ISLAMABAD -- The executive board of the International Monetary Fund has approved a new $7 billion loan for cash-strapped Pakistan, authorities said Wednesday, more than two months after the two sides said they had reached an agreement.

This financial assistance, which will be dispersed in installments over 37 months, aims to bolster Pakistan's struggling economy, according to authorities.

Prime Minister Shehbaz Sharif expressed his satisfaction with the agreement, which his team has been working on with the IMF since June. He extended gratitude to Kristalina Georgieva, the IMF's managing director, and her team for their approval.

The IMF has stated that an initial disbursement of approximately $1 billion will be made immediately.

In a statement released on Thursday, the IMF commended Pakistan for taking decisive measures to restore economic stability. The country has witnessed a rebound in growth, a decline in inflation to single digits, and a stabilized foreign exchange market, leading to the rebuilding of reserve buffers.

However, the IMF also highlighted areas of concern. Despite the progress made, Pakistan's vulnerabilities and structural challenges remain substantial, the organization cautioned.

The report highlighted a challenging business environment, weak governance, and excessive state involvement as obstacles to investment. It also pointed out a limited tax base.

“Insufficient spending on health and education has perpetuated poverty, and inadequate infrastructure investment has constrained economic growth and left Pakistan susceptible to the effects of climate change,” the report cautioned.

This development follows a staff-level agreement reached between the IMF and Pakistan over two months ago for a new loan. The agreement was announced just a day after officials confirmed that the IMF's executive board would approve the loan on Wednesday, stating that Pakistan had fulfilled all the conditions set by the lender.

For decades, Pakistan has relied on IMF loans to address its economic challenges.

Sharif expressed gratitude to China and other friendly nations for their support in facilitating Pakistan's deal with the IMF.