"We have done our part, I hope the IMF will do theirs," he said in a special address to lawmakers.

Wickremesinghe said the state-owned Exim Bank of China had sent a letter to the IMF on Monday night signalling its willingness to go ahead with a restructure.

There was no immediate confirmation of the announcement from the bank or the IMF.

Sri Lanka defaulted on its $46 billion foreign debt last April.

Just over $14 billion of that is bilateral debt owed to foreign governments, of which China holds 52 per cent.

Wickremesinghe's government entered into a staff-level agreement with the IMF for a $2.9 billion rescue package in September, but its release was held up pending "financial assurances" from creditors.

Japan and India, its other biggest creditors, along with a host of others known as the "Paris Club" creditor nations, had given assurances earlier this year, leaving only China to give its assent.

Financial analyst Murtaza Jafferjee, the head of the Colombo-based Advocata Institute think tank, told AFP "a significant shift in China's earlier position" would have been necessary for the bailout to proceed.

Beijing had earlier proposed a debt moratorium for up to two years instead of taking a haircut on its loans, an offer considered insufficient to meet the IMF's requirements.

"It is up to the IMF board to decide if the Exim Bank letter provides sufficient financial assurances they expect from all creditors," Jafferjee told AFP.

'Rebuild this nation'

Sri Lanka's economic crisis culminated last July when tens of thousands of protesters stormed then-president Gotabaya Rajapaksa's official residence, forcing him to flee abroad and resign.

Wickremesinghe has imposed sharp tax hikes and ended energy subsidies to repair the nation's finances and meet the terms of the IMF deal.

He has also announced plans to sell off loss-making state enterprises, including Sri Lanka's national airline, to satisfy the terms of the IMF bailout.

The president warned last month Sri Lanka would remain bankrupt for at least three more years and acknowledged that his austerity measures had caused discontent.

"Introducing new tax policies is a politically unpopular decision. Remember, I'm not here to be popular. I want to rebuild this nation from the crisis it has fallen into," he said then.

On Tuesday he told parliament that inflation had eased to about 50 per cent, from a high of nearly 70 per cent in September.

Police have used tear gas and water cannon to disperse several protests against the government's economic reforms in recent weeks.

Government doctors and bank employees were among those who went on strike last week, defying a government ban on trade union action by "essential services".