Sri Lanka is negotiating debt relief with international bondholders and is weighing engagement with the International Monetary Fund as the country battles a foreign exchange reserve crisis that has brought it close to default, Sri Lanka’s finance minister said.

Basil Rajapaksa told the Financial Times that the government was “negotiating with everyone” and “trying all options” to avoid default and ease the economic crisis.

“We have [international sovereign bonds] We have to pay back, so we are negotiating with them. Then we have creditors and we have to pay their debts, so whether we can make adjustments or some type of thing,” he said.

Rajapaksa added that the government will “consider a plan with the IMF . . . all these discussions are also ongoing.”

Many investors believe Sri Lanka will be the latest country to default on its sovereign debt during the pandemic, after Belize, Zambia and Ecuador. The country has nearly $7 billion in debt maturities this year, but has less than $3 billion in foreign reserves.

Some Sri Lankan officials insist that the country can avoid this fate by building up its foreign exchange reserves through tourism and exports, while receiving additional aid from its two largest donors, China and India.central bank governor this week tell CNBC “We don’t need IMF relief”.

Rajapaksa insists the government can cope but is preparing for contingencies. “I know it’s very difficult because we have to pay $6.9 billion this year, and on top of that, we have to raise money for medicines, raw materials, fuel, all of those things,” he said.

Inadequate foreign exchange reserves have led to power outages and shortages of imported fuel, including fuel and milk powder, which have fueled double-digit inflation.

More than a third of Sri Lanka’s debt is owed to international bondholders, with the country paying off $500 million in bonds last week. Another $1 billion is due in July, but Dimantha Mathew, head of research at brokerage First Capital in Colombo, said the country may have run out of foreign currency by then.

Its long-term dollar bonds are trading at less than half their face value, a sign that foreign fund managers are guessing how much they might get in a restructuring rather than expecting to be paid back in full.

Asked if he was negotiating restructuring with bondholders, Rajapaksa replied “yes”. “Obviously you can understand what we want and you can understand what bondholders want,” he added.

Sri Lanka also turned to India and China for help. New Delhi has provided nearly $1 billion in relief and is negotiating further aid. Beijing last month offered a $1.5 billion yuan currency swap, but analysts said it was unlikely to be used to pay off dollar-denominated debt.

President Gotabaya RajapaksaThe finance minister’s brother has also asked China to restructure its loans, which have ballooned to more than 10 percent of Sri Lanka’s foreign debt burden.Many people say that Chinese credit exacerbated the crisis Used for large but unnecessary infrastructure projects with little return.

Sri Lanka has previously signed 16 bailouts with the IMF, and even before the pandemic, investors were wary of its growing debt and meagre taxes.These were further eroded by the Rajapaksa government cut VAT and other levies in 2019, leading to a string of credit rating downgrades to junk status.

Sri Lanka has been left out of the debt market, while a pandemic-induced collapse in tourism and remittances has led to a sharp drop in dollar inflows.

“Maybe with the Indian financing, they can drag things out longer,” said Carlos de Sousa, a portfolio manager at Vontobel Asset Management, which holds some Sri Lankan dollar bonds. “But even if they repay in July, it’s just a delay. the inevitable.”