By Uditha Jayasinghe

COLOMBO, Sept 27 (Reuters) – The International Monetary Fund did not reach a staff-level agreement with Sri Lanka in its first review under a $2.9 billion bailout package, due to a potential shortfall in government revenue generation, the Fund said on Wednesday.

Speaking after a two-week visit to the country, IMF delegation head Peter Breuer said a second tranche of about $330 million under a lending programme would only be released after the IMF reaches a staff-level agreement, and there was no fixed timeline on when that would take place.

“Sri Lanka has made commendable progress in implementing difficult but much-needed reforms. These efforts are bearing fruit as the economy is showing tentative signs of stabilisation,” the IMF said in a statement.

“The team will continue its discussions in the context of the First Review with the goal of reaching a staff-level agreement in the near term.”

The IMF delegation said despite early signs of stabilisation, full economic recovery is not yet assured and growth momentum remains subdued.