COLOMBO Sri Lanka's in-principle pact with creditor nations to restructure its debt prepares the way for the International Monetary Fund (IMF) to consider clearing the first review of a bailout next month, the global lender said on Thursday.

The deal comes about a month after Sri Lanka's agreement with the Export-Import Bank of China covering about $4.2 billion of outstanding debt, while clearing the IMF review could trigger a second tranche of about $334 million in funds.

"These understandings pave the way for the IMF Executive Board to consider completion of the first review of Sri Lanka's four-year Extended Fund Facility Arrangement," Peter Breuer, IMF's mission chief for Sri Lanka, said in a statement.

"We look forward to the Executive Board taking up this review by mid-December and the continuation of our productive collaboration with Sri Lanka in the period ahead."

Sri Lanka plunged into its worst financial crisis in seven decades last year after its foreign exchange reserves dwindled to record lows.

But since locking down the IMF bailout of $2.9 billion in March, the South Asian island nation has managed to partly stabilise its economy, bring down runaway inflation and rebuild currency reserves.

After receiving the IMF money, Sri Lanka could get further funding from the Asian Development Bank and the World Bank, bringing the total amount to around $900 million, central bank Governor P. Nandalal Weerasinghe said last week.

(Reporting by Uditha Jayasinghe; Writing by Sudipto Ganguly; Editing by Clarence Fernandez and Steohen Coates)