Pakistan says $7.6 billion IMF loan agreed By ASHRAF KHAN , 11.15.08, 07:13 AM EST

Pakistan has agreed to borrow $7.6 billion from the International Monetary Fund to avoid adding an economic crisis to its struggle against Islamic militants, an official said Saturday.

Finance chief Shaukat Tareen said the IMF had agreed "in principle" to the bailout after vetting government plans to tackle Pakistan's yawning budget and trade deficits.

"We believe that we can see commencement of a steady stream of inflows from now on, thereby eliminating the air of uncertainty," Tareen said at a news conference.

Meanwhile, militants fired a mortar shell into a village near the troubled Pakistani city of Peshawar on Saturday, killing one soldier and wounding another, an official said.

The loan will top up Pakistan's foreign currency reserves, whose rapid rundown had raised the prospect of a run on the rupee and a default on the country's international debt.

That risk has already eroded confidence in Pakistan's government and economy, deterring badly needed foreign investment at a time of slowing economic growth and runaway inflation.

Tareen said the government would apply formally for the loan next week. The IMF has already signaled that it will consider the application quickly.