IMF approves $7bn loan to cash-strapped Pakistan

The International Monetary Fund (IMF) has approved a $7 billion loan to cash-strapped Pakistan.

The country is due to receive the first $1 billion of the loan immediately, with the balance to be paid out over the next three years.

Prime Minister Shehbaz Sharif welcomed the decision and thanked the head of the IMF, Kristalina Georgieva, and her team.

Pakistan has taken more than 20 loans from the IMF since 1958 and is currently its fifth-largest debtor.

The new programme "will require sound policies and reforms" to stabilise and help make the economy more resilient, the IMF said.

The South Asian nation has pledged that it would be the last loan from the international lender.

As part of the deal, Islamabad agreed to a number of unpopular measures, including increasing the amount of tax it collects from people and businesses.

The country has relied on IMF loans to meet its needs for decades and continued to struggle after years of financial mismanagement.

Last year, the country was on the brink of defaulting on its debts and had barely enough in foreign currencies to pay for a month of imports.

The IMF approved a $3bn bailout for Pakistan in July 2003. It also received funds from allies Saudi Arabia and the United Arab Emirates (UAE).

At the time, Mr Sharif said the bailout was a major step forward in efforts to stabilise the economy.

"It bolsters Pakistan's economic position to overcome immediate to medium-term economic challenges," he said.