ISLAMABAD: Federal Minister for Finance Muhammad Aurangzeb, while terming the directed lending by the government to housing sector wrong, stated that it would not be repeated, as it creates distortion and has implications.
“Two things, including regulatory authority and foreclosure law, which still need be solved if we have to take mortgage financing and want to encourage everyone to come into it in a big way,” said the finance minister, while addressing the “International Affordable, Green & Resilient Housing Conference” organised by Pakistan Mortgage Refinance Company Limited (PMRC).
Affordable resilient housing is directly linked with two existential problems including rapid population growth and climate change for the country, said the minister, adding the Finance Ministry’s involvement will be minimised.
People’s housing scheme is a testament to Sindh govt: Sharjeel
Aurangzeb said the Finance Ministry’s job was to give policy framework, policy continuity and give needed amount of subsidies, but its intervention would be zero, because it was the private sector which needed to lead the country. He said that housing sector had direct link with two existential problems to Pakistan which could not be taken sequential. “One is population growth and the other is climate change,” he added.
“Population growth rate is 2.5 percent which is not sustainable, as things which are associated with it including child stunting, poverty learning and third thing associated with it is housing,” said the minister, adding that housing was not just about financing, but it was shelter and socio-economic stability.
“Housing is a critical element and fixing it would be very critical moving forward. The second is climate change and the 2022 floods was a wakeup call in terms of rescue, rehabilitation and reconstruction,” the minister added. He highlighted the need for resilient housing that could withstand the impacts of climate change. He said the Sindh government had taken the first step towards promoting resilient housing by discouraging the construction of houses on water banks.
He said “two things still need to be solved if to take mortgage financing and want to encourage everyone to come into it in a big way. One thing is regulatory authority and we have not done a good job in terms of not taking this discussion forward,” said the minister, adding “the second is foreclosure. We made some good progress over the years but practically no one was convinced that this was going to work, and this worked. It is self-deceiving that all is good. All is not good, if people are not convinced that this is something which provides them protection then it is not going to work, said the minister, adding that the Finance Ministry is ready to support to take these two things forward.”
He clarified that government would not do what was done before. “We are not going back to directed lending as it creates distortion and it has implications for the medium term so that was a wrong thing to do and we are not going to repeat it,” he added. He said the second thing was to create incentivisation that banks could take it further and make other process easier. Ease of doing business would be very important part of it, he added. “Private sector would be incentivised that is the only sustainable way of dealing with these existential issues.”
In order to promote housing finance, the government will instead focus on creating incentivisation mechanisms, he added. “This approach will encourage banks and microfinance institutions to take the lead in providing housing finance, making it easier for people to access,” he said.
Talking about the economy, he said that stability had been achieved, the currency was stable, foreign exchange reserves had stabilised, and inflation had come down.
The minister said the big shift from deficits to surpluses in the primary and current accounts and an increase in foreign reserves to cover two and a half months of imports and would reach a three month cover by end of fiscal year—considered to be a good international benchmark.
Copyright Business Recorder, 2024
Comments
Comments are closed.