October 12, 2018 (MLN): Prime Minister Imran Khan’s announcement of ‘Naya Pakistan Housing Program’ to build five million homes in five years has been criticized severely as the cost of the project is estimated to be $100-150 billion which is half the size of the country’s total economy and 250 percent of the total cost of China-Pakistan Economic Corridor (spread over ten years).
Observers have warned that the politically motivated projects such as the housing project have little or no feasibility as the amount of capital required to get the project started is unprecedented.
To bring this in context, Pakistan is currently facing a financing gap of $8 billion, and it has knocked on every door to raise the amount eventually reverting to the International Monetary Fund (IMF).
The PM during the announcement also claims that after hearing about the project, one international firm has offered to invest up to $20 billion in the project.
He also said that the project would be carried out through mortgage-financing. Pakistan’ mortgage depth, according to central bank estimates, during the year 2015 was at 0.5 per cent compared to 7.7pc in India.
The total volume of Pakistan’s mortgage finance industry is Rs 83 billion ($633 million) and the central bank has set a target of raising the size to $1.9 billion by June 2021.
Ignoring other logistic costs, Pakistan’s financial sector is not even remotely equipped to facilitate a project of this scale to begin with.
One wonders as to where would the estimated $30 billion financing required per annum to carry out the project come from, since Pakistan had difficulty raising the funds required to finance the projects.
The present government has been on the defensive ever since taking charge of the affairs at Islamabad. The party has been criticized, ridiculed and mocked at for their boisterous announcement which seem to be emanating from a campaign mentality rather than a sensible, logical and prudent policy making perspective.
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