The World Bank Implementation Status & Results Report Pakistan Housing Finance Project (P162095) Pakistan Housing Finance Project (P162095) SOUTH ASIA | Pakistan | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 4 | ARCHIVED on 11-Feb-2020 | ISR40335 | Implementing Agencies: Islamic Republic of Pakistan, PMRC, Ministry of Planning, Development & Reform Key Dates Key Project Dates Bank Approval Date: 29-Mar-2018 Effectiveness Date: 25-Jun-2018 Planned Mid Term Review Date: 01-Apr-2021 Actual Mid-Term Review Date: Original Closing Date: 30-Jun-2023 Revised Closing Date: 30-Jun-2023 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The Project Development Objective is to increase access to housing finance for households, and support capital market development in Pakistan. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Support to PMRC in Strengthening its Capital Base:(Cost $60.00 M) Supporting Expansion of Mortgage Loans:(Cost $80.00 M) Capacity Building for Housing Policy and Analytics:(Cost $5.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Substantial Substantial Implementation Status and Key Decisions PMRC, the implementing agency for Component 1 and 2 of the Project, has been making steady progress since commencing operations in June 2018. Till date, it has signed seven Master Refinance Agreements (MRAs) with commercial banks (Askari Bank, Bank Islami, Bank Alfalah, Bank of Khyber, House Building Finance Company, JS Bank and First Women Bank) and has already disbursed USD 59 million as part of these agreements. The USD 70 million Line of Credit under this project has all been disbursed to PMRC (the most recent USD 30 million disbursement was in December 2019). These lines of credit were for middle and low income mortgage loans (a segment that banks have historically not catered to). As a result of these lines of credit, we have seen banks moving to these segments. The long term nature of the funding has allowed for longer term mortgages wiht fixed rates (further boosting affordability). Component 2(b) of the project is for a Risk Sharing Facility (RSF). This RSF, although small scale (USD 10 million), is a critical component of the overall Housing Finance Project with an important developmental impact since it has been designed to enable informal and low-income households to access mortgages. A critical factor to the success of this facility was a government backstop. The government has agreed to provide this backstop under a Trust Account Agreement with PMRC (letter to MoF dated May 8, 2019). The modalities of this Trust Account and parameters of 2/11/2020 Page 1 of 5 The World Bank Implementation Status & Results Report Pakistan Housing Finance Project (P162095) the RSF are currently undergoing the requisite government approvals. Concurrently the Bank and PMRC are developing the Operations Manual for the RSF. There has been no progress in the implementation of the technical assistance (TA) to Planning Commission on housing and urban planning (Component 3: USD 5 million). Since the advent of the Naya Pakistan Housing Program, we have had multiple requests for technical support for implementing the government’s ambitious housing program. The Naya Pakistan Housing & Development Authority seems the most likely and viable recipient of these TA Funds. Now that the Naya Pakistan Housing & Development Authority Act has been passed by Parliament, the TA funds may be reallocated to it. Any reallocation of funds to a new implementing agency would also require us to evaluate the capacity of the new agency as part of our standard due diligence procedures. The implementation of the housing finance project has been progressing satisfactorily. More than 90 percent of the Project amount was disbursed within 18 months of project effectiveness. However, the Project as is was designed prior to the Naya Pakistan Housing Program. It was designed to develop Pakistan’s primary mortgage market and has shown success on that front. Going forward, the Naya Pakistan Housing & Development Authority has requested that the Bank scale up support to meet the increase in demand for housing finance resulting from the Government’s Housing Program. This will entail developing new instruments for affordable housing finance. The team is scoping out how to best meet the Government's request for further support on affordable housing finance. The World Bank stands ready to support the government in this very ambitious and worthy program, however, for our additional support to be viable, certain