Zambia’s cabinet approved plans to restructure the country’s loans from China after the International Monetary Fund said the country was at high risk of debt distress.
The government will also source financing directly from Chinese lenders rather than through contractors in a bid to cut the cost of borrowing, the presidency said Tuesday in an emailed statement.
Zambia’s external debt grew to $7.6 billion, or 29 percent of gross domestic product, by the end of August, according to Finance Ministry data, a situation that prompted a warning in October from the IMF.
While $3 billion has been raised in Eurobonds since 2012, the bulk of the new foreign debt is from Chinese state-owned companies and has gone to building roads, airports and power plants.
The government has earmarked more than 10 percent of its 2018 spending to go toward servicing foreign loans.