People cross a street in Colombo on Nov 15, 2022. (PHOTO / AFP)

The International Monetary Fund (IMF) on Monday said its executive board approved a nearly $3 billion bailout for Sri Lanka, and the country's presidency said the program will enable it to access up to $7 billion in overall funding.

The decision will allow an immediate disbursement of about $333 million, the IMF said, and will spur financial support from other partners, potentially helping Sri Lanka emerge from its worst financial crisis in over seven decades.

Wickremesinghe told the country's parliament earlier that there were signs the economy was improving, but there was still insufficient foreign currency for all imports, making the IMF deal crucial so other creditors could also start releasing funds

IMF Managing Director Kristalina Georgieva said Sri Lanka also needs to undertake various reforms.

"For Sri Lanka to overcome the crisis, swift and timely implementation of the EFF-supported program with strong ownership for the reforms is critical," Georgieva said in a statement. EFF refers to the IMF's Extended Fund Facility.

READ MORE: Sri Lanka to announce debt restructuring strategy, cenbank chief

She emphasized the need for "ambitious revenue-based fiscal consolidation."

"For the fiscal adjustments to be successful, sustained fiscal institutional reforms on tax administration, public financial and expenditure management, and energy pricing are critical," Georgieva said in the statement.

Sri Lanka President Ranil Wickremesinghe's office said in a statement that the IMF program will help improve the country's standing in international capital markets, making it attractive for investors and tourists.

ALSO READ: World Bank's IFC to provide Sri Lanka with $400m financing

Wickremesinghe told the country's parliament earlier that there were signs the economy was improving, but there was still insufficient foreign currency for all imports, making the IMF deal crucial so other creditors could also start releasing funds.

The island nation aims to announce a debt-restructuring strategy in April and step up talks with commercial creditors ahead of an IMF review of a bailout package in six months, its central bank governor told Reuters earlier this month.