IDB and interest

Published in DAWN on 7 October 1998

I WAS shocked to read that the Islamic Development Bank (IDB) will charge eleven per cent interest on the loan it will provide to Pakistan. Incidentally, this is higher than all the interest rates that this economically bleeding country has had to pay so far. 

Will any of the experts explain why the Islamic Development Bank is allowed to charge interest at all, let alone a very high rate? If interest is not allowed in Islam, why is this  premier Islamic institution recovering it from an Islamic country?

Shakir Lakhani

Karachi