WASHINGTON - The International Monetary Fund on Monday said its executive board approved a $1.04 billion, 40-month Extended Credit Facility loan arrangement for Tanzania, with an immediate disbursement of about $151.7 million.

The IMF said in a statement that the financing package would assist Tanzania's economic recovery, address spillovers from Russia's invasion of Ukraine, help preserve macroeconomic stability and support structural reforms.

"Reforms will focus on strengthening fiscal space for much-needed social spending and high-yield public investment, resuming and advancing the authorities’ structural reform agenda," and strengthening financial stability, the fund said.

The ECF facility, equal to 795.58 Special Drawing Rights, or 200% of the country's quota, or IMF shareholding, follows IMF emergency support during 2021 of about $561.5 million. The fund has been seeking to convert low-conditionality COVID-19 support loans to longer-term, traditional loan packages that require policy reforms.

The IMF said the new arrangement "is expected to catalyze additional bilateral and multilateral financial support" and help attract private sector investment.

Spillovers from the war in Ukraine were stalling Tanzania's gradual recovery from the COVID-19 pandemic, the IMF said.

Tanzania faces "considerable development and reform challenges and external headwinds, including COVID-19-induced scars and the war in Ukraine, (that) risk eroding hard-won economic gains," IMF Deputy Managing Director Bo Li said in the IMF statement.

(Reporting by David Lawder; Editing by Sandra Maler and Leslie Adler)