As Sri Lanka struggles to find a resolution to its financial predicament, the nation is set to announce its domestic debt restructuring strategy this week. The move comes as a key step towards striking a deal with the island nation’s creditors. The announcement will be made soon, central bank Governor Nandalal Weerasinghe has confirmed. The government has declared a five-day closure of financial markets from Thursday to give sufficient time for the blueprint to get approval from cabinet and parliament.

The International Monetary Fund (IMF) has granted Sri Lanka a $3 billion bailout and is expecting the nation to complete the restructuring before its first program review in September. Reaching the debt sustainability that the Washington-based lender has envisaged is dependent on striking the right balance between the demands of domestic institutions, foreign bondholders, and bilateral creditors. The international financial community will be watching closely to see how much domestic debt will be restructured. Creditors are demanding that domestic bond holders share billions of dollars of losses, but the government’s proposal for a voluntary restructuring of its rupee-denominated bonds has had few takers. Central bank Governor Weerasinghe has emphasized that the plan won’t hurt deposit values and will ensure financial system stability.

The domestic debt restructuring plan is expected to be discussed by the parliament’s committee on public finance on June 29 and 30, and debated by the legislature over the weekend. Talks with foreign creditors to restructure external debt are still ongoing. Experts believe the move will help Sri Lanka’s economy recover from the crisis that saw it default on debt last year amid dwindling reserves. It should also pave the way for faster agreement with external stakeholders. They are expecting yields to drastically decline once the domestic debt optimization is implemented.