Colombo, Jun 27 (PTI) Sri Lanka's Parliament has been convened for a special session on July 1 to discuss the government's plan for domestic debt restructuring (DDR), a special gazette notification issued here said on Tuesday.

The move follows the cash-strapped government's action to declare a special bank holiday on June 30, leaving the banks to remain shut for an unprecedented five days in a row.

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The central bank governor Nandalal Weerasinghe announced on Monday that a five-day cooling-off period for the banks was required in view of the DDR programme.

Signed by Speaker Mahinda Yapa Abeywardena, the gazette notification said the urgent parliament session would be convened at 9:30 am on July 1.

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President Ranil Wickremesinghe, who is also the minister of finance, explaining the DDR programme on Tuesday said the government aims to restructure USD 17 billion out of the total USD 41.5 billion external debt over a five-year period.

Allaying public fears over the instability of the bank system with DDR, Wickremesinghe said: “Restructuring local debt will have no effect on the banks' deposits and the interest rate won't be affected”.

Wickremesinghe said that Sri Lanka's total debt by 2022 stood at USD 83,000 million -- 128 per cent of the island nation's GDP.

“At USD 42,000 million, our local debt was more than our foreign debt," he said.

Wickremesinghe said: “We want to reduce the amounts or get time extensions for repayment.”

After the DDR is approved by the cabinet, which will also meet on Wednesday in a special session, it will be referred to the public finance committee in parliament ahead of Saturday's parliamentary session, Wickremesinghe stressed.

Sri Lanka, which announced its first-ever sovereign default in April 2022, negotiated with the International Monetary Fund (IMF) bailout of USD 2.9 billion.

The island nation is facing its worst economic crisis in history due to a shortage of foreign exchange reserves.

An imperative in the IMF bailout is to restructure external debt, which needs to be completed by September.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)