Is it permissible to engage in government contracts that include usurious clauses, such as increasing repayment upon delay, based on the principle of widespread affliction (umum al-balwa), and would prohibiting this block a legitimate avenue for citizens' benefit?

It is not known that any scholar has permitted the stipulation of a delay penalty if it is imposed by the government absolutely. Although some of them considered it a discretionary punishment from the ruler, this interpretation is not acted upon, and the penalty for delayed debt payment remains a form of riba al-Jahiliyyah (usury of the pre-Islamic era).

Therefore, stipulating a delay penalty in murabaha (cost-plus financing) and deferred debt obligations is a corrupt condition that is not permissible, because it approaches forbidden riba. Scholars have interpreted riba al-Jahiliyyah as an increase on a debt in exchange for postponement.

There is no disagreement among jurists that stipulating an increase on a non-usurious debt makes it usurious, and more than one scholar has reported a consensus on this.

Similarly, there is no disagreement among contemporary jurists and the jurists of the past generations regarding the impermissibility of stipulating a penalty clause in debts. This is what has been affirmed by jurisprudential and economic councils and bodies.

The consideration remains for cases of necessity or need that may permit it, but such cases do not generalize a fatwa (religious ruling) of permissibility.