COLOMBO, Dec. 12 (Reuters) - The International Monetary Fund (IMF) said its executive board cleared the first review of Sri Lanka's about $3 billion bailout on Tuesday, providing about $337 million in funds to help tackle the fallout from the country's worst financial crisis in decades.

The South Asian island nation is recovering from its worst financial crisis since its independence in 1948 that sent the economy into freefall last year with soaring inflation, currency depreciation and low foreign reserves.

The total amount sent so far to Sri Lanka now stands at about $670 million, according to the IMF.

"A swift completion and signature of the Memoranda of Understanding with the official creditors is important. Timely implementation of the agreements, together with reaching a resolution with external private creditors on comparable terms, should help restore Sri Lanka's debt sustainability over the medium term," said Kenji Okamura, Deputy Managing Director of the IMF.

The economy, however, began to stabilise after Sri Lanka secured a bailout from the global lender in March. It reached a staff level agreement on its first review in October but had to wait for the board's approval till an agreement was reached with bilateral creditors to restructure part of its foreign debt.

Sri Lanka's parliament approved a hike in value-added tax(VAT)to 18% from 15% on Monday to meet revenue targets set under the IMF programme.

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