I. Introduction
The alarming rise in global public debt demands innovative, long-term financing solutions. For the Global South, the “Looming Debt Crisis” highlights the need for transformative approaches beyond temporary relief. Among these, GDP-linked bonds are emerging as a promising pathway for sustainable development financing.
First proposed in the 1980s and gaining renewed support after successive debt crises, GDP-linked debt aligns repayment with economic performance. Supported by leading economists and the IMF, this model offers a sustainable way to manage debt and promote sustainable growth.
Islamic finance principles, rooted in risk-sharing, make GDP-linked Sukuk a natural fit for development finance. By tying obligations to GDP, these Sukuk provide equitable and resilient solutions that align with Islamic ethics.
This article explores the potential value of this model and the role of blockchain technology in supporting implementation. Blockchain ensures secure and transparent tracking of economic data, while smart contracts enhance the efficiency of execution.
II. Structure
The coupon and principal in GDP-linked bonds rise and fall in proportion to the issuing country’s nominal GDP. Robert Shiller has called these instruments “GDP shares” as they allow governments to raise funds while linking repayments to the resources of the economy. In this model, sovereign obligations adjust in line with economic performance.
Shiller has argued that replacing part of conventional national debt with claims linked to economic output could help governments better manage financial obligations, reduce the risk of future crises, and potentially lower borrowing costs over time.
Interest in the indexing of debt servicing to GDP first emerged in the 1980s and received fresh support after frequent debt crises. The idea was supported by several distinguished economists, including Joseph Stiglitz and has also received favorable consideration from the IMF.
III. Features
In their Foreword to the book Sovereign GDP-Linked Bonds: Rationale and Design (2018), Andy Haldane of the Bank of England and Maurice Obstfeld of the IMF, note the following appealing features of GDP-linked bonds:
They can provide the issuing government with debt relief when growth weakens and tax receipts decline.
Investors gain a route out of being locked into low-interest rates through exposure to the real economy while the debt-stabilizing effects of issuance mean default risks become more remote.
They also allow risk to be shared across borders more efficiently, ultimately reducing the need for sovereign bailouts and limiting moral hazard.
The “automatic stabilizer” role of GDP-linked instruments reduces the need to resort to procyclical policies. When economic growth slows, GDP indexation can ease debt pressures, lower the probability of default, and help reduce financial distress and rising unemployment.
In periods of low GDP growth, the GDP-linked instruments can reduce debt-servicing costs and reduce the need for more borrowing or taxes. This would help to smooth the tax rate and reduce uncertainty for consumption and investment. Conversely, higher payments during stronger GDP growth may discourage governmental overspending. As a result, sovereigns may gain greater short-term budget flexibility while maintaining long-term solvency and resilience to financial turmoil.
A key element for the success of GDP-linked bonds, Griffith-Jones remarks is to identify the proper set of investors interested in this kind of bond. Given their equity-like features, they may appeal to equity investors as well as those interested in hybrid instruments. Moreover, since GDP-linked bonds are directly linked to the overall economy, they have elements of Development Impact Bonds.
Arshadur Rahman of the Bank of England suggests issuing GDP-linked Sukuk. To the extent that GDP is correlated with government income, then the GDP-linked Sukuk will represent a form of partnership between the government and investors. From a Shari’ah perspective, this structure potentially emulates musharakah arrangements.
IV. Blockchain networks
A serious challenge for GDP-linked instruments is the reliability of the data on which investors’ returns depend. Conventional economic statistics rely on samples intended to represent the entire economy, but these may create inaccuracies requiring revision in subsequent releases. In addition, given the centralized nature of the process, data are exposed to the risks of manipulation and interference. These challenges limit the appeal of GDP-linked instruments to investors.
Issuing GDP-linked papers requires establishing an effective system for collecting verifiable and consistent data. Blockchain technology can be very helpful in this regard. This can be done as follows:
1. A group of blockchain networks of consumers, producers, wholesalers, and retailers, among others, can be established with the verifiable identities of each member of each network. Each network would be dedicated to a particular sector of the economy.
