The International Monetary Fund said Thursday it was in "advanced" talks with Sri Lanka on an economic bailout programme, despite reservations expressed by Washington, agency reports said yesterday.

Following Sri Lanka’s victory this week over the LTTE, the IMF said it looked forward to "improvements" in the country, Washington based agency reports said.

"We are at an advanced stage in the discussions with the authorities. We do not have a definitive schedule executive board but we look forward to having a program brought to the board for approval in the coming weeks," IMF spokeswoman Caroline Atkinson told reporters in Washington.

"We have been discussing with the Sri Lankan authorities a normal stand-by arrangement, which we believe is appropriate given the nature of the problems and the need for an adjustment and for sufficient financing," she said.

"Obviously when the IMF executive board makes a loan, we’re also making a judgment on the ability of a government to carry out the policies that we see as necessary," Atkinson said.

"It’s helpful for me to clarify that when the IMF lends, it’s not for specific projects. We lend in order to support a country’s finances, with lending to the central bank to support reserves," she said.