WASHINGTON - The International Monetary Fund has approved a $1.2 billion aid payment to Pakistan after concluding a review of the country's economic performance, the fund said in a statement on Wednesday.

The IMF bailed out Pakistan in 2008 to avert a balance of payments crisis that, allied to budget and political concerns, had undermined investors' faith in a country central to U.S. efforts to confront al Qaeda and settle a volatile region.

The economic performance review came as Pakistan officials sought to keep funds flowing from its $11.3 billion aid deal, and the IMF said that with the newest disbursement the total paid out had reached about $6.54 billion.

The Fund said in November that Pakistan's economy was showing signs of recovery although it noted that risks remained. Pakistani officials said the IMF's concerns centered on the country's security situation, along with poor tax collection and sluggish donor aid.

Along with the IMF help, Pakistan was promised $5.7 billion in aid over two years at a donors conference in April, but only a fraction of the funds has arrived as donors demand Pakistan follow through on reforms.

On Wednesday, the IMF executive board also said it had approved Pakistan's request for a waiver of budget deficit criteria, which it missed by a margin of 0.3 percent of GDP at the end of September, the statement said.

(Reporting by Andrew Quinn; Editing by Sandra Maler)