Like any other country, Pakistan too felt the harsh impacts of the pandemic on the economy. During the first wave, Prime Minister Imran Khan’s government, apart from successfully getting a moratorium on loan repayments to the IMF and other major lenders, launched a construction package aimed at restarting the economy. While the strategy wasn’t a bad one, as an uptick in construction usually results in the activity of ancillary businesses to increase proportionately as well, the results have been largely underwhelming. As far as the amnesty over declaration of source of money to buy property is concerned, the prices of land have gone up due to more buying in the market, but this has not translated into more houses being constructed, which was the end goal. Those who already own land have made handsome capital gains, while people unwilling to invest in property at the risk of having to face the taxman have taken advantage of the ‘no questions asked’ policy and invested heavily in land.
A large part of the scheme is the government’s low cost housing for the poor initiative called Naya Pakistan Housing (NPH), which has failed to take off despite an attractive low interest rate on loans and the SBP instructing banks to set a side five percent of their portfolio for the project that would essentially translate into a Rs330 billion subsidy. Yesterday, following a virtual telethon for NPH, it was announced that the interest rate would be reduced further, from 5% to 3% and the loan limit increased by 100% to Rs10 million. However, the unfortunate reality here is that only those with a steady paycheck can take advantage of these low rates and at the moment, with rising unemployment, pay cuts and businesses shutting down due to a slowdown in economic activity, candidates able to avail these loans will be in short supply. The facilitation by banks, or lack thereof is another key issue and although PM Khan has asked the National Bank of Pakistan, the only state-owned bank of the country, to make the process of securing a loan more streamlined and easier, it is unlikely to happen anytime soon as that would require bringing about a major change in the culture and way of doing things that has been embedded into the organization over decades and is very rigid. Perhaps it is time the government diverts some of its energy towards important long-delayed economic reforms that would allow people to lift themselves out of poverty and comfortably buy or mortgage a home of their own.
