COLOMBO - The Asian Development Bank (ADB) on Monday approved a $350 million special policy-based loan to provide budget support to Sri Lanka for economic stabilisation, the regional lender said in a statement.

The programme is part of a broader package of financial assistance anchored by the International Monetary Fund's (IMF) Extended Fund Facility for the debt-ridden South Asian country, the, ADB said.

The island nation, struggling to emerge from its worst financial crisis since independence in 1948, secured a $2.9 billion bailout from the IMF in March but must now have a debt restructuring framework in place by September to take the programme forward.

"ADB is concerned about the deep crisis in the country and its impact on the people of Sri Lanka, especially the poor and the vulnerable, particularly women," ADB President Masatsugu Asakawa said in the statement.

"ADB is committed to standing with Sri Lanka as it addresses its present challenges and strides toward economic stabilisation, sustainable recovery, and inclusive growth."

Sri Lanka owes $7.1 billion to bilateral creditors, with $3 billion owed to China, $1.6 billion to India and $2.4 billion to the Paris Club, a group of creditor nations.

The government also needs to renegotiate more than $12 billion of debt in eurobonds with overseas private creditors, and $2.7 billion on other commercial loans.

"The country faces a long road to recovery and must remain steadfast in the implementation of necessary reforms," ADB said.

(Reporting by Uditha Jayasinghe, Writing by Swati Bhat; editing by Sudipto Ganguly)