Sri Lanka on Tuesday rejected international bondholders' proposal to restructure more than $12 billion in debt, putting at risk critical International Monetary Fund support and delaying its efforts to resolve a two-year-long debt crisis.

Sri Lanka’s first round of talks with dollar bondholders failed to yield an agreement, sending bonds lower, even as the South Asian country hopes to reach a deal in the next few weeks.

Sri Lanka's government rejected a proposal from its international bondholders on Tuesday on restructuring the more than $12 billion the country owes to them. It means a near two-year spell in default will drag on for Sri Lanka and that the country's next tranche of vital IMF support money could potentially get delayed.

COLOMBO: The Sri Lankan government on Tuesday said it failed to reach an agreement with its bondholders for restructuring around USD 12 billion debt, in the latest setback for the cash-strapped island nation which is aiming to meet targets for the next tranche of the IMF bailout.

Sri Lanka government in talks with private creditors for debt treatment plan, aiming for settlement before IMF meeting.

Sri Lanka plunged into its worst financial crisis since independence from the British in 1948 after its foreign exchange reserves ran to catastrophic lows in early 2022