The International Monetary Fund (IMF) has approved a $3 billion bailout package for Pakistan, which is facing a severe economic crisis due to high inflation, low growth, and a large fiscal deficit.

The IMF said the bailout, which is part of a larger $6 billion loan program agreed in 2019, will help Pakistan address its urgent balance of payments needs, support structural reforms, and strengthen social spending.

The IMF also praised Pakistan for its efforts to contain the impact of the Covid-19 pandemic on the economy and the population. The bailout comes as a relief for Pakistan, which has been struggling to meet its external debt obligations and maintain its foreign exchange reserves. Pakistan’s economy contracted by 0.4% in the fiscal year 2020, and is expected to grow by only 1.5% in the current fiscal year, according to the IMF.

The country also faces high inflation, which reached 10.7% in June, and a large fiscal deficit, which widened to 8.1% of GDP in the fiscal year 2020. The IMF said the bailout will support Pakistan’s economic recovery and resilience, and help it achieve sustainable and inclusive growth.

The bailout will also enable Pakistan to access additional financing from other international partners, such as the World Bank and the Asian Development Bank. The IMF said it expects Pakistan to implement key structural reforms, such as improving tax administration, strengthening governance and transparency, enhancing the business environment, and protecting social spending.

The IMF’s bailout is a welcome development for Pakistan, which has been facing a series of economic challenges in recent years. The country has been relying on loans from friendly countries, such as China, Saudi Arabia, and the United Arab Emirates, to shore up its finances. However, these loans have also increased Pakistan’s debt burden and reduced its policy space.

The IMF’s bailout will provide some breathing room for Pakistan to address its economic woes and pursue its development goals.