The agreement is subject to approval by IMF management and its executive board.
"The objectives of Sri Lanka's new Fund-supported programme are to restore macroeconomic stability and debt sustainability," the statement said, outlining the 48-month long arrangement under the IMF's Extended Fund Facility.
The agreement is subject to approval by IMF management and its executive board and is contingent on Sri Lankan authorities following through with previously agreed measures.
The IMF also requires receiving financing assurances from Sri Lanka's official creditors, besides ensuring efforts are made to reach a collaborative agreement with private creditors.
A soldier stands guard as people stand in a queue to buy diesel in Colombo. AFP
"Debt relief from Sri Lanka's creditors and additional financing from multilateral partners will be required to help ensure debt sustainability and close financing gaps," the statement added.
Sri Lanka needs to restructure nearly $30 billion of debt, and Japan has offered to lead talks with the other main creditors, including India and China.
It will also need to strike a deal with international banks and asset managers that hold the majority of its $19 billion worth of sovereign bonds, which are now classified as in default.
The debt-laden country has been seeking up to $3 billion from the IMF in a bid to escape its worst economic crisis since independence from Britain in 1948.
Sri Lankans have faced acute shortages of fuel and other basic goods for months, leaving it in political turmoil and hit by runaway inflation, which is now at almost 65% year-on-year.