Opposition parties may not see eye to eye with PM Modi on demonetization but our neighbours seem to learn a lesson from this bold move. Ever since the PM scrapped out Rs. 500 and Rs. 1,000 notes from the market, Pakistan public demanded a similar move from Nawaz government. Giving into public pressure, the Pakistan senate passed a resolution seeking withdrawal of high value 5,000 notes from circulation this Monday. While Pakistan leaders deny following India’s footsteps, we can’t deny the fact that Pakistan demonetization was planned within a month of currency demonetisation implemented in India.
When questioned, a PPP leader said notebandi was implemented to reduce money laundering and illicit money flow in Pakistan market. This will reduce undocumented cash deposits and encourage people to open up new accounts, something that we all have been hearing in India since November 9.
Pakistan Demonetization: Why did Leaders Ban 5000?
According to CPI (Corruption Perceptions Index) of 2014, corruption in Pakistan has seen an upward trend from 107.90% to 144.0% in 2005. As of now, it ranks 117th on the list of top corrupt countries of the world.
Last month when the media questioned Pak Finance Minister Ishaq Dar, he dismissed the rumours. Ishaq Dar said that the government will not withdraw Rs. 40,000 prize bonds or Rs. 5,000 currency notes. However, opposition leader Usman Saifullah of PPP (Pakistan People’s Party) was interested in passing this resolution because high-value notes were being used in illegal transactions.
Consequently, we saw an interesting discussion between Pak leaders in the Senate. While PML (Pakistan Muslim League) that is PM Nawaz’s party opposed this move, the PPP zealously supported it.
Pak Law Minister Zahid Hamid believes this move will have negative repercussions on the economy. Like India, it can create currency crisis and market instability in Pakistan too. Since 3.43 trillion notes are in circulation (which makes up to 30% of total Pakistan’s economy), it’ll lead to chaos and confusion.
According to senator Saifullah, rather than withdrawing Rs. 5000 note, the government should’ve halted its printing and gradually pulled it out from the market within 3 to 5 years. Nevertheless, since the opposition had the majority in the house, the resolution was moved quite easily. Now, we just have to wait and observe its effect on Pakistan’s economy.
