KARACHI: Pakistan said Thursday it had received $1.1 billion dollars from the United States for its fight against militants, the first installment of its kind since December 2010.

Washington released the funds after Pakistan and the United States on Tuesday signed an agreement governing Nato convoys travelling through Pakistan into Afghanistan until the end of 2015.

The fund, which is designed to reimburse Pakistan for the cost of counter-insurgency operations, paid $8.8 billion to Pakistan between 2002 and 2011.

But Islamabad stopped claiming the money as relations collapsed in the wake of the May 2011 raid that killed Osama bin Laden.

The crisis fell to a new low when US air strikes killed 24 Pakistani soldiers and Islamabad imposed a seven-month blockade on NATO traffic in protest.

“We received $1.118 billion from the coalition support fund last night,”Syed Wasimuddin, spokesman for the central State Bank of Pakistan, told AFP.

He said it was the first installment since $633 million in December 2010.

Analysts have suggested that the $1.1 billion dollars is particularly beneficial to Pakistan as it tries to head off a new financial crisis created by poor tax revenues, mismanagement and overgenerous subsidies.

The fund has increased the country's total liquid foreign exchange reserves to $15692.5 million.

Pakistan's total foreign reserves stood at $14,574.5 million on July 27, 2012, according to SBP. According to break-up, foreign reserves held by SBP were $10,139.3 million and net foreign reserves held by banks (other than SBP) $4,435.2 million on July 27, 2012

On Thursday, the US commander of Nato troops in Afghanistan held talks in Pakistan for the first time since the Nato supply lines resumed.

General John Allen later said that “significant progress” was being made in improving cooperation with Pakistan, which US officials have urged to do more to crush Afghan Taliban havens on its soil.

It may be noted that Pakistan and US had singed a memorandum of understanding (MoU) on July 31, 2012 to regularize the Nato supplies to Afghanistan via Pakistan.

The MoU, drafted under the light of the UN Charter and in line with the recommendations of the Parliament, has replaced the existing arrangement for Nato supplies.