Professor Obaidullah Esmat Pasha, a faculty member of Insif International University of Malaysia, pointed to the large volume of financing through debt and leverage instruments in the world, saying some of the challenges of financing through this method can lead to high cost of financing, lack of capacity to create more debt for governments, increase in interest rates and so on.

Professor Esmat Pasha went on to describe the unfavorable global conditions and some essential needs of the people, including the lack of some basic infrastructure in many parts of the world, such as lack of access to safe drinking water, lack of access to electricity, etc.

The World Bank estimates that $ 1 trillion is needed each year to address these shortages, and McCenzie estimates these shortages will reach $ 57 trillion by 2030, and that amount needs to be finance while financing through debt has been the cause of many financial crises. Now this question is raised how we can finance without using debt.

He reviewed Islamic financial contracts that have a risk-sharing mechanism and by examining the case of each of them, providing explanations on which Islamic means and contracts should be financed.

In developed economies, the use of government budgets and borrowing systems is a common method of financing development and infrastructure projects. Capital borrowing with a definite interest payment obligation is one of the pillars of the capitalist and conventional financial system. Bad debt cycle, leverage, instability, financial turmoil, too big to fail are all rooted in debt and interest.

Developing countries have shifted to debt-based markets by adopting and implementing conventional financial models and models not to stay out of progress.

Islamic countries are no exception to this story and have fallen into the trap of borrowing from global markets for growth and development and have suffered a lot of hardships. Out of 57 Islamic countries, only 6 countries in the Persian Gulf have a positive financial balance and the remaining 51 governments face the challenge of budget deficit. The World Bank and the International Monetary Fund have classified 19 of these 51 economies as poor with high debt.

In general, the issue of budget deficits and lower government revenues than expenditures is a common feature of developing economies, which is often the result of the need for financing for development projects. As a result of insufficient domestic resources, governments borrow from foreign sources through the issuance of bonds and, of course, in foreign currency (forced by the lender bank and the global bond market). In addition to the benefits that this type of external facility brings to an economy, there are also risks to the national economy. In addition to the risk of currency fluctuations, any increase in interest rates on external resources will double the burden of borrowing costs.

Since the economies of Islamic countries are small and significantly dependent on exports of goods, they are sensitive to changes in commodity prices, which in turn can exacerbate the possibility of economic fluctuations. Thus, borrowing from foreign sources in general has increased financial leverage and can lead to economic fluctuations, instability and the devaluation of the national currency. The accumulation of foreign debt becomes unmanageable without government assistance and turns into an additional burden on the government and even the permanent government debt.