On Thursday, Sri Lanka reached a preliminary agreement with the International Monetary Fund (IMF) for a loan of nearly $2.9 billion.
President Ranil Wickremesinghe has presented an interim budget with a hike in value-added taxes to show its commitment to engage in fiscal reforms, and to secure the IMF's deal.
Sri Lanka needs to restructure almost $30 billion in debt, and Japan has offered to lead negotiations with other major creditors, including India and China.
The country also need to negotiate with international banks and asset managers for its $19 billion worth of sovereign bonds, classified as default.
"This is a credible device to show to creditors that Sri Lanka is serious about engaging in reforms."
- Ranil Wickremesinghe, President of Sri Lanka
Sri Lanka is currently in a financial crisis due to economic mismanagement and the pandemic's impact on the country's vital tourism economy.
For months, the country has faced severe shortages of fuel and other necessities, resulting in unprecedented protests and a change in government.
