Hasty growth in housing finance – Newspaper

Agriculture and housing loans — along with micro, small and medium enterprises (MSME) finance — are vital for boosting economic activity. And, if banks start lending more to all the three sectors at the same time, that almost guarantees accelerated GDP growth in the short-to-medium term.

Currently, though, banks are not wholesomely engaged in such an exercise. But the government and the State Bank of Pakistan (SBP) are trying to promote just that. Policies introduced for accelerating housing loans offer an added advantage to the government — they make room for politically-motivated tax amnesty in the name of the documentation of the economy. The ongoing Naya Pakistan Housing Programme (NPHP) is no exception.

Regardless of the fact that this is opening yet another avenue under this programme for the whitening of tax-evaded money, housing loans being offered under NPHP are quite promising. Already, they have reactivated the real estate and building construction sector and continue to enliven demand for outputs of dozens of allied industries and services sub-sectors. Their impact on the overall economy (rebased to 2015-16) is already being felt and is sure to become more and more pronounced with the passage of time. That is if future governments let the programme continue in its current form and spirit.

The euphoric demand for housing finance and liberal supply of loans remains subject to ground reality checks after the expiry of the tax amnesty scheme

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