Over 118 Projects Shut Down as More Than Half of Budget Goes to Debt Repayments

June 2, 2025 Umar Ali

Planning Minister Ahsan Iqbal revealed that over 118 development projects have been shut down because more than half of the federal budget is being swallowed by debt repayments. Let us break this down step by step, so you can actually understand what’s going on and why it matters to people like you and me.

What Did Ahsan Iqbal Say?

In a meeting held at the National Assembly on Public Sector Development Programs (PSDP), Ahsan Iqbal laid it out plainly:

“Out of the total federal budget, more than 50% is going towards debt repayments… so we had to shut down 118 projects.”

This isn’t just a small trim around the edges. It’s like hitting pause or even stop on important developments across the country.

What’s the Federal Budget, Anyway?

Think of the federal budget like the country’s wallet. It includes all the money the government earns (mainly through taxes) and how it plans to spend that money over the year.

Let’s say the budget is Rs 100. If Rs 55 goes to repaying debt, that leaves just Rs 45 for everything else: healthcare, education, roads, dams, electricity, and yes those 118 development projects.

Just like in our home analogy, when too much of your money is tied up in repayments, there’s hardly anything left to improve your life.

What Kind of Projects Got the Axe?

Here’s where it gets real. The projects that got shut down weren’t just for show. Many were designed to make daily life better for ordinary citizens:

Clean water initiatives
Road and bridge construction
Upgrading hospitals and schools
Energy infrastructure (like solar and hydropower)
Technology and innovation hubs

By cutting these, it’s not just about delays it’s about people not getting basic services, opportunities, or even jobs. In fact, thousands of jobs linked to these projects might have disappeared overnight.

Why Is Debt Taking Over the Budget?

Let’s break this into bite-sized pieces:

1. Borrowing Too Much in the Past

Governments often borrow to fund development.. Over the last decade, Pakistan has loaned, both domestically and from international lenders like the IMF and China.

2. Weak Revenue Collection

Pakistan doesn’t collect enough in taxes. Out of 240+ million people, only about 3 million actually pay taxes. That’s like trying to run a household of 20 people on the income of one person.

3. Currency Devaluation

The Pakistani rupee has been falling, making it more expensive to repay loans taken in dollars or other foreign currencies.

4. Interest Payments Snowball

When you can’t even pay off the actual loan and only cover interest, you end up taking new loans to pay off old ones. It becomes a cycle like paying your credit card bill with another credit card.

What Are the Short-Term Effects?

Let’s be real, this impacts us more than it sounds.

No New Infrastructure

You’ll see fewer new roads, hospitals, and educational institutes.

Job Losses

Thousands of engineers, laborers, and other workers involved in these projects are likely already out of work.

Delays in Education & Health Services

New school buildings or hospital upgrades? Delayed. That means crowded classrooms, and under-equipped medical facilities.

Energy Projects Postponed

That hydropower project in your province? It might be sitting idle for the next few years, even if it’s 70% completed.

And the Long-Term Picture?

Slower Economic Growth

Without infrastructure and development, foreign investment becomes less attractive. That hurts job creation and income levels for years to come.

Brain Drain Continues

Talented professionals, especially engineers and IT experts, are more likely to move abroad when local opportunities dry up.

Even More Debt

Ironically, not investing today could force the government to borrow even more tomorrow to deal with the consequences.

So, What Can Be Done?

Honestly, there’s no quick fix, but here’s what should happen:

1. Improve Tax Collection

Make the tax system fair, efficient, and enforceable. If more people chip in, we wouldn’t be drowning in debt.

2. Reduce Wasteful Spending

A complete audit of where the money goes especially military and administrative costs could help plug leaks.

3. Invest in High-Return Projects

If only a few projects can be funded, choose ones that give maximum social and economic benefit.

4. Restructure Debt

Work with lenders to get better repayment terms or longer schedules. Several countries have done this successfully.

5. Promote Exports

More exports mean more dollars coming in. That helps reduce dependence on foreign loans.

Why Should You Care?

Let me be honest with you: this isn’t just about politicians or economists. This is about your future, your children’s education, your access to clean water, electricity, and medical care.

When development halts, we all pay the price not just in numbers, but in missed opportunities.

FAQ – Quick Questions You Might Be Wondering

Q: Were all 118 projects completely canceled?
Not all were permanently scrapped, some were paused or delayed indefinitely. But that still means they’re not being funded this year.

Q: Can Pakistan survive this level of debt?
Yes, with the right reforms. Other countries like Turkey and Argentina have faced similar issues and recovered with strict measures and international cooperation.

Q: Who decides which projects to shut down?
The Planning Commission, in consultation with ministries and political leaders, prioritizes projects based on available funds and strategic importance.

Q: Is there hope for the economy?
Absolutely. Pakistan has vast potential youth population, strategic location, and untapped resources. But unlocking that requires tough choices and transparent governance.