COLOMBO: Sri Lanka has reached a staff-level agreement on the first review of the Extended Fund Facility (EFF) Arrangement with the International Monetary Fund (IMF), clearing the path for the country to access the next installment of funds from its $3 billion bailout program, an official said here on Friday.

The island nation will have access to about $330 million in financing once the review is approved, Xinhua news agency quoted IMF Senior Mission Chief for Sri Lanka Peter Breuer as saying at a virtual press briefing.

Sri Lankan authorities remain committed to the reform agenda under the EFF and their reform efforts have been commendable, including rapid disinflation and a significant fiscal adjustment expected by the end of this year, according to a statement issued earlier by Breuer and Deputy Mission Chief Katsiaryna Svirydzenka.

Inflation is down from a peak of 70 per cent in September 2022 to 1.3 per cent in September 2023, gross international reserves increased by $1.5 billion during March-June this year, and shortages of essentials have eased, said the statement.

Despite these early signs of stabilisation, full economic recovery is not yet assured, as growth momentum remains subdued, with real GDP in the second quarter contracting by 3.1 per cent on a year-on-year basis and high-frequency economic indicators continuing to provide mixed signals, according to the IMF.

Sustaining the reform momentum is of paramount importance in steering the economy towards a sustained recovery and fostering stable, inclusive economic growth, said the IMF.

The IMF in March this year approved a 48-month extended arrangement under EFF of about $3 billion to support Sri Lanka's economic policies and reforms.