A consortium of foreign investors operating in Pakistan has formally urged the government to consider demonetizing the Rs5,000 currency note as a significant step towards discouraging cash transactions and accelerating the nation’s transition to a digital economy. The recommendation was included in their budget proposals submitted for the fiscal year 2025-26.
Key Proposal: Curbing Cash Transactions
The Overseas Investors Chamber of Commerce and Industry (OICCI), representing these foreign investors, highlighted in their budget recommendations that the elimination of large-denomination currency notes could play a crucial role in reducing undocumented economic activity, enhancing financial transparency, and fostering a more robust, digitally-driven economic framework.
To achieve Pakistan’s long-term digitalization goals, the investors emphasized the critical need for collaborative efforts between both the public and private sectors. They pointed to existing limitations in Pakistan’s current IT infrastructure, which they believe lacks the capacity to support widespread banking access, particularly in rural parts of the country. This infrastructure gap, they noted, acts as a significant impediment to the broad expansion of digital payment systems nationwide.
Supporting Digital Payment Adoption
While commending the State Bank of Pakistan (SBP) for launching initiatives such as the RAAST instant payment platform, the investors stressed that broader measures are necessary to reduce reliance on cash. Demonetizing high-value currency notes like the Rs5,000 note was presented as one such measure that would help formalize the economy and improve overall financial transparency.
Among other key suggestions was the call for mandatory digital invoicing across all economic sectors, moving beyond the current focus primarily on the Fast-Moving Consumer Goods (FMCG) sector. The foreign investors also proposed that the government make strategic investments in developing digital payment platforms, including supporting fintech solutions, expanding Point-of-Sale (POS) systems, implementing e-invoicing tools, and promoting mobile wallets. They argued that such investments would not only boost tax compliance among retailers and service providers but also significantly enhance financial inclusion across the population.
Incentives and Global Alignment
To further catalyze the adoption of digital payments, the investors recommended that the government introduce tax incentives specifically for fintech companies and merchants who actively support or utilize digital payment systems. They stressed that encouraging innovation and providing support for the necessary digital infrastructure are essential for building a modern, efficient economy.
Reiterating their stance, the foreign investors stated that the “Demonetization of the Rs5,000 note is a crucial step to discourage cash dealings.” They urged the government to align Pakistan with global digital payment trends and emphasized the importance of engaging international fintech and e-commerce players to ensure the successful implementation of these proposed reforms.
