The International Monetary Fund (IMF) said Wednesday it had agreed with the Pakistani government to resume a suspended loan program that will inject $1.17 billion into the struggling economy.

A statement from the IMF said a "staff-level agreement," which is still subject to IMF's board approval, will bring to $4.2 billion the amount dispersed under an extended fund facility that could increase to $7 billion and stretch until June next year.

"Pakistan is at a challenging economic juncture. A difficult external environment combined with procyclical domestic policies fueled domestic demand to unsustainable levels," Nathan Porter, who headed the IMF team, said in a statement.

(With input from AFP)