Poor Pakistanis worry IMF bailout measures risk stark future

Shah, a 53-year-old construction worker, sat along a sidewalk with his fellow workers on the outskirts of the capital Islamabad, his head hung low as he worried.

What if he failed to find work on Friday, for the second day in a row, just as Pakistan considers a tax hike amid looming economic troubles?

Starting early in the morning, Shah's job is to pick up bricks, gravel, cement and sand and hand them to masons who use them on construction sites. He is paid 1,600 rupees ($6) a day — barely enough for basics like food. He doesn't know what he'll do if Pakistan's government follows through on its plan for new taxes in the coming weeks.

“I could not get work yesterday, and I am waiting for customers since morning, and today I don’t have even money to get groceries before going to my home,” said Shah, who found work at midday after several costly hours without any.

Pakistan's National Assembly, the lower house of parliament, is expected to approve a tax hike on Monday in a step toward meeting the terms of a 2019 bailout worth $6 billion from the International Monetary Fund. The increase would then need a sign-off from President Arif Alvi.

Economists say Pakistan is caught. It must slash subsidies and raise taxes to comply with the bailout terms and release a $1.2 billion portion of the deal that's been stalled since December. But doing so would make food, gas, and power more expensive and drive up the hardship on poor people — like Shah.

Economists say if nuclear-armed Pakistan gets an IMF bailout, it will avoid a default. But critics say that the poor tend to be the ultimate victims of economic mismanagement and public austerity.

Taxes are included in utility bills and are added to the price of food. Increasing desperation means an increase in crime, which law enforcement experts in Pakistan say is on the rise. Protests add unease, as does Pakistan's recent wave of violence. The country already was struggling to recover from record-breaking floods last summer that killed 1,739 people and made millions of Pakistanis homeless.

"The poor will specially pay a very heavy price for the mismanagement of the economy,” said economist Ashfaq Ahmad.

A more expensive future weighs on worried Pakistanis.

“How will we get out of this new storm of inflation?" Farzaba Bibi, a housewife who lives in the Phulgran village near Islamabad, asked in a muffled voice, as she sat in an open farm field with her children.

“Life has become very difficult now," said Ashfaq Ahmad, 52, who works as a junior clerk at a government department in Lahore, the cultural capital of Pakistan.

Saqib Kaif, a poet, said the latest increase in taxes will make many people jobless. “Most of the companies will reduce the numbers of their employees to curtail production-cost and expenses," he said.

“Poverty and uncertain situations also affect mental health, and this is what we are witnessing in society," Farwa Naqvi, an Islamabad-based psychologist told The Associated Press. She said that “living in survival mode for too long, deprivation of basic needs and strangulation of hopes adversely affect mental health.”

Pakistan is low on foreign reserves, which slightly improved to $3 billion this week after dipping due to uncertainty about the ongoing talks between Pakistan and the IMF.

Associated Press writers Adil Jawad in Karachi, Babar Dogar in Lahore and Riaz Khan in Peshawar, Pakistan contributed to this story.