Too little, too late

A massive power breakdown last week in Pakistan left millions of citizens without electricity across the country for most of the day on Monday. Triggered by ‘frequency variations’ in the system, it was the second major electricity breakdown since October, forcing many to compare the nation’s fragile power sector and its economy on the verge of collapse. Later in the evening, the State Bank hiked its key policy rate by 100 bps to a 25-year high of 17 per cent to fight runaway inflation. Nonetheless, the biggest surprise came on Thursday when the SBP silently let the rupee fall by almost 10pc, the biggest one-day drop in more than two decades, as its foreign currency reserves shrank to a new low of $3.6 billion, enough only to cover three weeks of suppressed imports. Shortly after, the International Monetary Fund (IMF) announced sending its mission to Pakistan to conclude the talks on the pending ninth review of its programme from January 31 to February 9. All and sundry breathed a great sigh of relief, rejoicing in the fact that it would mitigate the country’s risk of a sovereign default.