Sri Lanka's parliament approved a hike in Value Added Tax (VAT) up to 18% from the current 15% on Monday ahead of the International Monetary Fund (IMF) preparing to approve the second tranche of a $2.9 billion bailout for the crisis-hit country.

The country's parliament approved the VAT increase with 100 parliamentarians of the 225-member house voting in favour of the legislation, Speaker Mahinda Yapa Abeywardena said. 55 parliamentarians voted against the legislation.

(Reporting by Uditha Jayasinghe, Editing by Louise Heavens)