The Economic Coordination of Cabinet has approved Rs. 13.2 billion technical supplementary grant (TSG) in favor of Pakistan Mortgage Refinance Company Limited (PMRC) to provide medium and long-term funding to primary mortgage lenders by raising funds from the capital debt market at cheaper rates.
The ECC meeting, chaired by Finance Minister Ishaq Dar, on the summary of the Ministry of Finance, approved TSG in favor of PMRC equivalent to $50 million to be obtained from the World Bank as the first tranche of a credit line of $85 million.
PMRC has been set up as a joint initiative of the government and commercial banks and development finance institutions (DFIs) with the support of the International Finance Corporation (IFC) and the World Bank (WB) to provide medium and long-term funding to primary mortgage lenders by raising funds from the capital debt market at cheaper rates.
The government holds 28.86 percent shares of PMRC, while the rest of the 71.14 percent shareholding is held by banking sector investors –NBP, HBL, UBL, IFC, Askari Bank, Bank Alfalah, ABL, Bank Al Habib., HBFCL and Summit Bank. The State Bank of Pakistan (SBP) issued a commencement of business certificate to PMRC from 12-06-2018.
The World Bank provided a credit line of $140 million to the government in 2018 to pass on the same to PMRC at a concessional rate of 3 percent. To expand the provision of risk cover to Els against financing in the housing sector, the World Bank on 10-03-2022 approved an additional credit line of $85 million to the government for Housing Finance Project, which will be passed on to Credit Guarantee Trust Fund (CGTF) solely owned by the government as a loan and PMRC will act as a trustee.
The ECC on 29-11-2022 approved a summary regarding the constitution of a new scheme titled Credit Guarantee Trust Scheme for low-income housing namely Mera Pakistan Mera Ghar (MPMG) scheme through Second Supplemental Trust Deed with an amount of $85 million to be obtained from the World Bank. The cabinet ratified the same on 08-12-2022.
The second supplementary trust deed between the government and PMRC has been signed on 15-12-2022 which has been registered by the Directorate of Labour and Industries, Islamabad on 20-12-2022.
The disbursement process for the first tranche of $50 million has been initiated. To release the said funds to PMRC, an equal amount of rupee cover would be required and the Finance Division has allocated an amount of Rs. 1 billion Federal Miscellaneous Investments and Other Loans and Advances for the current fiscal year for the Pak rupee equivalent of the said fund.
Accordingly, a letter to AGPR for the opening of an Assignment Account in the National Bank of Pakistan, Karachi in the name of PMRC – Trustee Credit Guarantee Trust Scheme for low-income housing – MPMG to operate the Trust Fund has been issued. To release the funds amounting to $50 million to be received from the World Bank, an equal amount of Rs 14.2 billion at the rate of Rs 284 per US$ as per the prevailing exchange is required.
The Finance Division has allocated an amount of Rs. 1 billion under federal miscellaneous investments and other loans and advances for the fiscal year 2022-23 for the Pak rupee equivalent of the said funds, therefore, funds of Rs 13.2 billion will be arranged through Technical Supplementary Grant.
Source: Pro Pakistani