A Note by Rema Marie Kodaimati

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The global debt levels have reached new records despite the massive technological advances made in recent decades.[1] The current global debt has reached approximately 350% of the global GDP, or the equivalent of $37,500 per person in the world.[2] Although international economists have forecasted that the global economy will continue to grow in 2023, albeit at a decreased rate of 2.7% from the 6% of 2021, their predictions are based upon gross domestic product, (“GDP”),[3] a metric that is often criticized as misrepresenting the true state of economic health or the general well-being of societies.[4] Looking at the debt levels within the United States alone, circumstances do not appear to be any better as federal borrowing has practically reached the nearly $31 trillion national cap, with the Treasury Department using latch ditch accounting maneuvers to postpone a default on the debt, which many view as being inevitable.[5]

However, as the governments of the world’s economic powers rush to stave off a debt crisis that could reach cataclysmic proportions,[6] the global Islamic finance industry has proven itself to be resilient under mounting pressures, like the recent pandemic. Its success has come from its, unique principled approach that complies with the Environmental, Social, and Governance (“ESG”) framework,[7] a tool utilized by institutions in assessing the sustainability of an organization.[8] Driven significantly by the high demands of increasing Muslim populations and consumers averse to the heightened risks of conventional financing from increasing interest rates, assets held by Islamic financial institutions (“IFIs”) are forecasted to maintain double digit growth rates like the record rate of 17% seen in 2021.[9]

[1] See Nicole Goodkind, The World Has a Major Debt Problem. Is a Reset Coming?, Cnn Bus. (Jan. 17, 2023, 7:37 AM),

[2] See id.

[3] See IMF, Countering the Cost-of-Living Crisis, World Economic Outlook (Oct. 2022). 

[4] See, e.g., Joseph E. Stiglitz, GDP Is the Wrong Tool for Measuring What Matters, Sci. Am. (Aug. 1, 2020),

[5] See Drew Desilver, 5 Facts about the U.S. National Debt, Pew Rsch Ctr(Jan. 14, 2023)  

[6] See Goodkind, supra note 1.

[7] See Shereen Mohamed & Tayyab Ahmed, Islamic Finance Development Report 2022: Embracing Change, Refinitiv,

[8] See generally What Is Islamic Finance?, Corporate Finance Institute: Capital Markets (Mar. 15, 2023),

[9] See Mohamed & Ahmed, supra note 7.