The World Bank has said it would not offer new funding to Sri Lanka unless the bankrupt island nation carried out "deep structural reforms" to stabilise its crashing economy.

The World Bank said in a statement on Thursday that it was concerned about the impact of the crisis on Sri Lanka's people but was not ready to give funds "[u]ntil an adequate macroeconomic policy framework is in place"

"This requires deep structural reforms that focus on economic stabilisation, and also on addressing the root structural causes that created this crisis," the lender said.

The World Bank said it had already diverted $160 million from existing loans to finance urgently needed medicines, cooking gas and school meals.

Sri Lanka has suffered an unprecedented downturn with its 22 million people enduring months of food and fuel shortages, rolling blackouts and rampant inflation.

The South Asian nation defaulted on its $51 billion foreign debt in April and huge protests earlier this month forced then president Gotabaya Rajapaksa to flee the country and resign.

Bailout talks with IMF

Sri Lanka is currently in bailout talks with the International Monetary Fund but officials say the process could take months.

The island nation has run out of foreign exchange to finance even the most essential imports, and chronic shortages have inflamed public anger.

Motorists stay in long queues for days to get rationed petrol and government officials have been told to work from home to reduce commuting and save fuel.

The UN World Food Programme estimates the crisis has forced five out of every six Sri Lankan families to buy lower-quality food, eat less or in some cases skip meals altogether.

The crisis came to a head on July 9, when tens of thousands of protesters stormed Rajapaksa's residence, forcing the president to flee to Singapore and resign.

His successor, Ranil Wickremesinghe, has declared a state of emergency and vowed a tough line against "troublemakers", with several activists who helped lead the mass demonstrations arrested this week./agencies