Zambia cancels US$1.6 billion Chinese loans and halts infrastructure projects in move to avoid debt crisis

Name: Top Chinese diplomat tours East Africa to promote peace, ensure stability for belt and road allies
Uploaded: 2022-08-01T12:30:24.000Z
Duration: 1 min 45 s
Description: Top Chinese diplomat tours East Africa to promote peace, ensure stability for belt and road allies

Loans are agreed on but not yet distributed and form part of the US$2 billion in undisbursed lending cancelled by Lusaka

Bilateral lenders also agreed to give debt relief, showing the ‘potential of the G20 Common Framework for debt treatment’, says IMF

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Zambian President Hakainde Hichilema and China’s ambassador to Zambia, Du Xiaohui, on May 12. Zambia said it had notified Chinese lenders and contractors about plans to cancel undisbursed loan balances for 14 projects. Photo: Xinhua

Jevans Nyabiage

Published: 8:30pm, 1 Aug 2022

Zambia has cancelled US$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 US$2 billion that Lusaka has 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.

Lusaka announced that it ceased the construction and rehabilitation of several roads, highways and information and technology projects, most funded by China Exim Bank, after it faced challenges in making loan payments.

“Measures have been taken by the government of the Republic of Zambia to address the current debt challenges – beyond the debt restructuring process. Cabinet, at its sitting on Thursday … took measures to discontinue some loan-financed projects,” Zambia’s Ministry of Finance and National Planning announced on Saturday.

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Top Chinese diplomat tours East Africa to promote peace, ensure stability for belt and road allies

Further, it said a few critical projects would be re-scoped to allow critical components to be finished using budget resources allocated over the medium term.