Bankrupt Sri Lanka said Tuesday it had failed after three weeks of talks to reach an agreement with its sovereign bondholders, a key condition for maintaining an International Monetary Fund bailout.

The talks with a majority of sovereign bondholders ended inconclusively, the finance ministry said, ahead of a June deadline for the island to restructure its bilateral and private debt.

"Despite constructive discussions, the parties did not come to an agreement on restructuring terms," the ministry said in a 19-page statement outlining the offers and counter offers at the table.

Sri Lanka secured a $2.9 billion four-year bailout loan from the International Monetary Fund in March last year after defaulting on its external debt in 2022 during an unprecedented economic crisis.

Failing to meet the June deadline for a restructure would halt future bailout payments.

Sri Lanka's offer of a 28.8 percent haircut on its estimated $12.5 billion in outstanding International Sovereign Bonds (ISBs) was rejected by bondholders.

They instead proposed only giving discounts on the debt if Sri Lanka failed to meet economic growth targets set by the IMF.

The government said it was willing to consider the counter-proposal of bondholders "subject to being provided with more details."

There was no immediate reaction from bondholders who have grouped themselves into a "Steering Committee" to negotiate a restructuring deal.

The IMF urged Sri Lanka to speed up restructuring with key bilateral lender China and other creditors to sustain its recovery from the 2022 crisis.

Beijing accounts for around 10 percent of the island's total foreign debt.

China had agreed "in principle" to restructure Sri Lanka's debt in December, but both parties have also yet to finalise an agreement.

Sri Lanka defaulted on its foreign debt in 2022 after the country ran out of foreign exchange to import food, fuel and other essentials.

Months of protests forced the then president Gotabaya Rajapaksa to step down after being accused of corruption and mismanagement.

President Ranil Wickremesinghe, his successor, has raised taxes and cut energy subsidies as part of austerity measures in line with the IMF rescue deal.

Wickremesinghe said last month that he expects a moratorium on foreign debt payments till 2028.

Sri Lanka's annual debt servicing was officially estimated at $6.0 billion before the sovereign default.

Its external debt stood at $54.61 billion at the end of 2023, according to central bank figures.