A proposal has been put forward in the Senate to eliminate the Rs 5,000 banknotes, with Senator Mohsin Aziz leading the initiative. The core argument behind this proposal is the belief that the Rs 5,000 note contributes to inflation, and discontinuing it would have positive economic effects.
Senator Mohsin Aziz highlighted that a significant portion of the country’s economy, estimated to be between 35 to 40 percent, operates in the undocumented sector. Moreover, out of the total 3.5 trillion rupees in circulation, a substantial amount, specifically 5.2 trillion rupees, remains unused. In light of these considerations, Senator Aziz urged the government to take immediate steps to demonetize the Rs 5,000 note.
Drawing parallels with India’s experience, where discontinuing large denominations was followed by economic development, Senator Aziz made a case for similar potential benefits in Pakistan. The idea is that by discontinuing the Rs 5,000 note, the government could address issues related to the undocumented economy and circulation of unused currency.
Caretaker Information Minister Murtaza Solangi, while offering additional insights, pointed out that the Rs 5,000 note was introduced on May 27, 2006. Currently, there are approximately 4.5 billion rupees worth of these notes in circulation in the country.
It’s noteworthy that Murtaza Solangi emphasized that Senator Mohsin Aziz did not address the role of the State Bank in his proposal, indicating that aspects related to the central bank’s involvement in the matter need further consideration and discussion.
