HBF programme needs clarity | BY Rizwan Ghani

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HBF programme needs clarity


THE current policies on house building finance and mortgage loans are allowing private banks to make profit with public funds.

This entire process undermines democratic system of check and balance.

This mega corruption merits to be stopped immediately to save democracy, youth and keep the country tolerant.

Among other steps to improve economy and banking sector, the parliamentary oversight of HBF programme will help overcome these challenges and ensure its continuity on annual basis.

The three-tier 20-year interest rate plan (3-9 & market rate after 10 years) has made the HBF scheme unaffordable for 90% public.

The government has to bring HBF bill to the parliament so that it can lower interest rate to 60paisa/100Rs.

National Saving Centres used to charge 12 paisas to process Rs100 but it was forced to charge market rate to increase business of private banks.

By separating retail and commercial banking, banking sector can improve. Only public should controls central banks in democracies.

The mortgage model being peddled in Pakistan has already failed in west. The 2007-8 global financial crisis started due to US subprime mortgage (home loan) corruption. It cost US economy $8tn and UK £1.7tn. The cost has been shifted to taxpayers and their next generations.

America has passed hundreds of Mortgage laws to protect homeowners from fraud, exploitation and allied complications but still it has left the country with surplus homes leaving taxpayers to pay the cost.

Loans should protect individual ownership rights under poverty alleviation, women empowerment and ending domestic abuse. Joint family loan is illegal. Women are already victims of car loans and allied corruption.

Historically, working-women will not get possession of the property despite paying major share of family loan. In majority of cases, women will be forced to make compromises while sharing the accommodation or forego its ownership altogether.

There are other reasons for homelessness. Reportedly, there are 20 million total homeless in Pakistan. In 2010, floods and other natural disasters displaced 10M people.

The control of floods will improve homelessness, food and water security and irrigation water needs.

According to Multidimensional Poverty Index, 39 percent population is living below poverty levels with majority of women and children.

In Pakistan, the wages of men and women in private sector should increase by 58% and 100% respectively for equal salary and benefits in both public and private sector.

The public sector employees in Pakistan earn 49% percent more than the private sector.

In UK, the public sector wages are 1% more than private sector but they are 4% less in America. It will help improve economic and social mobility.

The number of government jobs with pension should increase five times. According to World Bank data, Pakistan’s public sector employed around 7.5 percent of the labour force in 2014.

In line with America, Pakistan should increase public sector wage bill from 0.62% of its GDP to 10 percent (UK 9 percent) and increase 3 percent of public expenditure on the wages of its public sector employees to 26% (UK 23 & Bangladesh 12%). The artificially engineered housing boom in UK has failed.

The increase in home prices undermines capitalist economic model in which everyone is supposed to get his or her due share.

However, a 5% annual increase in salary is more beneficial for economy, jobs and public mental health.

Pakistan’s faulty loan policy has left out unemployed youth, those who have no assets and others who do not want to deal with interest based economy. It explains growing disillusionment with democracy, rise of intolerance and fall in moral values in both countries.

For genuine economic growth, government should introduce income-based taxes in line with USA, UK starting from 2.5 million and onwards, ensure workers rights and job security, and enforce equal wage premium in public and private sectors to meet benchmarks of social mobility, transparency and accountability.

By diverting 90% of funds from Rs200bn Ehsaas program and Rs400bn police budget, government can free substantial sum to fund HBF, education, training and employment programs.

Improve democracy by protecting weak against strong. The poor should benefit more as compared to the rich in the economy.

It is only possible when banks are controlled so that money does not find its way to politics.

The ECP has to help adopt Alternate Voting ballot after victory of PTI because FPTP system is only for two-party system and support ballot paper against EVM because it has proved to be most reliable in 2020 US presidential election.

Other democratic institutions of state should keep a check so that public gets its due share in the national economy and money goes toward those who deserve it and away from those who do not.

The city development authorities should be used to have affordable housing plans.

The interest rate should be near zero and the loan should be for 30 years with a restriction of one house.

Otherwise, corruption elite will never allowed enough money to reach and benefit public at large in Pakistan.

—The writer is senior political analyst based in Islamabad.