Zambia has engaged lenders to facilitate the formal cancellation of more than US$ 2 billion in undisbursed loans as part of measures to address its debt challenges, the Finance Ministry said on Friday in a statement that is quoted by Reuters news agency.

The statement said that the ministry has taken steps to cancel some loan-funded projects and change the scope of some critical projects.

Creditors of undisbursed loans, which are being canceled, include Exim Bank of China, Jiangxi Bank, Intesa Sanpaolo Bank and Israel Discount Bank, the statement read.

The Ministry of Finance also said that several ongoing projects, which were initially financed through commercial loans, will now be financed through government revenues over the medium term.

In 2020, Zambia became the first African country in the Covid-19 pandemic era to default on its debts, struggling with foreign debts that reached more than US$ 17 billion at the end of last year, according to government data.