COLOMBO: The International Monetary Fund (IMF) stands ready to support Sri Lanka’s discussions with international bondholders and will provide a formal assessment after the parties reach a tentative agreement-in-principle, an IMF spokesperson said on Thursday.

“We hope an agreement consistent with the parameters of the IMF-supported program and official creditors’ Comparability of Treatment requirements can be reached soon, ahead of completing the second review under the program,” the spokesperson said.

Sri Lanka said it failed to reach an agreement with bondholders to restructure about $12 billion debt earlier this week, raising concerns there could be a delay in the island nation receiving a third tranche of its $2.9 billion IMF program in June.

The government said one of the main stumbling blocks had been that the “baseline parameters” of the bondholders’ plan had not matched those embedded in its IMF program.

“We encourage both parties to continue their discussions swiftly,” the IMF statement added.

Sri Lanka will consult with the IMF to assess if the latest proposals discussed with bondholders were within the parameters of its bailout program.

Sri Lanka fails to agree on restructuring terms with bondholders

The island nation defaulted on its foreign debt in May 2022 and kicked off negotiations with bilateral creditors several months later, eventually securing an agreement in principle with China, India and the Paris Club last November.

Sri Lanka plunged into its worst financial crisis since independence from the British in 1948 after its foreign exchange reserves fell to record lows in early 2022, leaving it unable to pay for essentials including fuel, cooking gas, and medicine.