The International Monetary Fund (IMF) said on Wednesday it had reached a staff-level agreement with Pakistan on the first review of a $3 billion bailout, which will unlock $700 million in funding for the South Asian country.

Ahead of the bailout in July, Pakistan had to undertake a slew of measures demanded by the IMF, including revising its budget, a hike in its policy rate and increases in electricity and natural gas prices.

The funds to be issued are a second tranche of the bailout, which is subject to approval from the IMF's executive board.

"Upon approval, around $700 million will become available, bringing total disbursements under the program to almost $1.9 billion," IMF Pakistan mission chief Nathan Porter said in a statement.

An IMF mission led by Porter, which has been in Pakistan for two weeks for technical and policy talks, concluded its visit on Wednesday. It reviewed whether Pakistan was on track to meet benchmarks set under the standby arrangement agreed in July, which had immediately disbursed a first tranche of $1.2 billion to help the South Asian economy avert a sovereign debt default.

Pakistan was facing an acute balance of payment crisis, with its foreign exchange reserves diminished to barely three weeks of controlled imports, historically high inflation and an unprecedented currency devaluation.

Under the bailout deal, the IMF also got Pakistan to raise $1.34 billion in new taxation to meet fiscal adjustments. The measures fuelled all-time high inflation of 38% year-on-year in May, the highest in Asia, which still is hovering above 30%.

"Inflation is expected to decline over the coming months amid receding supply constraints and modest demand," the IMF said, warning that Pakistan would remain susceptible to significant external risks, including the intensification of geopolitical tensions, resurgent commodity prices and the further tightening in global financial conditions.

"The agreement supports the authorities' commitment to advance the planned fiscal consolidation, accelerate cost-reducing reforms in the energy sector, complete the return to a market-determined exchange rate, and pursue state-owned enterprise and governance reforms to attract investment and support job creation while continuing to strengthen social assistance," the IMF statement added.

It said a nascent recovery anchored by the stabilization policies under the program was underway.