Housing Project

closed

The project objectives are to support the transition from heavily subsidized, centrally controlled housing production to more efficient, market-based supply through private initiative. The project consists of the following three components. A line of credit for mortgages to alleviate the risks of long term lending when inflation is high and volatile. The mortgage instrument will be one that charges a variable market rate of interest while regularly adjusting payments to changes in nominal wages. When payments are less than the amortization due, the unpaid part will be added to the loan balance to be paid off over the lifetime of the loan. A line of credit for construction will finance construction of about 15,000 new dwelling units in projects to be carried out by developers. Finally, technical assistance will be provided to: (a) the Mortgage Fund; (b) the Project Unit within the Ministry of Spatial Economy and Construction; (c) participating banks willing to engage in mortgage lending; and (d) municipalities undertaking reform of land use practices, financial management and urban infrastructure planning.