By Staff Reporter
KARACHI: The State Bank of Pakistan (SBP) on Thursday shelved new disbursements under Mera Pakistan Mera Ghar (MPMG) scheme till August 31, 2022 and Prime Minister’s Kamyab Jawan Youth Entrepreneurship Scheme (PMKJ-YES) for next 15 days in an attempt to narrow the budget deficit to meet IMF bailout goals.
“It is advised that the Government of Pakistan is considering reviewing/revising features of the subject scheme in light of recent developments in the macroeconomic scenario,” the SBP said in a circular on Thursday.
The central bank gave the same aforementioned reason for freezing both the schemes in two separate circulars.
“Accordingly, banks, development finance institutions, and microfinance banks are advised to put further disbursements under MPMG on hold from July 01, 2022, till August 31, 2022. However, in those cases where partial disbursements have already been made till June 30, 2022, banks may release remaining disbursement under MPMG,” it added.
Analysts suspect this abrupt decision to be an IMF diktat, though the central bank attributed the latest move to the changing economic conditions of the country.
“The government seeks fiscal consolidation to arrest the budget deficit and stunt the growing debt along with denting the demand in the economy,” said an analyst.
Banks almost doubled their housing and construction finance portfolio to Rs404 billion as of March 31, 2022, from Rs204 billion a year earlier, according to the SBP’s numbers released in April.
Local lenders showed strong progress in approving and disbursing the financing under the MPMG scheme against the manifold increase in applications by borrowers to avail the housing finance.
Till April 11, 2022, banks received applications for housing finance amounting to Rs409 billion, which was merely Rs57 billion a year ago, reflecting an increase of more than 7 times.
In October 2020, the government augmented these efforts by introducing the MPMG scheme.
Available in both conventional and Islamic modes, this scheme enables banks to provide financing for the construction and purchase of houses at very low financing rates for low to middle-income segments of the population.
Key initiatives taken under the MPMG scheme included allowing acceptance of third-party guarantees during the construction period, waiver of Debt Burden Ratio (DBR) in case of informal income, and the introduction of standard facility offer letters by the banks.
The SBP had also advised banks to develop and deploy income estimation models for borrowers with informal sources of income.
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