Colombo, July 26 (Xinhua) The Sri Lankan government said Saturday that the International Monetary Fund (IMF) has approved a $2.6 billion loan to Sri Lanka to support the country's reform programme.

As per the agreement, $322.2 million would be immediately made available, while the remaining amount will be released based on the quarterly reviews, the government information department said in a statement.

With the support of the IMF loan, Sri Lanka would be able to reduce its budget deficit to five percent of the GDP by 2011, from a target of seven percent this year, the statement added.

The government said the island's 15 percent population living below the poverty line and the civilians displaced by the long drawn-out civil war will benefit from the programme.

To build confidence in the local financial system, the government will take measures to strengthen the banking system by improving the current regulatory framework and enhancing bank supervision.