The International Monetary Fund (IMF) has approved a $7 billion (£5.25 billion) loan for Pakistan, providing critical financial relief to the cash-strapped nation. The first $1 billion will be disbursed immediately, with the remainder paid over the next three years.

Prime Minister Shehbaz Sharif welcomed the decision, expressing gratitude to IMF Managing Director Kristalina Georgieva and her team.

Pakistan, which has taken over 20 loans from the IMF since 1958, is currently the lender’s fifth-largest debtor. The IMF emphasized that the new loan program requires Pakistan to implement “sound policies and reforms” aimed at stabilizing the economy and increasing its resilience.

Islamabad has committed to making this its final IMF loan, agreeing to several tough measures, including raising taxes on individuals and businesses. The country has long relied on IMF support due to years of financial mismanagement.

Last year, Pakistan faced a near-default situation, with foreign currency reserves barely enough to cover a month’s worth of imports. In July 2023, the IMF approved a $3 billion bailout for the country, which was supplemented by funds from Saudi Arabia and the UAE.

Sharif hailed the bailout as a crucial step toward economic stabilization, saying it “bolsters Pakistan’s economic position to overcome immediate to medium-term challenges.”