Zambia Signs Deal With China Railway Worth $825m

The project to upgrade Zambia’s railway tracks will last eight years and will cover nearly 650km of lines, China Railway says

Zambia signed an $825m contract with a China Railway Construction Corporation unit to upgrade tracks in the south of the country, the company said.

The project will last eight years and will cover nearly 650km of lines, China Railway said a statement, without saying how it will be financed. If the government is planning on funding the rehabilitation project through borrowing, it could raise questions about the credibility of measures Zambia announced in February to cut foreign debt.

Zambia’s economy is straining under soaring liabilities, and S&P Global Ratings cut the nation’s credit rating to CCC in February, eight levels below investment grade.

That’s the lowest level for any African country it assesses. Finance minister Bwalya Ng’andu said in February that the cabinet agreed to a moratorium on contracting external project loans. The government also planned to cancel or re-scope contracts to reduce its pipeline foreign debt by about $5bn, he said.