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.

The International Monetary Fund (IMF) approved the third review of Sri Lanka's $2.9 billion bailout, releasing another $333 million. While economic recovery signs surface, the nation must finalize debt restructuring to continue progress.

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 (IMF) approved the third review of Sri Lanka's $2.9 billion bailout on Saturday but warned that the South Asian economy remains vulnerable.

In a statement, the global lender said it would release about $333 million, bringing total funding to around $1.3 billion, to the crisis-hit nation. It said signs of an economic recovery were emerging.

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.