2. Data from sector-specific networks can be aggregated into a national blockchain network, providing a comprehensive and real-time estimate of GDP.
3. This unified approach ensures consistency and avoids duplication or gaps in data collection.
4. Members of each network could report:
a. Current price of a pre-identified set of goods and services within their respective sectors.
b. Expected prices over defined future periods.
5. Reported data are verified by members following blockchain verification and consensus algorithms. The IsDB Institute developed the patented “Proof of Use” algorithm as a more economically sustainable alternative to Proof of Work.
6. Members could be rewarded tokens issued by the networks’ sponsors such as the central banks or relevant authorities.
This process would help ensure that the collected data are transparent, observable, easy to compute, and non-manipulative. Since the technology requires only an internet connection and smartphones, the data collection process requires minimal upfront costs.
The Blockchain network can be used to collect various kinds of data including indicators related to financial inclusion and broader development outcomes.
Digital GDP-linked Sukuk could be issued and distributed through the Blockchain network. These Digital Sukuks would represent a tokenized form of the Sukuk certificates and their underlying contractual terms.
Smart contracts can be used to link the periodic Sukuk payments with the data collection network. Using blockchain on both sides, data collection and Sukuk issuance are likely to make the entire process seamless, transparent, and efficient. This allows the Sukuk to be accessible to a wider range of investors, particularly retail investors.
V. Issues and challenges
While the Digital GDP-linked Sukuk might be conceptually appealing, there are many issues that need to be addressed before implementation. For example:
Managing the blockchain networks would be demanding and may involve some centralized control. Although the risks of manipulation are much lower than the centralized approach, some risks remain.
Developing countries, which stand to benefit most from GDP-linked Sukuk, may face challenges in implementing and maintaining blockchain networks due to limited infrastructure and technical expertise.
Ensuring that all economic actors, including those in remote or underserved areas, can participate in the blockchain network will require extensive outreach and capacity building.
GDP-linked Sukuk are suitable for most middle-income countries with promising growth prospects.
Very-low-income countries could issue sector-specific Sukuk tied to growth in sectors such as agriculture, mining, or oil & gas.
Although the GDP-linked Sukuk of a single country may carry higher risk, a diversified portfolio of such instruments could reduce risks.
VI. Conclusion
Islamic finance is, at its core, a risk-sharing system with the capacity to absorb and manage various economic risks. This will not make the economy risk-free, but it will make these risks manageable and self-stabilizing. However, when debt becomes excessive, these risks can become destabilising.
GDP-linked Sukuk offers an innovative approach to sustainable financing by aligning debt obligations with a country's economic performance. This instrument can help curb excessive debt accumulation while promoting a more stable and inclusive growth, reflecting the risk-sharing principles of Islamic finance.
Author: Dr. Sami Al Suwailem Acting Director General, IsDBI
This article is produced and sponsored by IsDBI. It was first published in the State of the Global Islamic Economy 2025/26 report produced by DinarStandard. The report can be downloaded from here.
In the close of the 2025 calendar year, global leaders gathered for what many hope will be remembered as the beginning of the end for one of humanity's most dreaded diseases. The occasion marked a pivotal moment in the decades-long battle against polio, as international partners announced a collective commitment of $1.9 billion to advance eradication efforts and protect hundreds of millions of children worldwide.
The global pledging event, titled "Investing in Humanity: Uniting to End Polio," was hosted by the Mohamed bin Zayed Foundation for Humanity in partnership with the Global Polio Eradication Initiative (GPEI). Among those in attendance were His Highness Sheikh Hamdan bin Mohamed bin Zayed Al Nahyan, Gates Foundation, World Health Organization Director-General, Dr. Tedros Adhanom Ghebreyesus, and government ministers from affected nations.
