The IMF said Thursday it has reached agreement with Sri Lanka to disburse the second tranche of a $3 billion loan to aid the country's recovery from its worst-ever economic crisis.
The recommendation to make roughly $330 million available to the South Asian country follows agreement over the first review of the four-year Extended Fund Facility (EFF) agreement it signed up to in March, the International Monetary Fund said in a statement.
The release of the funds is subject to approval by its executive board, it added.
The Sri Lankan government defaulted on its $46 billion debt last year at a time when months of food and fuel shortages were making life a misery for millions of people.
"The authorities remain committed to the ambitious reform agenda under the EFF and their reform efforts have been commendable," IMF Senior Mission Chief for Sri Lanka, Peter Breuer, and his deputy, Katsiaryna Svirydzenka, said in a statement.
They noted Sri Lanka's "rapid" disinflation, from 70 percent in September last year to just 1.3 percent by September this year, along with a "significant fiscal adjustment expected by the end of this year."
Gross international reserves also increased by $1.5 billion between March and June this year, while shortages of essential items have eased, they added.
However, "Despite these early signs of stabilization, full economic recovery is not yet assured" they said.