The international community has agreed to provide $4 billion needed by Pakistan to avoid bankruptcy in return for Islamabad undertaking a series of tough economic reforms, according to a media report.

The US and diplomatic sources in Washington said Pakistan had started negotiating various arrangements with international financial institutions and friendly nations soon after it realised it might default on payments if it did not get help.

The US played a key supporting role in these negotiations, remaining engaged with the Pakistani embassy in Washington, the Dawn newspaper reported on Friday. "There was a real panic in the Pakistani camp... Last month, Pakistani diplomats made 10 visits to the (US) Treasury," said a US official familiar with the talks.

The negotiations were finalised during a visit to Washington by Shaukat Tareen, Adviser to the Prime Minister on Financial Affairs, to attend annual meetings of the World Bank Group.

Image: A Pakistani salesman reads a newspaper at a grocery shop in Karachi. The increase of prices on grains and groceries has minimised the number of customers at these outlets.| Photograph: Asif Hassan/AFP/Getty Images

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