World Bank approves $435 million loan for low-cost housing projects


ISLAMABAD: The World Bank (WB) has approved loans of $435 million for three projects, including Pakistan Housing Finance Project, Punjab Urban Land Systems Improvement and Punjab Affordable Housing Program to help low income groups.

However, independent economists have argued against World Bank estimates of housing unit shortages in Pakistan. Moreover, the land registration projects in Punjab, already implemented in the province, have actually created more difficulties for the common man.

According to the multilateral lender’s announcement, the WB Board of Directors has approved three loans as these projects will expand access to housing finance, especially for low-income households, improve land rights and facilitate the development of affordable housing in urban areas of Punjab.

“Affordable and accessible housing is in high demand in Pakistan, home to more than 200 million people and the most urbanized country in South Asia,” said Najy Benhassine, World Bank Country Director for Pakistan.

“These projects will help meet housing needs, particularly for low-income households, by leveraging the private sector and facilitating access to mortgage options for those who currently do not have access to finance to buy a home. . They will also strengthen property rights and increase the supply of affordable, climate-resilient housing.

The additional $85 million in funding for the Pakistan Housing Finance project will help expand access to affordable mortgages to increase home ownership among low-income households, including women and informal workers. The additional financing will strengthen the Credit Risk Sharing Facility launched in 2018, to provide partial credit guarantees to banks, to incentivize them to lend to borrowers traditionally excluded from trade finance. This will benefit up to 70,000 first time home buyers in the country, who are eligible for the government’s interest rate subsidy scheme – Mera Pakistan, Mera Ghar (My Pakistan, My Home).

According to the World Bank project document, the development objective of this project is to increase household access to housing finance and support capital market development in Pakistan.

This was achieved by filling a significant gap in the long-term finance market through the establishment of the Pakistan Mortgage Refinance Company (PMRC).

This project provided support to help start the PMRC through $60 million in subordinated debt and $70 million in lines of credit (LoC) for low- and middle-income households.

It also included a pilot $10 million Risk Sharing Facility (RSF), established as a trust, to encourage lending to low-income and informal households.

The PMRC is now a vital part of the housing finance ecosystem in Pakistan; it has established partnerships with twenty-four financial institutions (banks, Islamic banks, micro-finance banks, MFIs and DFIs). Additionally, the PMRC undertook six capital transactions through which it raised 10.3 billion rupees ($63.2 million).

The $150 million Punjab Urban Land Systems Improvement Project will strengthen land administration and facilitate housing authorities’ efforts to identify suitable areas and public lands for affordable housing developments in the province of Punjab.

The project will help the provincial government modernize its land registry by creating a province-wide digital land and deed inventory. It will help secure land tenure and streamline land licensing procedures – which are essential for private sector investment, housing finance and tax revenue collection.

The project will also generate geospatial data and risk information to inform strategies for urban planning and risk management of natural disasters such as floods.

More than 38 million people are expected to benefit from land registration, which will not only improve security of tenure, but also formalize land and property ownership.


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