Question
I owe someone 10,000 kwacha on 1 May and promised to pay back at the end of the month. At the time of borrowing the cash, one could buy 10 litres of petrol, but with the devaluation, the same 10,000 will not buy 10 litres. My question now is: Will our agreement be affected? Do I need to pay back 12,000 kwachas for example to cover up so that my friend does not lose anything? If I do that, will it be interest?
Answer
If the government has devalued the currency, then the percentage of devaluation should be added when repayment of the loan is paid. Example, the currency was devalued by 10%. When repaying the 10,000 Kwacha borrowed before devaluation, pay 11,000. However, if the currency is not devalued by the government, but the prices of commodities increased, then the exact amount has to be repaid. Any excess given will be interest. And Allah knows best.
- Source
- themajlis.co.za
- Published in
- The Majlis Vol 21 No 06
- PDF page
- 5
Appears under Questions and Answers (approximate).