prerequisites will need to be met, namely: 1) Now that Naya Pakistan Housing & Development Act has gone through all the requisite Parliamentary approvals, the rules and regulations underpinning its operations should be fast-tracked, ideally by April 2020; 2) The TA funds must be mobilized at the earliest (The Housing Authority must start working to commence the process for reallocation), by March 2020 3) The RSF should be operationalized, by February 2020 4) Progress must be made on regulating builders and developers; 5) There should be robust pipeline of housing projects under the Government’s Housing Program to demonstrate an increase in affordable housing supply; and 6) PMRC should undertake a capital markets transaction to demonstrate its market viability, before June 2020 Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Substantial Substantial Substantial Macroeconomic Moderate Moderate Moderate Sector Strategies and Policies Substantial Moderate Moderate Technical Design of Project or Program Moderate Moderate Moderate Institutional Capacity for Implementation and Substantial Moderate Moderate Sustainability Fiduciary Moderate Moderate Moderate Environment and Social Moderate Moderate Moderate Stakeholders Substantial Moderate Moderate Other -- Moderate Moderate Overall Substantial Substantial Substantial Results 2/11/2020 Page 2 of 5 The World Bank Implementation Status & Results Report Pakistan Housing Finance Project (P162095) PDO Indicators by Objectives / Outcomes To increase access to housing finance for households and Capital market development in Pakistan IN00795773 ►Number of Total Mortgage Loans Refinanced by PMRC (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 177.00 636.00 15,400.00 Date 30-Dec-2016 03-Dec-2018 31-Oct-2019 30-Jun-2023 IN00795774 ►Number of Total Outstanding Mortgage Borrowers (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 60,000.00 62,399.00 59,423.00 150,000.00 Date 30-Dec-2016 03-Dec-2018 31-Oct-2019 30-Jun-2023 State Bank Quarterly Housing data Comments: IN00795775 ►Percentage of Outstanding Women Mortgage Borrowers Refinanced by PMRC (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.05 0.21 10.00 Date 30-Dec-2016 03-Dec-2018 31-Oct-2019 30-Jun-2023 Based on PMRC October 31, 2019 data which indicate 636 loans were refinanced. Out these loans 133 Comments: for women mortgage borrowers. IN00795831 ►PMRC bond issuance volume (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 261,000,000.00 Date 15-Jun-2018 03-Dec-2018 31-Oct-2019 30-Jun-2023 Intermediate Results Indicators by Components Support to PMRC in Strengthening its Capital Base IN00795832 ►Amount of PMRC-Refinanced Mortgage Loans (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target 2/11/2020 Page 3 of 5 The World Bank Implementation Status & Results Report Pakistan Housing Finance Project (P162095) Value 0.00 8,400,000.00 20,267,000.00 400,000,000.00 Date 30-Dec-2016 03-Dec-2018 31-Oct-2019 30-Jun-2023 From PMRC October 2019 reporting. It indicated total refinanced loan value is PKR 3.040 billion. Applying Comments: an exchange rate of PKR150/USD the value is USD20.67 million. Supporting Expansion of Mortgage Loans IN00795833 ►Number of Mortgage Loans of PKR 3 million or less (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 583.00 5,000.00 Date 01-Jan-2018 03-Dec-2018 31-Oct-2019 30-Jun-2023 From PMRC data reporting as of Dec 31, 2019. The data indicates that PMRC has refinanced 636 loans Comments: of which 583 were PKR 3 mil or less. IN00795835 ►Direct project beneficiaries that feel that project investments reflected their needs (Percentage, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 0.00 0.00 80.00 Date 30-Dec-2016 03-Dec-2018 31-Oct-2019 29-Dec-2023 Capacity Building for Housing Policy and Analytics IN00795834 ►New low income strategy prepared and adopted (Yes/No, Custom) Baseline Actual (Previous) Actual (Current) End Target Value No No No Yes Date 30-Dec-2016 03-Dec-2018 31-Oct-2019 30-Jun-2023 Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P162095 IDA-62070 Effective USD 145.00 145.00 0.00 128.04 10.63 92% Key Dates (by loan) 2/11/2020 Page 4 of 5 The World Bank Implementation Status & Results Report Pakistan Housing Finance Project (P162095) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P162095 IDA-62070 Effective 29-Mar-2018 14-Jun-2018 25-Jun-2018 30-Jun-2023 30-Jun-2023 Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) P172581-Pakistan Housing Finance: Additional Financing 2/11/2020 Page 5 of 5