The International Monetary Fund today approved a $135 million loan installment for Pakistan in a sign that economic policy was being used to shore up critical allies.

Without it, the fund's board cannot approve the next loan installment.

As sales shrink and revenue falls, indebted companies run short of cash to pay loan installments.

The suppliers, in turn, also have trouble paying their bills and loan installments.

Early this month, the International Monetary Fund refused to release a $1.3 billion loan installment after Argentina failed to meet budget deficit targets.

She sells some vessels at her home and pays the loan installment.

The bitter experience of last July, though, has left the I.M.F. wary about making a second loan installment.

There is considerable posturing in these sorts of negotiations, and the troika has threatened to withdraw aid in the past, only to approve the next loan installment.

The European authorities are not going to let that happen over a measly $17bn loan installment.

The existing I.M.F. commitment is for two remaining loan installments of $1.2 billion each.