Zambia has signed a contract of more than $824 million with a subsidiary of China Railway Construction Corporation to upgrade a rail line, the company said on Wednesday.
China Civil Engineering Construction Corporation will rehabilitate the railway line in southern Zambia over a period of eight years, China Railway said in a statement.
The railway has a total length of 648.26 km (403 miles), the statement said, adding that the contract value of the project amounted to approximately $824.87 million, 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 last month to cut foreign debt.
Zambia’s economy is straining under soaring liabilities, and S&P Global Ratings last month cut the nation’s credit rating to CCC, eight levels below investment grade.
That’s the lowest level for any African country it assesses.
Finance Minister Bwalya Ng’andu said last month the cabinet agreed to a moratorium on contracting external project loans.
Dr Ngandu said the government also planned to cancel or re-scope contracts to reduce its pipeline foreign debt by about $5 billion.
Finance and Transport Ministries didn’t immediately respond to requests for comment.
