By Uditha JayasingheCOLOMBO (Reuters) -The International Monetary Fund (IMF) approved the third review of Sri Lanka's $2.9 billion bailout on Saturday but warned that the South Asian economy remains vulnerable.

IMF staff and the Sri Lankan authorities have reached staff-level agreement on economic policies to conclude the third review of Sri Lanka’s economic reform program supported by the IMF’s Extended Fun

The International Monetary Fund will have close discussions with Sri Lanka on the budget for 2025, Senior Mission Chief Peter Breuer said after striking a staff level agreement on the next phase of the program.

Sri Lanka’s new National People’s Power government on Saturday got the International Monetary Fund approval for a staff-level agreement to secure the fourth tranche of the nearly $3 billion bailout package.

Sri Lanka expects the IMF to announce a staff level agreement on its third review of the country's bailout programme on Friday, President Anura Kumara Dissanayake told the first sitting of the new parliament.

Sri Lanka's new leader on Thursday backed a controversial IMF bailout, marking a U-turn from his election pledge to renegotiate the deal secured by his predecessor.