Turkey issues fatwa allowing government loans for housing projects

JEDDAH: A new fatwa from Turkey’s top religious authority on Tuesday said that the government was allowed to take out loans with interest for its public housing projects.
The fatwa was issued by the country’s Directorate of Religious Affairs, the Diyanet. It said that taking out loans with interest was a sin except for the government’s public housing projects. “However, taking interest loans from the banks for setting up a new business or buying a car is a sin,” it added.
The fatwa was approved by the Diyanet’s High Council of Religious Affairs, with a majority voting in favor of it. According to the Diyanet, the distinction resides in the government’s aim of providing housing for low- and medium-income households, and the ruling is valid only for public banks.
Ali Gul, a lawyer who is an expert on taxation issues, criticized the decision. “Based on such a fatwa, private banks may claim that their intention is not obtaining interest income, but just contributing to the economy,” he told Arab News. “So, in this way, the interest loan that private banks apply also becomes lawful religiously. This religious edict means that when the state receives the interest, it is permissible.”

There has been debate about whether the Diyanet has become political following the dismissal of some imams who failed to follow guidelines set by the religious authority.
Among those sacked was an imam who disagreed with a Diyanet fatwa disallowing women to enter supermarkets without their husbands. Another cleric was also dismissed recently, due to his musical activities in a rock band.
The Diyanet budget, which exceeded TRY10 million ($1.8 million) in 2019, is also a talking point in Turkey because its expenses last year surpassed the overheads of six ministries.