The IMF board on Monday approved a $1 billion, three-year loan for Uganda to help the African nation recover from the economic crisis caused by the Covid-19 pandemic.

The new aid provides $258 million immediately to help the government cover spending, and comes on top of an emergency loan of nearly $500 million last year, the International Monetary Fund said in a statement.

The pandemic upended years of progress in reducing poverty, but the Washington-based crisis lender noted a modest recovery underway even amid continuing uncertainty and risks to the outlook.

The International Monetary Fund will provide new financing for Uganda to help with poverty reduction
The International Monetary Fund will provide new financing for Uganda to help with poverty reduction AFP / Olivier DOULIERY

"Uganda's economy has been severely impacted by the COVID-19 global pandemic, which reversed decade-long gains in poverty alleviation and opened up fiscal and external financing gaps," IMF Deputy Managing Director Tao Zhang said in a statement.

The government will work on debt reduction and investments in infrastructure "while increasing social spending, including for vaccines" and reducing poverty, he said.

Coronavirus