Cash-strapped Sri Lanka is seeking a 10-year moratorium on its foreign debt, President Ranil Wickremesinghe’s office said Monday on the eve of a desperately needed $2.9 billion IMF bailout.

Wickremesinghe’s office quoted him as saying the widely expected International Monetary Fund rescue “will only give us a breathing space where they will say we are no longer bankrupt”.

“All the money we have to repay this year, I hope we will be given at least 10 more years to repay it,” Wickremesinghe told a meeting of students in Colombo on Sunday. He did not give details of his plans to restructure Sri Lanka’s $46 billion external debt.

Sri Lanka defaulted on its foreign debt in April 2022 as the country plunged into its worst economic crisis, running out of cash to finance even the most essential imports and causing massive social unrest.

Widespread protests over economic mismanagement, acute shortages of food, fuel and medicines, and runaway inflation forced Wickremesinghe’s predecessor Gotabaya Rajapaksa to flee the country and resign in July.

The IMF’s executive board was expected to sign off on Colombo’s bailout application later on Monday after a long delay in securing financial assurances from China, Sri Lanka’s largest bilateral lender.

Beijing had said this year it was offering a two-year moratorium on its loans to Sri Lanka, but the concession fell short of IMF expectations for the sustainability of the island’s debt.

Wickremesinghe had said after China agreed to restructure its loans that he expected the first tranche of the $2.9 billion IMF package would be made available within the month. Officials involved in the negotiations said the terms of debt restructuring must be finalised and agreed by all parties before June, when the IMF was expected to review the bailout programme.

“Sri Lanka will not be able to draw down the second tranche unless a debt restructuring plan is agreed with all creditors,” said one of the officials, who asked not to be identified. Colombo is also banking on the IMF deal to unfreeze billions of dollars in foreign aid for projects suspended since Sri Lanka defaulted on its loans last year.

The government has already doubled taxes, increased energy tariffs threefold and slashed subsidies in an effort to meet the preconditions of the IMF bailout. The austerity measures have sparked widespread protests and led to strikes that crippled the health and logistics sectors last week. Wickremesinghe has said he had no alternative but to go with an IMF programme.

Sri Lanka’s economy shrank by a record 7.8 percent last year as it grappled with its worst foreign exchange crisis since independence from Britain in 1948.