Recently in my country, someone started a buzz in which he had plans to replace current debt of the country with low interest loans from other countries such as Japan. May I know if this is possible at all ?
Suppose Country XYZ can borrow at 5% in XYZ currency and Japan can borrow 1% in JPY. Theoretically, Japan could borrow JPY at 1%, lend it at 1.5% to Country XYZ, and hedge the currency risk using a cross-currency basis swap. This is theoretically possible and Japan could profit on the 50bps (minus hedging costs) spread between its lending and borrowing rate.
Were this to happen on a large scale, however, the markets would catch on since the credit risk of Japan would become more and more exposed to the credit risk of Country XYZ. If this exposure grew to be large enough, you would expect any possible spread for Japan to make from acting as the middle man to go away.
This is debt-replacement strategy is possible, but definitely seems unlikely unless there are other geopolitical reasons why the middle country (Japan in this case) would want to lend money to Country XYZ.