Pakistan has received the second tranche of a $1.31bn loan from the International Monetary Fund (IMF), which it was awarded after supporting the US military action against neighbouring Afghanistan.

"The state bank today received the $107.8m from the IMF," Syed Wasimuddin, chief spokesman for the central State Bank of Pakistan (SBP), told the Reuters news agency.

The IMF approved the three-year loan in December to offset the impact on the economy from the war.

Loans had been suspended due to sanctions imposed by the US, the largest shareholder of the IMF, after Pakistan tested nuclear weapons in May 1998.

After the 11 September attacks on New York and Washington, Pakistan's President Pervez Musharraf pledged to back the US-led war.

War loans

The US lifted sanctions against Pakistan, one of the few countries that recognised the Taleban government in Afghanistan, in late September.

Days later a $596m standby arrangement was made available to Pakistan by the IMF.

Pakistan's medium-term arrangement with the IMF also paved the way for rescheduling $12.5bn of the country's debt.

With more than $65bn in foreign and domestic debt, Pakistan spends 83% of its annual revenues on debt servicing and defence.

Mr Wasimuddin said the release of the second tranche from the IMF had pushed Pakistan's liquid foreign exchange reserves to about $5.3bn from $5.2bn on 30 March.