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Cash-strapped Pakistan on Tuesday began talks with the International Monetary Fund (IMF) aimed at releasing funds from a $7 billion bailout that have been stalled since November.

Finance Minister Ishaq Dar met IMF Pakistan Mission Chief Nathan Porter, the finance ministry said, and briefed him on the "fiscal and economic reforms and measures being taken by the government in different sectors".

Unlocking the funding is critical for Pakistan, which has enough foreign reserves to cover just three weeks' worth of imports. Fuel comprises the bulk of the import bill.

The IMF had set several conditions for resuming talks on the bailout, including a market-determined exchange rate for the local currency and an easing of fuel subsidies.

Last week, Pakistan removed an artificial cap on the rupee, resulting it to lose 20% of its value against the U.S. dollar until Monday.

It also raised fuel prices by 16%, saying the increase was in response to higher global energy costs.

The central bank has also raised interest rates this month by 100 basis points to fight record high inflation, which is expected to be at 24-26% in January.

Pakistan secured a $6 billion IMF bailout in 2019, which was topped up with another $1 billion last year. This is the IMF's ninth review of its Extended Fund Facility, which is meant to help countries facing a balance-of-payment crisis. (Reuters)