The scale of the announcement was a peek into the severity of the situation, and its eventual outcome now hinges on whether these global health efforts succeed or fail. It was a story that shines a light on institutions that operate at the intersection of trust, culture, and credibility. Among them was the Islamic Food & Nutrition Council of America (IFANCA), whose $4 million pledge is a critical investment during this last mile moment, where every dollar matters. In the final stretch to end polio for good, partnership, influence and credibility remain as important as funding, ensuring communities have the trust and support needed to finish the job.
A disease on the brink
The significance of this funding announcement cannot be overstated. Wild poliovirus, which once paralyzed hundreds of thousands of children annually, is now endemic in only two countries: Afghanistan and Pakistan. The world stands at what public health experts describe as 99.9% of the way toward complete eradication. That in itself is a milestone that seemed impossible just decades ago.
“Polio eradication is not just a health priority for Gilgit-Baltistan; it is a national responsibility for Pakistan, especially after the recent case in Diamer (one of the regions in the north of Pakistan in Gilgit Baltistan) reminded us that the virus still threatens our children,”said Dr. Mubashir Hassan, Director Health Planning & Procurement, Gilgit-Baltistan.
“As one of the last two endemic countries alongside Afghanistan, Global stakeholders must sustain unwavering immunization efforts to protect every child and fulfil their global commitment to a polio-free world,” he added.
Public health professionals often describe eradication as a paradox: the closer you get to zero, the harder every remaining step becomes. Early gains are relatively straightforward. The final cases are not. The window for action is narrow, and the stakes are enormous. Complete eradication would save the world more than $33 billion by 2100 compared with the costs of managing recurring outbreaks indefinitely.
The latest commitments include approximately $1.2 billion in new pledges, which reduces the remaining funding gap for GPEI's 2022-2029 strategy to $440 million. These resources will accelerate vital efforts to reach 370 million children each year with polio vaccines while simultaneously strengthening health systems in affected countries to protect against other preventable diseases.
The "last mile" of polio eradication runs through regions shaped by conflict, political instability, misinformation, and deep-rooted mistrust of external intervention. In such environments, technical capacity alone is insufficient. The simple fact is that vaccines do not fail because they are ineffective; they fail because they are refused, feared, or misunderstood.
This is where IFANCA's role becomes especially significant.
IFANCA and the politics of trust
IFANCA is best known globally for its work in halal certification, which lies at the cross-section of religion and modern scientific methods, ensuring that food, pharmaceuticals, and consumer products meet Islamic dietary and ethical standards. But its influence extends well beyond certification. For decades, IFANCA has functioned as a bridge between scientific institutions and Muslim communities, translating technical standards into culturally credible assurances. That same credibility now matters profoundly in global health.
At the Abu Dhabi pledging event, IFANCA reaffirmed its commitment to polio eradication, framing its contribution not simply as financial support, but as part of a broader moral obligation to protect children. "Supporting children and protecting the most vulnerable is central to IFANCA's mission," said IFANCA President Dr. Muhammad Munir Chaudry, adding that "the last mile is the hardest, but we stand with GPEI partners and donors to finish the job".
The wording is telling, reflecting an understanding that eradication is not just a logistical challenge, but a social one. In communities where vaccination campaigns have historically been met with suspicion, institutions like IFANCA, which have built significant trust through their previous work, play a crucial role in facilitating public health efforts. Their support signals that immunization is not only medically sound, but ethically acceptable and religiously compatible.
Why IFANCA's contribution punches above its weight
Beyond its financial contributions, the additional value of IFANCA's involvement lies in where and how it operates. Polio eradication efforts increasingly depend on reaching communities where external authority, whether governmental or international, is often viewed with skepticism. In such contexts, faith-based institutions often enjoy levels of trust that governments and NGOs do not. Their participation can determine whether a vaccination campaign is tolerated, embraced, or rejected outright.
“We are closer than ever to ending polio for good, but the final mile demands not only resources, but trust and partnership,” said Michael J. Nyenhuis, President and CEO of UNICEF USA. “UNICEF USA has seen that vaccines can only save lives when communities have confidence in the institutions delivering them. The leadership of trusted organizations like IFANCA reminds us that protecting children from preventable disease is a shared moral responsibility. Together, if we stay the course, we can reach the finish line.”
