The International Monetary Fund (IMF) said on February 1 2010 that its executive board approved a three-year $574.4 million loan "to support the country’s economic program aimed at restoring fiscal and external sustainability, preserving financial stability, reducing poverty, and raising growth".

About $93.2 million will be made available immediately and the rest will be released following semiannual reviews.

The new arrangements follow a three-year program supported by a Poverty Reduction and Growth Facility, which was approved by the IMF executive board in May 2006 and expired in May 2009, the Fund said in a statement.

"The authorities’ program for 2010–12 aims to restore fiscal and external sustainability and boost growth. Fiscal policy targets a gradual return to a sustainable position by 2012, or earlier if possible," IMF deputy managing director and acting chairperson of the board Takatoshi Kato said in the statement.

"Monetary policy will focus on maintaining price stability. Structural reforms will support the recovery, including by increasing the flexibility of the highly regulated economy. The programme will also increase spending for essential social services and poverty reduction."

"Structural reforms are designed to unlock the economy’s growth potential and support the fiscal program. A wide-ranging program of liberalisation and deregulation is aimed at stimulating competition and fostering private sector-led growth. To keep the social insurance system financially sustainable, early retirement privileges of the civil servants will be gradually phased out, and sick leave compensation will be revamped. The authorities will also address the large quasi-fiscal arrears in the heating sector," Kato said.

Specific programme objectives include reversing structural fiscal deterioration while safeguarding funds for public investment and priority social spending; keeping inflation under control while rebuilding foreign reserves to cushion the economy from external shocks; ensuring financial stability by enabling early detection of problems and strengthening the framework for bank rehabilitation and resolution; and raising the economy’s potential through structural reforms.

"To promote poverty reduction, the program sets a floor on priority social spending. Moreover, social assistance spending will be increased by 36 per cent in 2010 relative to 2009 to support vulnerable households," the IMF said.