Sri Lankan shares kicked off September on a positive note on Thursday, extending gains to a third day, after the crisis-hit country reached a preliminary agreement with the International Monetary Fund (IMF) for a loan of about $2.9 billion.

At the close of trade, the CSE All-Share index was up 2.02% at 9,254.81. Last month, the index had surged 17.33%, its biggest since January 2021.

The agreement is subject to approval by the IMF management and its executive board, and is contingent on Sri Lankan authorities following through with previously agreed measures.

The tourism-dependent nation of 22 million is facing its worst economic crisis since independence in 1948, as it struggles with soaring inflation, economic contraction and a severe shortage of essential items caused by a record slump in foreign reserves.

The IMF programme, spread over 48 months, will aim to raise government revenue to support fiscal consolidation, introduce new pricing for fuel and electricity, hike social spending, bolster central bank autonomy and rebuild depleted foreign reserves.

Sri Lankan shares post biggest monthly gain in more than 1-1/2 years

On the CSE All-Share index, trading volume rose to 151.3 million shares from 134.8 million shares in the previous session.

Indian Oil Corp unit Lanka IOC and conglomerate Expolanka Holdings Plc were the top boosts on the index, advancing 8.2% and 1.9%, respectively.

The equity market turnover was at 4.09 billion rupees ($11.52 million), compared with 4.26 billion rupees in the previous session, according to exchange data.

Foreign investors were net buyers in the equity market, purchasing about 421.5 million rupees worth of shares, while domestic investors were net sellers, offloading 3.79 billion rupees worth of shares, data showed.