Housing Finance in Kyrgyztan

The Kyrgyz financial market is still comparatively underdeveloped and faces many constraints. The majority of loans are extended for short to medium time periods and mainly for business needs. Kyrgyz commercial banks and microfinance institutions have been in particular reluctant to give out long-term funds in local currency for new residential housing (purchase or construction) or for investments in improvement of housing on a massive scale due to lack of longer-term refinancing in local currency and adequate appraisal technologies. Though only a few financial institutions have gained experience in mortgage / housing finance over the past five years. It is against this background that during bilateral Governmental Negotiations on Financial Cooperation (FC) in 2007 the German and the Kyrgyz Governments agreed on the allocation of a loan to the Kyrgyz Republic for on-lending it to up to three partner financial institutions (PFIs). The PFIs will use the refinancing funds for extending housing and/or mortgage loans to middle and low income households for the purpose of financing new housing (purchase or construction), renovation or expansion of existing housing. The Housing Finance Programme will be enhanced by an Accompanying Measure for institutional capacity building and training. The Accompanying Measure will be financed by funds provided to the Kyrgyz Ministry of Finance under the German Financial Cooperation with Kyrgyz Republic. The Housing Finance Programme has the overall goal of contributing to the improvement of living conditions of the Kyrgyz population by increasing and improving (in terms of access and maturity) the access to housing and mortgage loans in local currency, which would in turn contribute to the deepening and widening of the Kyrgyz financial sector. This goal would be achieved through improvement in the supply with sustainable housing finance for, middle and lower income households of Kyrgyz Republic as target groups of the Programme that would improve their living conditions by taking the loans from up to three PFIs selected to participate in the programme. The objectives of the consultancy assignment are: Supporting the PFIs to introduce, improve and increase a sustainable housing credit portfolio; Strengthening the institutional and operational capacities of the PFIs in the area of housing finance; Supporting the PFIs in the efficient and effective implementation of the Housing Finance Programme; Ensuring an effective cooperation with similar projects of other donors and International Finance Institutions (IFIs) in the development of internationally accepted housing finance standards in the Kyrgyz Republic.