Weeks after India demonetised its high-value currencies, Pakistan’s Senate on 19 December 2016 passed a resolution that seeks withdrawal of high denomination Rs 5000 currency notes. This currency note will be withdrawn in a phased manner.
The resolution was passed with an aim to curb the flow of black money in the nation.
As per reports, the currency notes will be withdrawn in three to five years and this time period will help the government to purge markets of the notes.
The resolution was tabled in the upper house of Pakistani Parliament by Senator Usman Saif Ullah Khan of Pakistan Muslim League. His resolution was endorsed by the majority of lawmakers.
As per reports, the resolution said, the withdrawal of bank notes of Rs 5000 will encourage the use of bank accounts. It will also reduce the size of the undocumented economy.
Zahid Hamid, a lawmaker, said that this withdrawal would create a situation of crisis in the market and people will resort to foreign currencies in absence of banknotes of Rs 5000.
At present, 3.4 trillion notes are available in the market of Pakistan of which 1.02 trillion notes are of Rs 5000 denominations.
Comment: The resolution and its aim hint that the move is inspired by India’s demonetisation, which was announced on 8 November 2016 by Prime Minister Narendra Modi. After the announcement, banknotes of Rs 500 and Rs 1000 were pulled out from circulation.
Earlier on 11 December 2016, Venezuelan government also announced the demonetisation of Bolivar Fuerte 100 banknotes. He gave 10-days time to Venezuelans to exchange the notes at the central bank of the country. Amid protests and looting, this time period of 10 days was extended up to 2 January 2017.