After celebrating rather loudly what seemed like positive economic trends, like improvements in the current account, remittances and exports, you can bet that no government official is going to tweet about the 88 percent decline in private sector borrowing in more than five months of the current fiscal year; and with good reason. This means that a whole host of measures undertaken by the state bank to lessen the blow of the pandemic have not yet started to work. The State Bank of Pakistan (SBP) not only cut the benchmark interest rate from 13.25 percent to seven percent rather quickly but also provided cheap financing to businesses so they could defer laying off workers. These were very nice steps but now it is clear that the private sector did not respond to them. Therefore, even though the government has not yet announced an emergency or locked the country down even as the second wave of the coronavirus intensifies with every passing day, the economy is already raising a red flag. The price of money, or the interest rate that the Money and Fiscal Policy Coordination Board (MFPCB) felt pretty alright with just a few days ago, is still not right to induce investment in the present climate. Granted, Pakistan has very limited resources and there’s really not much more that the state bank could have done, but the painful fact of the matter is that yet more is needed if an outright collapse of the economy is to be avoided. The government must now prepare for unemployment and production figures to disappoint. At a time when the combined opposition is already up in arms and demands the government’s ouster for reasons just like the freefalling economy, this will put the ruling party in a very awkward position. Yet to be fair things are not much different in most parts of the world. Other Asian countries are also experiencing trauma like they haven’t before, but at least they have been more flexible with the interest rate. You can expect SBP to look seriously to follow a similar path even though the impression everybody has given lately is that rates will be maintained at seven percent in January. Clearly events are overtaking us and the need to be proactive, as opposed to reactive, has never been more pressing. *