Development projects across multiple ministries have been stalled after the government froze development spending worth Rs 120 billion over the past three months, officials and experts said.

The freeze, imposed by the Cabinet formed under Prime Minister Sushila Karki with support from the Gen-Z movement, has affected projects in physical infrastructure, urban development, energy, irrigation, water supply, and transport, among others. Experts warn that halting development expenditure could stall economic activity and negatively impact overall growth.

Speaking at a press briefing in Kathmandu on Wednesday while presenting his 100-day performance report, Minister for Energy, Water Resources and Irrigation, Physical Infrastructure and Transport, and Urban Development Kulman Ghising confirmed that the government had frozen development projects worth Rs 120 billion. He said around Rs 40 billion has been released, while proposals have been sent to the Ministry of Finance to unblock the remaining amount.

According to the minister, the decision to freeze the budget was taken by the Cabinet, and the release of funds must also be approved at the same level. “We have frozen programs worth less than Rs 30 million and fragmented projects. Proposals have already been submitted to the Finance Ministry to release the remaining budgets,” he said.

The Cabinet had decided on October 20 to freeze over Rs 120 billion in development spending to cut unproductive expenditure and promote fiscal discipline. Following the decision, the Ministry of Finance issued a 15-point circular instructing ministries and agencies to halt various budget lines.

The circular directed offices to freeze allocations for projects entered into the budget system without adequate preparation, small and low-priority schemes, overlapping programs, projects better handled by provincial or local governments, and programs with unclear objectives.

Officials said the Urban Development Ministry has been the hardest hit. A senior ministry official said 1,280 programs have been affected by the freeze, with around Rs 40 billion of its budget blocked. Of this, only Rs 7 billion has been released so far.

Similarly, the Department of Urban Development and Building Construction has seen Rs 31 billion frozen, while the Ministry of Physical Infrastructure and Transport had Rs 24 billion blocked, of which around Rs 10 billion has been released.

Former National Planning Commission member and former Urban Development Secretary Dr. Ramesh Prasad Singh warned that freezing development budgets could severely damage the economy. “Even in normal years, the government manages to spend only 60 to 65 percent of the development budget. If development spending is frozen, economic activity will nearly come to a halt and unemployment will rise,” he said.

Dr. Singh stressed that the frozen budget should be released immediately, warning that prolonged delays could have long-term negative consequences. He also noted that reconstruction and development spending usually accounts for only 5-10 percent of the total budget, and freezing large sums at once is inappropriate.

Director General of the Department of Urban Development and Building Construction Rabindra Bohara said the freeze has adversely affected overall economic activity and urged the government to release the blocked funds as soon as possible.

A senior official at the Urban Development Ministry said halting projects already approved by Parliament sets a “wrong precedent.” “Freezing projects that lack preparation or face land-related issues is understandable, but halting all development spending disrupts the economy,” the official said, adding that such decisions create public frustration and leave technical manpower idle.