Zambia cancelled $1.6 billion in agreed upon but not-disbursed Chinese loans, mostly from China Exim Bank and the Industrial Commercial Bank of China, to help manage its debt woes.
It is a portion of the $2 billion that Lusaka cancelled in undisbursed loans from its external creditors, coming shortly before its official bilateral lenders agreed on Saturday to provide debt relief to the Southern African nation.
The ministry said in a statement that it has taken measures to cancel some loan financed projects and to change the scope of a few critical projects.
The creditors of undisbursed loans, which were cancelled, include Exim Bank of China, Jiangxi Bank, Intesa Sanpaolo bank and Israel Discount Bank, the statement said.
The ministry of finance also said that a number of continuing projects, which were initially financed through commercial loans, will now be financed through government revenues over the medium term.
Among the projects cancelled are the rehabilitation of a major highway – the $1.2 billion Lusaka-Ndola dual carriageway funded by China Jiangxi Corporation – which was to link the capital to the country’s Copperbelt Province. Lusaka engaged China Jiangxi to cancel $157 million in undisbursed loans.
In 2020, Zambia became the first African country in the Covid-19 pandemic era to default on its debts, struggling with external debts that reached over $17 billion at the end of last year, according to government data.