COLOMBO: Sri Lanka could exit bankruptcy by September, President Ranil Wickremesinghe said on Friday, signalling a turnaround for the country which is emerging from its worst financial crisis in decades.

Wickremesinghe “expressed confidence that Sri Lanka would overcome its bankruptcy status by September,” his office said in the statement.

Sri Lanka launched a much-anticipated domestic debt restructuring framework on Thursday that seeks to rework part of its the island nation’s $42 billion domestic debt.

The domestic debt plan is crucial for Sri Lanka, which defaulted on its foreign debt last May, to push forward negotiations with bondholders and key bilateral creditors China, Japan and India.

Cash-strapped Sri Lanka to restructure domestic debt

“This is about the best that we can achieve. With this comes the fact that our interest rates will come down.

It’s a matter of months before it comes down. Secondly, the development assistance will start,“ he said.

Sri Lanka’s economy is expected to contract by 2% in 2023, the government estimates, after shrinking 7.8% last year.