When Sri Lankan officials arrive in Washington this week to meet with the International Monetary Fund amid an economic and political crisis, the main question they will have to answer is how the country plans to manage its billions in debt.

Sri Lanka is seek up to $4 billion this year to help him import basic necessities and pay his creditors. To achieve all of this through the various IMF programs, the government of President Gotabaya Rajapaksa must present a viable debt program. It’s a standard requirement for help from the so-called lender of last resort, even if a shortage of food, fuel and medicine pushes the country into a humanitarian crisis.

The downward economic spiral – dwindling foreign exchange reserves and soaring inflation – has sparked political unrest in Colombo, where Rajapaksa has resisted calls to resign despite mounting protests and the loss of coalition partners in parliament . Over the weekend, the the military denied speculation he planned to suppress the protesters, while the local stock exchange announced that it closed this week in the midst of uncertainty.

The outlook makes a default inevitable, because recognized by S&P Global last week when it downgraded Sri Lanka’s credit rating and warned of a further cut if the country missed coupon payments due on Monday. Meanwhile, investors are trying to figure out how much they could recover $12.6 billion of foreign bonds, and whether there is even a profit to be made.

The country’s dollar bond due July 2022 was up 5.2 cents on Monday to trade at 46 cents on the dollar, after falling sharply on Friday.

Here are some IMF financing options in play as talks are due to begin this week:

Emergency assistance

IMF members can access one-time emergency loans, with few conditions, through the Rapid Credit Facility and the Lender’s Rapid Financing Instrument. However, this payment is capped at 50% of a state’s quota for one year, which in the case of Sri Lanka is equivalent to $395 million, or 289 million special drawing rights, the IMF unit of account. The nation said it would prioritize payments for food and fuel imports over debt service.

But even for that, Colombo must take steps to restructure its debt, which IMF staff determined last month was unsustainable.

“When the IMF determines that a country’s debt is not sustainable, the country must take steps to restore debt sustainability before lending,” said Masahiro Nozaki, IMF mission chief in Sri Lanka. in an email response to questions. “Thus, approval of an IMF-supported program for Sri Lanka would require adequate assurances that debt sustainability will be restored.”

Meeting these criteria could even include initial steps such as hiring advisers, which the government is pursuing. The administration has set a deadline of Friday for applications from financial and legal advisers, extending its original date by one week. That makes Finance Minister Ali Sabry’s stated goal of securing emergency funds as soon as a week after the start of negotiations optimistic.

Given that Sri Lanka has a $1 billion bond maturing in July and further repayments over the course of 2022, it will likely need to access the IMF stand-by arrangement. Dubbed a “workhorse” instrument, Sri Lanka would be eligible for a loan of up to 435% of its quota – around $3.4 billion, net of repayments – for up to 36 months.

Payment can be anticipated if the need is urgent, but depends on the borrower agreeing to conditions such as specific revenue and deficit targets.

Central Bank Governor Nandalal Weerasinghe said last week that it was too early to estimate the value of loans Sri Lanka might get from the IMF or to confirm what kind of program the lender might accept.

Although he said an expanded credit facility – which allows for longer repayment periods – might be best suited to the country, it generally requires deeper structural reforms. Sri Lanka had this facility approved in 2016and a stand-by arrangement during the 2009 financial crisis.

Weerasinghe noted that Sri Lanka in the 2009 loan was approved for access to 400% of its quota.

“I don’t see why we can’t get at least that amount,” he said. “Now the financial gap is much higher.”

Debt sustainability

Bringing deficits under control will require extending the maturity of existing debt and reducing interest payments. When the government announced last week that it stop debt payment and warned it was headed for an unprecedented default, Weerasinghe said authorities were looking to negotiate with creditors.

Nomura Holdings Inc. is considering an Ecuadorian-style restructuring where Sri Lanka will swap notes for longer-maturity bonds with lower coupon rates and some reduction in principal. Barclays Plc said Sri Lanka could convert all of its debt into a new bond with a final maturity in 2037 and semi-annual amortizations from 2027; coupons could be around 4% to 5%, lower than their current average of 6.6%.

Rajapaksa’s government has also appealed to China, one of its biggest creditors, for additional money. $2.5 billion in support. While President Xi Jinping has pledged to help, a apparent reluctance reflects both an overhaul of its external lending practices and a reluctance to be seen interfering in messy domestic political situations.

Earlier this month, Jin Liqun, president of the China-backed Asian Infrastructure Investment Bank, encouraged Sri Lanka to turn to the IMF. Neighboring India is also helping Sri Lanka with lines of credit to buy food and fuel.

Sabry, the finance minister, said last week that the country will hold talks with other lenders, including the World Bank and the Asian Development Bank, adding that the country is committed to honoring its debt. “We will pay back every dollar we borrowed,” he said.