The International Monetary Fund (IMF) has endorsed Nigeria’s ongoing bank recapitalisation drive.
It said stronger capital buffers are cushioning the financial system against external shocks and strengthening resilience amid intensifying global uncertainties.
Tobias Adrian, Financial Counsellor and Director of the Monetary and Capital Markets Department at the IMF, said this during the presentation of the Global Financial Stability Report.
He made the remarks at the IMF/World Bank Spring Meetings in Washington, D.C., on Tuesday.
Adrian said robust fiscal positions remain critical for emerging markets to withstand volatile global capital flows.
He noted that this would reduce exposure to sudden market reversals and help maintain macroeconomic stability under uncertain financial conditions.
He stressed the growing importance of bank recapitalisation during periods of heightened global financial stress.
Adrian said building a well-capitalised banking sector remains essential to sustaining global financial stability, particularly as economies confront persistent uncertainty.
He added that managing tightening financial conditions and evolving risks across international capital markets is crucial for economic stability.
According to him, the benefits of bank recapitalisation become most evident during periods of stress, as stronger capital positions enable financial institutions to absorb shocks, sustain lending, and support broader economic stability.
Adrian said ensuring debt sustainability and maintaining strong fiscal positions are central to IMF engagement with countries, particularly in Sub-Saharan Africa, where tailored programmes address diverse economic challenges and vulnerabilities.
On capital flows to Sub-Saharan Africa, he said: “I have observed that the ongoing Middle East conflict has triggered an outsized reaction, with movements roughly twice as large as those recorded during the early stages of the Ukraine crisis.”
Adrian said that despite significant shifts in capital flow volumes, price reactions have remained relatively contained, reflecting a broadly healthy global risk appetite.
He also called for sustained investor confidence across financial markets despite prevailing geopolitical tensions worldwide.
Jason Wu, Assistant Director in the Monetary and Capital Markets Department at the IMF, said capital flows to emerging markets are increasingly driven by debt rather than foreign direct investment and equity.
He noted that this raises concerns about the long-term global financial stability outlook.
Wu said countries with stronger fiscal positions generally enjoy better access to international markets and lower borrowing costs.
He also underscored the need for sustained fiscal reforms to guard against sudden capital outflows.
