The International Monetary Fund's (IMF) board has given its endorsement for a much-needed $3bn (£2.3bn) bailout for crisis-hit Pakistan.

The nation will get around $1.2bn upfront, with the rest due to be paid out over the next nine months.

The South Asian nation was on the brink of defaulting on its debts and had barely enough in foreign currencies to pay for a month of imports.

This week Pakistan received $2bn from long-term ally Saudi Arabia.

Pakistan's Prime Minister Shehbaz Sharif said the bailout was a significant step in the right direction to stabilize the economy.
"It bolsters Pakistan's economic position to overcome immediate to medium-term economic challenges, giving the next government the fiscal space to chart the way forward," he said.

The IMF deal came after eight months of tough negotiations over how to deal with serious long-term issues with Pakistan's ailing economy.

The country had been on the brink of being unable to meet debt repayments to creditors.

Much of the country was hit by devastating floods last year, which added to other major problems faced by the country, including high inflation and economic mismanagement by successive governments.

Saudi Arabia deposited $2bn with Pakistan's central bank on Tuesday, Pakistan's Finance Minister Ishaq Dar said.

The oil-rich Middle Eastern nation pledged the money in April but held off handing it over until it was certain that the IMF bailout would be finalized.

The IMF deal, along with the from Saudi Arabia, will unlock more funds to help support Pakistan's ailing economy.

Pakistan's foreign exchange reserves are expected to rise to around $15bn by the end of this month, Mr Dar has said.

On Monday, the credit rating agency Fitch upgraded Pakistan's sovereign rating, with the deal bringing some relief to investors in the country's stocks and bonds.

The heavily-indebted country's bonds have soared since the end of June when the IMF gave preliminary approval for the bailout.

Mr. Sharif's coalition government, which is due to face a national election this year, still has to make major spending cuts to meet the conditions of the bailout.

In June, Pakistan's central bank raised its main interest rate to a record high of 22% as it struggles to curb the country's soaring cost of living. The official annual rate of inflation currently stands at almost 30%.

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