Constructing the Pakistani Economy: The Pakistan Rupee and Pakistan’s Membership in the IMF, 1947–50

In September 1947, Pakistan applied for membership to the International Monetary Fund, making it the first postcolonial nation to apply for membership. In April 1948, the State Bank of Pakistan printed the first Pakistani rupee notes and announced a program to replace British Indian rupees with the new currency, which was to be of identical value. This paper tracks the concurrent histories of the Pakistani rupee and Pakistan’s admission into an international world of national economies.

The Pakistan government and the IMF could not agree on Pakistan’s quota, a dollar figure representing the proportion of votes the nation held in the IMF council. National quotas were calculated through a complex formula involving national income, gold reserves, and exports and imports in 1940, that is, before WWII began and Pakistan was created. The paper examines how, in the course of their negotiations, Pakistani government officials and IMF economists produced an imaginary economy that did not, at the time, exist. Concurrently, I examine the construction of a concrete economy through the introduction of a new, sovereign currency. I look at how the Pakistani government’s efforts to separate the Pakistani rupee from the British Indian and Indian rupee impacted economic life in East Bengal, focusing particularly on workers and merchants whose lives straddled newly-drawn partition lines.

The separation of the Pakistani and Indian rupee was completed in October 1949, when Pakistan decided not to devalue its rupee in line with the Indian rupee and the two currencies diverged in value. The decision not to devalue featured prominently in ongoing negotiations with the IMF, with Pakistan finally gaining membership in July 1950. The paper concludes by examining how Pakistan’s decision not to devalue its currency shaped the terms of its membership in the IMF.