Pakistan has reached a deal for $3bn in short-term financing from the IMF following months of tense negotiations, offering the crisis-hit economy a reprieve as the government fights to avert a possible default.

The IMF announced on Thursday that it had reached a staff-level, or preliminary, agreement with Prime Minister Shehbaz Sharif’s government for nine months of financing under a so-called standby arrangement. The deal has to be finalised by the fund’s executive board, with approval expected by mid-July, the IMF said in a statement.

Pakistan has descended into one of its worst economic crises, with analysts warning that it risks defaulting on its debt payments without the IMF’s assistance. Foreign reserves have fallen to $3.5bn, enough for less than one month’s worth of imports, while inflation has risen to 38 per cent.