Islamabad - Pakistan's top economic adviser on Saturday said the International Monetary Fund (IMF) had agreed to provide a loan of at least 7.6 billion dollars to stave off an economic meltdown.

Shaukat Tarin told journalists in the port city of Karachi that the 23-month standby credit facility was exclusively for strengthening the country's foreign exchange reserves and to avert a balance-of-payment crisis.

"Next week we will officially apply and send a letter of intent," Tarin said.

Pakistan has an immediate need for up to 5 billion dollars to avoid default on its foreign debts.

The rescue deal has been reluctantly reached after months of talks with the IMF, as earlier the Islamic republic was concentrating on finding funding from the members of the so-called "Friends of Pakistan," a group of international donors that is meeting in Abu Dhabi on Monday. However, that group has been reluctant to supply Pakistan with the needed aid.

Tarin said the IMF had largely adopted Pakistan's "home-grown" economy stabilization programme. He said the fund had advised Pakistan to increase interest rates to cut core inflation.

The central bank on Thursday raised the key interest rate by two per cent, taking it to 15 per cent.

Tarin said the loan's first tranche was expected this month.

The repayment of the loan will start in 2011 and will be completed in 2016, with an interest rate between 3.5 to 4.5, according to the adviser.

Pakistan's seven-month-old government is grappling with a high inflation rate and fast-depleting reserves that hold barely enough to cover nine weeks of import bills.

The reserves have fallen from more than 16.5 billion dollars in October 2007 to around 6.7 billion dollars last month, when the inflation rate reached a 30-year high. (dpa)