ISLAMABAD: The World Bank has approved three loans totaling $435 million for the housing sector in Punjab, said the local office of the lender on Friday – the day Prime Minister Imran Khan once again blamed his political rivals for sinking the country into foreign debt.
The World Bank’s board of executive directors approved $435 million in financing for three projects in Pakistan, ie the Pakistan Housing Finance project, Punjab Urban Land Systems Enhancement project and Punjab Affordable Housing Programme, according to a statement.
These projects will expand access to housing finance, particularly for the low-income households, improve land tenure rights and facilitate affordable housing development in urban Punjab, it added.
Pakistan’s housing shortage is currently estimated at about 10 million units, with about half in urban areas, according to the lender. Around 47% of urban households are in informal settlements with inadequate infrastructure and services.
Each year, the private sector only delivers 300,000 to 400,000 formal housing units in mainly urban Pakistan, compared to the 700,000 new households formed. Therefore, the national housing shortage will continue to grow unless fundamental reforms needed to trigger the land and housing markets are undertaken, said the World Bank.
The World Bank said that the urban housing gap in Punjab was estimated at 2.3 million units in 2017. This gap is expected to reach 11.3 million units by 2047, driven by population growth, migration from rural areas and deterioration of the existing housing units.
The financing will be used in Punjab – the province being run by the Pakistan Tehreek-e-Insaf (PTI).
Prime Minister Imran Khan on Friday said at a public gathering that his political rivals had plunged the country into foreign debt, ignoring the fact that since his government came to power, Pakistan’s total debt and liabilities had jumped to Rs52 trillion, up from Rs30 trillion in June 2018.
Affordable and accessible housing is in high demand in Pakistan, which is home to over 200 million people and is the most urbanised country in South Asia, said World Bank Country Director for Pakistan Najy Benhassine.
He said that these projects will contribute to addressing the housing needs, particularly for the low-income households, by leveraging the private sector and facilitating access to mortgage options for those who currently cannot access financing to buy a home.
They will also strengthen property rights and increase the supply of climate-resilient, affordable housing developments, said Benhassine.
The $85 million additional financing for the Pakistan Housing Finance project will help expand access to mortgages to increase home ownership among the low-income households, including women and informal workers.
The additional financing will scale up the credit risk sharing facility launched in 2018, to provide partial credit guarantees to banks, in order to incentivise them to lend to borrowers traditionally excluded from commercial financing.
This will benefit up to 70,000 first-time homebuyers in the country, who qualify for the government’s interest rate subsidy programme – Mera Pakistan, Mera Ghar.
The $150 million Punjab Urban Land Systems Enhancement project will strengthen land administration and facilitate the efforts of housing authorities to identify suitable areas and public land for affordable housing developments in the Punjab province.
This project will support the provincial government in upgrading its land registry by creating a digital, province-wide inventory of land and deeds.
This will help secure land tenure and streamline procedures for land-related permits, 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 about urban planning and disaster risk management strategies for natural hazards such as floods.
More than 38 million people are expected to benefit from land registration, which will not only improve the tenure security but also formalise land and property ownership, according to the World Bank.