LONDON - The International Monetary Fund said on Thursday that was in talks with Sri Lanka's authorities on a package that would restore economic stability and debt sustainability.

"The team made good progress in assessing the economic situation and in identifying policy priorities to be taken going forward," according to an IMF statement following a staff virtual mission to the country that ended earlier this week.

The statement didn't specify which type of IMF programme is being discussed with the country which finds itself engulfed by a severe economic and political crisis.

The multilateral lender reaffirmed its "commitment to support" the 22 million strong country at a "difficult time."

(Reporting by Jorgelina do Rosario, editing by Karin Strohecker)