Home improvement project

investors against default on loans provided to the Government of Belize (GOB) to increase the capacity of credit unions (CU"s) to provide home improvement loans to below-median income families and to expand private sector involvement in shelter financing and construction. The Development Finance Corporation (DFC) and the Belize Credit Union League (BCUL) and its members will implement the project. Up to 1,300 loans averaging $1,500 will be provided at 18% interest for home improvements such as water and sewerage connections, new rooms or increases in living space, repair of minor structural damage due to hurricanes, etc. To make loans affordable by the poor, no down payments will be required and borrowers will be able to use up to 25% of household income to service the loan. It is anticipated that most loans will be repaid before the 20 years allowed. The DFC will use HG funds to open a line of credit to member CU"s through the BCUL. The BCUL will develop with the CU"s (including Holy Redeemer) a general allocation/disbursement mechanism, administer mortgages and loan contracts through member CU"s, and make repayments to the DFC. Member CU"s will deal directly with individual borrowers to verify their income and eligibility, arrange disbursements, inspect and verify construction, and receive and forward to the BCUL monthly repayments. Construction work will be performed by private contractors selected by individual beneficiaries. Although loans will be concentrated in Belize City and other urban areas, the DFC will use its agricultural credit program to allocate $250,000 of the $2 million in HG funds to rural areas not reached by CU"s. Grant funds under project 5050003 will finance a resident housing advisor to help the DFC and the BCUL coordinate project activities and implement the project. Short-term assistance to promote the project and to reprogram reflows by the BCUL will also be provided. Finally, the resident advisor will help the GOB rationalize its housing policy by developing new and affordable shelter solutions built by the private sector rather than standard shelters built by subsidized public sector groups; depending on the results of this assistance, a second phase of HG-financed construction is possible. Amendment of 6/18/86 shifts the use of HG funds for urban shelter construction from the BCUL to the DFC. This shift will increase the number of beneficiaries being served and reduce the GOB burden to cover interest payments on the outstanding balance of the escrow account. (PD-AAT-999)