ISLAMABAD: Pakistan and the World Bank on Wednesday signed a financing agreement for the “Pakistan Housing Finance Project” worth $85 million with the objective to increase access to housing finance for households, and support capital market development in the country.
Mian Asad Hayaud Din, Secretary Ministry of Economic Affairs Pakistan and Gailius J Draugelis, acting country director, WB signed the Financing Agreement while a representative of Pakistan Mortgage Refinance Company (PMRC) signed the Project Agreement.
Federal Minister for Economic Affairs Sardar Ayaz Sadiq witnessed the signing ceremony of the agreement.
Acting Country Director, Gailius, ensured the WB’s continuous financial and technical assistance to the Government of Pakistan to help promote inclusive and sustainable economic growth in Pakistan.
The Minister for Economic Affairs reiterated the parameters of valued partnership with the WB.
He also stated that the event reflected continued confidence by the WB in the government’s policy and programmes. He particularly announced that the primary beneficiaries of that project would be low- and middle-income households in Pakistan reliant on informal incomes.
The Pakistan Housing Finance Project is aimed at supporting the ongoing efforts of the Government of Pakistan in increasing access to housing finance for households and support capital market development in Pakistan.
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This additional financing will fund the initial capitalization of sub-trust of the Risk Sharing Facility (RSF) created under the parent project of $140 million being executed by PMRC.
The project will enable the Primary Mortgage Lenders (PMLs) to move from the very upper end of the households in the fifth quintile to lower quintile income groups. Therefore, the financial sector at large will also benefit greatly as the project will help deepen the primary mortgage market, in addition to supporting the development of the capital market.
According to the project documents, additional financing (AF) is being proposed to increase access to housing finance for low-and middle-income households and to support the development of capital markets in Pakistan. The AF will fund the initial capitalization of a sub-trust (Risk Sharing Facility-phase 2) of the pilot RSF under the parent project, which provided the initial capitalization of this RSF. This is aligned with the Government of Pakistan’s increased policy focus on this area. The proposed AF will be directly channeled through the Recipient, but the operation of the RSF will continue to be managed by the existing implementation agency, the PMRC.
The proposed AF does not entail changes to the original Project Development Objective (PDO) nor the safeguard policies applicable to the parent project. The AF does, however, include a level-2 restructuring of the parent project, which is expected to entail the cancellation of one component and revisions to the results framework, including the revision of one PDO indicator, the addition of an intermediate indicator, and revision of end targets.
Copyright Business Recorder, 2022
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