ADB to allocate $200M to Uzbekistan to create long-term mortgage system

Finance Materials 14 May 2019 12:11 (UTC +04:00)

Baku, Azerbaijan, May 14

By Fakhri Vakilov – Trend:

Uzbekistan will borrow $200 million from the Asian Development Bank (ADB) to create a sustainable system of long-term mortgage financing, Trend reports with reference to the decree of the President of Uzbekistan.

This loan is provided for by the program of development of the mortgage market in Uzbekistan, developed by the Ministry of Finance together with the Asian Development Bank.

From January 1, 2020, the grace period for loans provided to banks by the Ministry of Finance, as well as mortgage loans issued to the population, will be reduced to one year.

The decree signed by President Shavkat Mirziyoyev abolishes a number of tax benefits. Citizens that need better housing conditions will receive subsidies to pay the down payment and / or interest on a mortgage loan instead of benefits.

In this case, loans will be available for the repair and reconstruction of residential buildings and apartments.

The Office for the coordination of state targeted programs for the construction of affordable housing and the development of financial market instruments will be created in the Ministry of Finance.

In addition, the Ministry of Finance will establish a company to refinance mortgages in the form of a joint stock company with an initial share capital of $2.9 million.

Commercial banks can be the founders. The company's goal will be to attract money from financial institutions and foreign government financial organizations and redirect them to refinance mortgage loans.

Banks will issue securities, including mortgages, and place them among investors, introduce modern methods and tools for developing the mortgage market, and participate in the development of laws in the sphere of mortgage lending and refinancing.

The company will enter into a mortgage loan or mortgage trust management agreement with commercial banks. Banks will ensure the execution of contracts by borrowers in favor of the company. The Central Bank has been appointed to monitor the activities of mortgage refinancing organizations.

The presidential decree states that until 2020, preferential mortgage is issued for 20 years with a three-year grace period and an interest rate of 7 percent per annum for the first five years and thereafter at the Central Bank refinancing rate.


Follow author on Twitter:@vakilovfaxri