As a substitute to T-bills, the governments can issue Treasury Sukuk Ijarah Bills to source funds. For profit benchmarking, data from trading operations can be used in which the government sets prices to reflect its target profit rate knowing the cost as well as the selling price. This target profit rate can become a benchmark for issuing Treasury Sukuk Ijarah Bills and affect the other rates of returns in Islamic short term financing instruments.
A key maxim of Islamic jurisprudence suggests that in the matter of commercial transactions, everything is deemed permissible unless explicitly stated otherwise. As long as the transacting parties adhere to the principles of Islamic jurisprudence while applying the benchmark to their transaction, it is acceptable to utilize a consensus methodology. In place of risk free rate or base rate of expected return on investment, some thinkers in Islamic finance suggest the possible use of Zakat rate.
From the Islamic finance industry perspective, an important criterion for the industry wide adoption of any benchmark, particularly one that is published every business day, is the simplicity, reliability and robustness of its methodology.
Growth rate of Gross Domestic Product (GDP) is one of the most frequently suggested alternative for Islamic finance transactions. GDP measures value of production in a given year. This alternative avoids reference to interest based benchmarks and reflects pure economic activities in a comprehensive way covering output of all sectors plus prices.
Islamic Economics Project 