am in this position, I will continue to fight against [high] interest rates, I will continue to fight against inflation," he said.

"We will remove this interest rate trouble from the shoulders of the people. We will never let our people be oppressed by interest [rates]."

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In an address to members of his Justice and Development Party (AKP) in parliament, Erdogan also justified his decision with a verse from the Quran which strictly forbids charging interest.

"I cannot stand by those who defend interest," he said.

Erdogan, who has in the past fired a number of central bank governors, is notorious for his unorthodox belief that high-interest rates cause inflation instead of controlling it.

Conventional economic theory states the exact opposite is true.

Erdogan once called interest rates the "mother and father of all evil".