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Pakistan and the International Monetary Fund are to resume talks online next week they said on Friday, after ten days of face-to-face discussions in Islamabad on how to keep the country afloat ended without a deal.

With the nuclear-armed nation in the grip of a full-blown economic crisis, the IMF talks are aimed at unlocking at least $1.1 billion of stalled funding as part of a $6.5 billion bailout signed in 2019.

Finance Minister Ishaq Dar told reporters Pakistan had agreed with the IMF on the conditions to release the funds, which have been delayed since last December.

Talks would resume virtually on Monday, he added, citing "routine procedures" for the delay. "We will implement whatever has been agreed upon between our teams," Dar said.

In a statement, Pakistan IMF Mission Chief Nathan Porter confirmed talks were continuing and that considerable progress had already been made. The hold-up though sent the price of the country's government bonds tumbling again.

Pakistan is in dire need of a successful outcome. The $350-billion economy is still reeling from devastating floods last year, and the government estimates rebuilding efforts will cost $16 billion.

The heavily-indebted nation only has enough foreign reserves to cover less than three weeks of crucial imports. The longer it takes for the IMF tranche to be paid out, the higher the risk of default, analysts say, especially with elections also looming.

Last week, Prime Minister Shahbaz Sharif called Pakistan's economic situation "unimaginable."

"Ideally, Pakistan should have reached a staff level agreement at the end of the IMF mission," Khaqan Najeeb, a former finance ministry adviser, told Reuters.

"Delay is untenable."

IMF MEASURES

The so-called staff-level agreement, which then needs to be approved by the IMF's head office in Washington, must be reached before the funds are disbursed.

In addition to the stalled tranche, another $1.4 billion remains of the $6.5 billion bailout programme, which is due to end in June.

Experts said Pakistan needs the payout as soon as possible. "If this drags on for, say, longer than a month, things get more difficult as our forex reserves have reached a critical level," former central bank Deputy Governor Murtaza Syed told Reuters.

The conditions set by the IMF include a return to a market-based exchange rate and higher fuel prices, measures that Pakistan recently implemented and that have already sent inflation to a record high - 27.5% year on year in January - and created shortages in some imported goods.

Dar said Pakistan had also agreed with the IMF to introduce fiscal measures, including new taxes.

Analysts fear more fiscal tightening could tip the economy further into crisis.

"The government has not only wasted over five months in realising the gravity of the situation, it is still sleepwalking the country into an economic abyss," said Sakib Sherani, who served as the finance ministry's principal economic adviser in 2009-10. (Reuters)