Prime Minister Shehbaz Sharif has rejected a proposal to get millions of commemorative polymer banknotes printed outside of the country in the wake of current economic situation and shrinking foreign currency reserves.
The State Bank of Pakistan (SBP) is eager to issue the commemorative polymer banknotes to mark the 75th anniversary of the independence of Pakistan and the establishment of the central bank.
The matter was tabled before PM Sharif in a meeting of the cabinet to seek his approval.
The Finance Division told the meeting that the State Bank intimated that at the time of golden jubilee independence celebration in 1997, a commemorative banknote of Rs5 had been issued.
On the same lines, the SBP proposed that on the occasion of 75th anniversary of the independence of Pakistan and the creation of central bank, two commemorative polymer banknotes of Rs75 may be issued on August 14, 2022 and July 1, 2023.
The State Bank mentioned that central banks of many countries had opted for the polymer substrate for printing the banknotes.
The Reserve Bank of Australia was one of the first central banks that issued a full series of polymer banknotes. Other notable polymer banknote issuers include, but not limited to, the Bank of England, Reserve Bank of New Zealand, Bank of Canada and Saudi Arabian Monetary Authority.
These polymer banknotes have a longer life and stronger counterfeit resilience. Studies on the durability of polymer banknotes indicate 2.5 times longer life as compared to the paper banknotes.
However, some central banks claim that the life of polymer banknotes is even longer.
The Bank of Canada has assessed the life of such banknotes at 4 times higher whereas the Central Bank of Mauritius claims it is 3.5 times longer. This results in significant potential savings.
This will obviate the need to make significant periodic investments in the production capability for banknotes to meet the growing demand for them.
Keeping in view the situation, the SBP considered that before the introduction of regular polymer banknotes in Pakistan, the public response as well as performance of the commemorative polymer banknotes in the climatic condition of the country needed to be assessed.
Therefore, the central bank intended to use the upcoming opportunity by undertaking a pilot programme to gain experience and assess the public response by issuing the commemorative banknotes.
The SBP revealed that the bid evaluation committee, after completing due process under the Public Procurement Regulatory Authority (PPRA) Rules, 2004, recommended the design of De La Rue, UK for printing 100 million polymer banknotes on the 75th Independence Day of Pakistan at a cost of $3.57 million and the design of CCL Secure, Australia for 100 million commemorative polymer banknotes to mark the SBP’s creation at a cost of $3.07 million.
Total expenditure will be $6.64 million, which will be met by the SBP through its own resources.
The SBP board, in its meeting held on January 31, 2022, recommended to the federal government to approve the design, form and material in terms of Section 27 of the SBP Act 1956.
During discussion, PM Sharif, citing the current economic and foreign exchange crunch, rejected the proposal of getting the commemorative polymer banknotes printed abroad, which was endorsed by the cabinet members.
Minister of finance and revenue proposed that paper banknotes could be printed locally, which was endorsed by the cabinet.
The cabinet considered a summary titled “Issuance of commemorative polymer banknotes on the 75th anniversary of independence of Pakistan and SBP’s founding” dated May 13, 2022, submitted by the Finance Division.
While approving the design, it rejected the idea of getting the banknotes printed abroad and directed that the State Bank should get the commemorative banknotes printed in the country.
Published in The Express Tribune, June 4th, 2022.
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