Sri Lanka's $12.5 billion bondholder debt rework has received support from bilateral creditors and the International Monetary Fund, the finance ministry said on Friday, a huge boost to the island nation's fragile economy.

COLOMBO: Sri Lanka's new government has approved a controversial restructure of US$14.7 billion in foreign commercial credit tentatively agreed by its predecessor, the finance ministry said Saturday (Oct 5).

Sri Lanka needs to complete the third review of its IMF programme in order to receive about $337 million in funds and support the finalisation of a $12.5 billion debt restructuring with bondholders. (Reporting by Uditha Jayasinghe, writing by Pushkala Aripaka; Editing by Hugh Lawson)

Sri Lankan authorities have “completed their consultations with Sri Lanka’s Official Creditor Committee (OCC) and the International Monetary Fund (IMF),” the official statement said. It added that the agreement is compatible with the comparative treatment principle.

Sri Lanka's painful austerity measures were "bearing fruit" and must be sustained, the International Monetary Fund said Friday as the country's new president sought changes to its $2.9 billion bailout.

The International Monetary Fund said it’s looking forward to working with Sri Lanka’s newly elected leftist president, including on the latest review of the country’s $3 billion bailout package.