The International Monetary Fund approved a $7 billion bailout package for Pakistan on Wednesday.

According to sources, the bailout package will be 37 months long in duration.

The first tranche from the bailout worth $1.1 billion has also been approved for release and the funds could be transferred as soon as September 30.

The IMF loan will be available at less than 5 percent interest rate, sources in the Ministry of Finance said.

The approval for the bailout package was given in a meeting of the Fund’s executive board in Washington on Wednesday.

Pakistan’s package was reportedly the top item on the meeting’s agenda. The meeting will also discuss packages for Liberia, Turkey and Portugal.

Finance Minister Muhammad Aurangzeb had recently stated that the terms of the loan would be made public on September 25.

He had also claimed that his five predecessors had not been able to negotiate such favourable terms with the global lender.

The finance minister expressed hope that it could be Pakistan’s last IMF programme, contingent upon the country implementing agreed-upon structural reforms.

The IMF had announced that it reached staff-level agreement with Pakistan for an extended fund facility (EFF) of around $7 billion on July 13.

Faced with chronic mismanagement, Pakistan’s economy has found itself on the brink, challenged by the Covid-19 pandemic, the effects of the war in Ukraine and supply difficulties that fuelled inflation, as well as record flooding that affected a third of the country in 2022.

With its foreign currency reserves dwindling, Pakistan found itself in a debt crisis and was forced to turn to the IMF, obtaining its first emergency loan in the summer of 2023.

The latest bailout, coming to Pakistan in the form of loans, follows a commitment by the government to implement reforms, including a major effort to broaden the country’s tax base.

According to the statement, Pakistan will be receiving the money in the next three years if it lives up to the promises the current government has made with the Fund. These include measures to tax everyone in the county and privatise the state’s own organisations.

The IMF said the new program would help authorities improve macroeconomic stability and create conditions for stronger, more inclusive, and resilient growth.

“This includes steps to strengthen fiscal and monetary policy and reforms to broaden the tax base, improve State Owned Enterprises’ (SOE) management, strengthen competition, secure a level playing field for investment, enhance human capital, and scale up social protection through increased generosity and coverage in the Benazir Income Support Program (BISP),” the statement had added.