Islamabad, Mar 25 (IANS): The International Monetary Fund (IMF) has approved the release of a $500 million loan tranche to Pakistan, reviving a bailout package that had been suspended due to Islamabad's failure to implement reforms.

"The program aims to support Pakistan's policies to help the economy and save lives and livelihoods amid the still unfolding Covid-19 pandemic," the IMF said in a statement after the approval to revive the stalled loan facility on Wednesday.

The approval has paved the way for the release of the third tranche of a $6 billion bailout package which Pakistan had secured in 2019 to avert a balance of payment crisis, dpa news agency reported.

The loan facility was suspended in April 2020 due to lack of progress on a package of economic reforms attached to the loan which included raising energy prices and boosting revenue collection, which is one of the lowest in the world.

The IMF had also asked Pakistan to give up central bank control of the currency and to adopt a market-based exchange rate, privatize loss-making public sector companies and end subsidies in power and agriculture sectors.

Some of the reforms have been implemented since the deal was signed. The government increased electricity prices by 16 per cent in February.

Pakistan's economy had started gradually recovering from the aftermath of the Covid-19 pandemic, but the country currently faces a third wave.

Last week, the central bank projected 3 per cent GDP growth for this fiscal year.