Sri Lanka will consult with the International Monetary Fund (IMF) to assess if the latest proposals discussed with bondholders were within the parameters of its bailout programme, the country's finance ministry said on Wednesday.

The South Asian island nation on Tuesday rejected international bondholders' proposal to restructure more than $12 billion in debt, putting at risk critical IMF support and delaying its efforts to resolve a debt crisis.

"Following these consultations, we hope to continue discussions with the bondholders with a view to reaching common ground ahead of the IMF board consideration of the second review of Sri Lanka's EFF (extended fund facility) programme," state finance minister Shehan Semasinghe said in a statement.

The island nation defaulted on its foreign debt in May 2022 and kicked off negotiations with bilateral creditors several months later, eventually securing an agreement in principle with China, India and the Paris Club last November.

Discussions held in recent weeks with bondholders' representatives proved constructive, building on the restructuring proposals presented by both parties, Semasinghe said.

"During the talks both sides successfully bridged a number of technical issues enabling important progress to be made," he added.

(Reporting by Swati Bhat in Mumbai; editing by Sudipto Ganguly)