Perils of a hard reset

In Pakistan, standing in queues at petrol pumps has become a regular occurrence, particularly when people anticipate an increase in fuel prices. Waiting in these lines, one often reflects on the past when petrol used to cost under Rs100 per litre, a time that now seems distant, even though it was less than three years ago. These queues also serve as a sobering reminder of the potential consequences of a default, as witnessed in Sri Lanka, where drivers had to wait for as much as 10 days just to get a few litres of fuel. In Pakistan, the high petrol prices played a role in pushing headline inflation to fifty-year highs of 31.5 per cent in February, whereas inflation in Sri Lanka has been hovering in the range of 54pc to 70pc since June. While Pakistan faces an economic slowdown and back-breaking inflation, Sri Lanka’s default serves as a cautionary tale that it can always get worse. When it comes to Sri Lanka’s crisis, the fuel shortage captured global attention. The country was able to continue functioning despite its financial troubles, but the disappearance of fuel from petrol pumps brought it to a halt.