Loan okayed for overseas workers

The government has decided to extend loan to overseas workers for skill training, travel costs and initial settlement expenses under the Prime Minister's Youth Business and Agriculture Loan Scheme.

Sources told The Express Tribune that the Prospective Overseas Workers Loan amounting to Rs1 million would be provided to cover skill training, travel and visa costs, and initial settlement expenses. Eligible applicants include workers aged 21 to 45 years with a valid job letter or recruitment through the licensed Overseas Employment Promoters.

Loans will be booked jointly in the name of the overseas worker and a family member (parent, spouse or sibling) residing in Pakistan. Loan tenor will be up to five years, with repayment in equal monthly installments.

The Finance Division briefed the Economic Coordination Committee on the Prime Minister's Youth Business and Agriculture Loan Scheme, launched in January 2023 as a flagship initiative of the government.

The programme aims to promote entrepreneurship among youth through business and agricultural loans at simple terms with a lower markup. The scheme is available to Pakistani citizens aged 18 to 45 years with entrepreneurial potential.

The loan structure is currently divided into three tiers, as approved by the Economic Coordination Committee. The scheme is managed by the Prime Minister's Youth Programme (PMYP) in collaboration with the State Bank of Pakistan (SBP) and other participating banks.

The government, through the Finance Division, covers markup subsidy and credit loss guarantee. Since its launch, the scheme has shown significant progress, disbursing loans totaling Rs123.06 billion to 249,053 borrowers as of October 31, 2024.

To further expand its scope, the PMYP, in consultation with the relevant ministries and the SBP, proposed the inclusion of a new tier (Tier 4). The features of the Tier 4 were devised by the PMYP and the SBP.

Its proposed components and key features include laptops for all under which a loan of Rs150,000 will be given for a basic laptop, Rs300,000 for a medium-level laptop and Rs450,000 for advanced laptop.

The purpose is to facilitate the youth in purchasing devices essential for academic and entrepreneurial pursuits. Eligible applicants include students of the Higher Education Commission-recognised institutions, freelancers and entrepreneurs aged 18 to 30 years. Loan tenor will be of four years, with repayment in equal monthly installments.

Additional details for Tier 4 include provision of only term loans, with end-user rate of 0% and bank rate of Kibor plus 3%. Debt-to-equity ratio will be 80:20. Risk mitigation will be up to 29% on a first-loss basis for the disbursed portfolio.

A budgetary allocation of Rs8.6 billion has been made for the current fiscal year, with a 10-year budget.

The Finance Division highlighted the importance of prioritising financial assistance for skilled workers seeking overseas employment. It was noted that the proposal for Tier 5, under the Prime Minister's Youth Business and Agriculture Loan Scheme, is still under consideration, which should be expedited.

The Economic Coordination Committee of the cabinet reviewed a summary brought by the Finance Division for the inclusion of Tier 4 in the youth business and agriculture loan scheme. The committee approved the proposal.