By standing publicly alongside GPEI, WHO, UNICEF USA, and major philanthropic actors, IFANCA reinforces a critical message: that ending polio is compatible with, not in conflict with, religious values.
A broader shift in global health
The Abu Dhabi pledging moment also reflected a broader transformation in how global health initiatives are financed and delivered. The budget of the Global Polio Eradication Initiative faces an expected 30% cut in 2026, part of a broader pullback from foreign aid by wealthy nations. The United States has withdrawn from the World Health Organization, creating uncertainty about future funding commitments. Other major donor governments, including Germany and the United Kingdom, have also implemented cuts to international aid budgets.
While traditional donor governments remain important, the Abu Dhabi pledging moment revealed a deeper structural shift within global health itself. As geopolitical tensions rise and foreign aid commitments become less predictable, the architecture of global health response is evolving away from reliance on a narrow set of state actors toward a broader coalition that includes philanthropies, regional foundations, civil society organizations, and faith-based institutions. This evolution reflects not simply diversification, but adaptation to a more complex risk environment.
Seen through this lens, the growing role of organizations like IFANCA is less about supporting individual medical interventions and more about strengthening global health security. Public health crises increasingly unfold in environments shaped by political instability, cultural sensitivities, and distrust of external authority. In such contexts, success depends not only on scientific capability but on the presence of trusted intermediaries capable of bridging global systems with local communities. IFANCA’s longstanding credibility within Muslim communities positions it as one of these stabilizing actors—reducing friction and helping ensure that international health initiatives can operate effectively in culturally complex settings.
This shift represents a recalibration of how global health challenges are addressed. Rather than framing success solely in terms of funding levels or technical delivery, the emerging model emphasizes resilience: the ability of health systems to function amid uncertainty, contested narratives, and evolving geopolitical pressures. In this environment, partnerships founded on trust and cultural fluency become essential components of the global health security infrastructure.
This funding environment makes the Abu Dhabi commitments all the more critical. In response to budgetary pressures, GPEI partners plan to focus resources more strategically on surveillance and vaccination in areas with the highest risk of polio transmission. The approach reflects both pragmatism and determination—doing more with less while maintaining momentum toward eradication.
Whether that time is used effectively will depend not only on how funds are deployed, but on who is trusted to deliver them. In that equation, IFANCA's involvement is strategic. The $1.9 billion pledged in Abu Dhabi represents renewed commitment at a moment when global cooperation faces significant headwinds. It demonstrates that even in an era of constrained budgets and competing priorities, the world can still rally around goals that transcend borders and benefit all of humanity.
As Dr. Chaudry noted, the last mile is the hardest. It is also the most revealing of priorities, of partnerships, and of whether the global community truly understands what eradication requires. If the world does finish the job, institutions like IFANCA will have played a role that history may not fully quantify but should not forget. The end is in sight. With sustained commitment and the resources pledged in Abu Dhabi, the world may soon declare victory in one of the longest and most consequential battles in public health history.
This article is produced and sponsored by IFANCA. It was first published in the State of the Global Islamic Economy 2025/26 report produced by DinarStandard. The report can be downloaded from here.
“Constraining Iran’s maritime trade directly targets the regime’s primary revenue lifelines,” he added.
Kharg Island is a small island northwest of the port of Bushehr and serves as a terminal for nearly all of Iran’s oil exports.
Iran has also sustained significant damage to its petrochemical facilities, notably at Shiraz and Mahshahr. Israel struck Iran’s South Pars field, a critical energy asset that supplies 80% of Iran’s natural gas. Natural gas generates 79% of the country's electricity, primarily used for heating, cooking, lighting and other uses, according to IEA.
“Israel’s attack on the South Pars Gas Field damaged infrastructure indispensable for the survival of Iranians,” said Joey Shea, senior Saudi Arabia and UAE researcher at Human Rights Watch.
“Attacks on key oil and energy infrastructure have foreseeable knock-on economic impacts that could prove harmful to millions of people.”
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