The International Monetary Fund (IMF) has reached a staff-level pact with Pakistan on a $3 billion stand-by association, the lender mentioned, a choice lengthy awaited by the South Asian nation which is teetering getting ready to default.

The deal, topic to approval by the IMF board in July, comes after an eight-month delay and affords some respite to Pakistan, which is battling an acute stability of funds disaster and falling overseas alternate reserves.

The $3 billion funding, unfold over 9 months, is larger than anticipated for Pakistan. The nation was awaiting the discharge of the remaining $2.5 billion from a $6.5 billion bailout package deal agreed in 2019, which expired on Friday.

The new stand-by association builds on the 2019 programme, IMF official Nathan Porter mentioned in a press release on Thursday, including that Pakistan’s financial system had confronted a number of challenges in current occasions, together with devastating floods final 12 months and commodity worth hikes following the warfare in Ukraine.

“Despite the authorities’ efforts to reduce imports and the trade deficit, reserves have declined to very low levels. Liquidity conditions in the power sector also remain acute,” Porter mentioned in a press release.

“Given these challenges, the new arrangement would provide a policy anchor and a framework for financial support from multilateral and bilateral partners in the period ahead.”