Sri Lanka's Central Bank on Monday declared a special bank holiday on Friday to ensure a continuous five-day cooling-off period after the government’s announcement on the domestic debt restructuring (DDR) process as part of the efforts to revive the cash-strapped economy.

According to government sources, the DDR plan would be announced on either Wednesday or Thursday, with Parliament expected to take it up over the weekend.

Governor of the Central Bank, Nandalal Weerasinghe, said that June 29 to July 3 would be continuous bank holidays with the Colombo Stock Exchange also observing a holiday on June 30.

“We have now reached the stage of announcing domestic debt optimisation. For this, we need some time (and) space to discuss the plan in the cabinet, discuss at the finance oversight committee in Parliament, and finally present it in Parliament for approval," Weerasinghe said, adding that a minimum of five days would be required for the entire process.

On Thursday, Sri Lanka will celebrate Eid al-Adha, and on Monday, the country will have a holiday for Esala Full Moon Poya, Buddha's first sermon and the arrival of the Tooth Relic in Sri Lanka.

On Sunday, the government asked its parliamentarians to remain in Colombo through next weekend to seek parliamentary approval for DDR.

Explaining the DDR process, the State Minister of Finance, Ranjith Siyambalapitiya, said the total amount of local debt stood at SLR 42 billion, comprising mainly of SLR 25 billion on treasury bonds, SLR 11 billion on treasury bills and SLR 5 billion on development bonds.

Assurances for bank depositors

“We are not talking of seeking haircuts, we only want rescheduling, extending repayment time, and reduction of interest,” Siyambalapitiya said. He asserted that bank depositors would not be affected by the DDR.

President Ranil Wickremesinghe, also the Finance Minister, is expected to meet the government parliamentary group on DDR mid-next week before it will be presented in Parliament.

Sri Lanka is currently negotiating with its external creditors on debt restructuring as required by the International Monetary Fund (IMF)'s bailout conditions.

The Washington-based global lender has asked the crisis-struck country to reach an agreement with all its creditors before the next review, scheduled for September.

IMF bailout conditions

In March, the IMF extended a nearly $3 billion bailout facility over a period of four years to debt-ridden Sri Lanka to help stabilise its economy after it was jolted by a devastating economic crisis last year.

In April 2022, Sri Lanka declared its first-ever debt default, the worst economic crisis since its independence from Britain in 1948, triggered by forex shortages that sparked public protests.

Months-long street protests led to the ouster of the then-president Gotabaya Rajapaksa in mid-July last year. Rajapaksa had started the IMF negotiations after refusing to tap the global lender for support.