By Jessica Holzer

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The International Monetary Fund's executive board approved another release of funds to Sri Lanka under an arrangement to help the South Asian country avoid a balance-of-payments crisis.

The IMF will release immediately about $329 million to Sri Lanka, bringing the total funds disbursed under the agreement since July to about $659 million.

The agreement was approved on July 24 for about $2.6 billion.

Sri Lanka's performance under the arrangement is "encouraging," Takatoshi Kato, IMF Deputy Managing Director and Acting Chair, said in a statement. "Recent economic developments have been stronger than expected, and the near-term outlook has improved."

However, he added that the country still needs to address "fundamental vulnerabilities."

-By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com

(END) Dow Jones Newswires

11-06-09 1741ET