LONDON/COLOMBO: Sri Lanka will kick off a debt rework of part of its domestic debt next month and aims to finalise it by May, officials from the country’s central bank and the Treasury told creditors during a virtual presentation on Thursday.

The country will also start formal negotiations for the debt it owes to bilateral creditors and bondholders after the domestic debt operation, aiming to finalise it by September.

The country expects that “exploring options for a domestic debt operation” will help to achieve much-needed liquidity relief, including both local currency T-Bills and T-Bonds.

Government officials told investors that only T-Bills held by the central bank would be considered for a debt rework, while a voluntary domestic debt operation was expected for the holders of T-Bonds. Sri Lanka’s total local currency debt is equivalent to $36.6 billion, according to the presentation.

The country owes international bondholders over $12 billion, while the external debt with bilateral creditors such as the Paris Club, China and India totals $7.1 billion. “The government will engage with all T-bills and T-bonds holders,” Central Bank Governor P. Nandalal Weerasinghe said.

Secretary Mahinda Siriwardena also participated in the presentation, along with representatives of financial and legal advisers Lazard and Clifford Chance.

The island nation of 22 million people is struggling with its worst economic crisis in more than seven decades, which has led to shortages of essentials and the ouster of a president.