Govt to Launch $85 Million Credit Guarantee Scheme for Low-Income Housing

The Economic Coordination Committee (ECC) of the Federal Cabinet on Tuesday approved to launch of a $85 million World Bank-funded Credit Guarantee Trust Fund through the Second Supplemental Trust Deed for low-income housing (Mera Pakistan Mera Ghar). The meeting, chaired by Finance Minister Ishaq Dar, approved the new Fund upon a request from the Finance Division to provide a risk cover to financing institutions (FIs) against their financing in the housing sector. Pakistan Mortgage Refinance Company Limited (PMRC) has been set up as a joint initiative of the government of Pakistan and Commercial Banks/Development Finance Institutions (DFIs) to provide medium and long-term funding to primary mortgage lenders by raising from capital debt market at cheaper rates. PMRC being the trustee launched a scheme titled Credit Guarantee Trust Scheme under the First Supplemental Trust Deed. Under the new scheme, the Pakistan Mortgage Refinance Company Limited (PMRC) as a trustee of the Fund will get 0.25 on premiums received from FIs against their portfolio covered as trustees. On the support side, the government of Pakistan will provide a backdrop arrangement initially of Rs. 7 billion with the commitment to increase it up to Rs. 30 billion if required, based on the recommendations of the Oversight Committee. Pertinently, an Oversight Committee may be constituted to monitor the operations of the Credit Guarantee Trust Fund with the objective to ensure that it meets its developmental objective and to ensure that the Government’s contingent liability may remain within the agreed limit.