The entire housing reconstruction in earthquake-hit areas needs $1.375 billion, while the total external financing, approved and in the pipeline, without Asian Development Bank (ADB) is $816 million. According to ADB sources, the Pakistan government was facing significant requirements gave the large number of houses damaged.
The estimated funding gap in the housing sector without ADB currently stands at $559 million. As of March 31, 2007 the cumulative expenditure by the government for housing reconstruction amounted to $621.5 million, including $247.2 million before the establishment of Erra and $374.3 million after. A key point to note is that the government has already diverted significant resources from its general development priorities to meet the reconstruction requirements.
In light of the adverse fiscal performance, the government has requested ADB to provide a concessional loan equivalent to $400 million to finance the housing reconstruction programme.
In addition, the World Bank and the Islamic Development Bank have tentatively proposed $130 million and $127 million, respectively, additional financing for housing reconstruction. If all these sources of external funding materialises, the government will be able to recoup a portion of the expenditures already incurred. This would imply a net expenditure of $159 million by the government for housing reconstruction.
According to the Ministry of Finance sources, Erra would pay housing subsidies to the targeted affected people through its two provincial or state branches: (i) the Provincial Earthquake Reconstruction and Rehabilitation Agency (Perra) for NWFP), and (ii) State Earthquake Reconstruction and Rehabilitation Agency (Serra) for Azad Jammu and Kashmir (AJK).
All transactions are conducted through bank accounts, with no cash changing hands. Perra and Serra provide important checking and verification to ensure that the list of affected people is up-to-date and correct. Feedback indicates that this approach minimises potential leaks during transactions, and has been effective in getting the funds to the targeted affected people.
Individual households will carry out housing reconstruction based on the standards and designs specified by Erra. The subsidy schemes are developed based on the market replacement value of a typical house, irrespective of the size of the original houses. For a completely destroyed house, the payments to the households are made in four instalments based on benchmarks of construction progress, ie, Rs 25,000, Rs 75,000, Rs 25,000, and Rs 50,000, for a total of Rs 175,000.
For a partially damaged house, the payments are made in two instalments, ie, Rs 25,000 and Rs 50,000, for a total of Rs 75,000. For houses with minor damage, the owners will receive one payment of Rs 25,000. The payments are made based on progress reports by field inspectors provided by the Army and non-government organisations (NGOs).
Comments
Comments are closed for this article.