The International Monetary Fund has endorsed Nigeria’s ongoing bank recapitalisation drive.

It said that 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 IMF’s Monetary and Capital Markets Department, said this during the presentation of the Global Financial Stability Report.

The reports that he stated this during the IMF/World Bank Spring Meetings in Washington, D.C. on Tuesday.

Mr Adrian said that robust fiscal positions remained critical for emerging markets to withstand volatile global capital flows. He said this would reduce exposure to sudden market reversals and maintain macroeconomic stability under uncertain financial conditions.

He stressed the growing importance of bank recapitalisation during periods of heightened global financial stress.

Mr Adrian said that building a well-capitalised banking sector remained essential to sustaining global financial stability, particularly as economies confront persistent uncertainty.

He also said that tightening financial conditions and evolving risks in international capital markets were crucial to economic sustainability. 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 across markets.

Mr Adrian said that ensuring debt sustainability and maintaining stronger fiscal positions are foundational to IMF engagement with countries, particularly across Sub-Saharan Africa, where tailored programmes address diverse economic challenges and vulnerabilities.

On capital flows to Sub-Saharan Africa, he said, “I have observed 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.”

Mr Adrian said that in spite of the significant shifts in capital flow volumes, price reactions have remained relatively contained, reflecting broadly healthy global risk appetite.

He also called for continued investor confidence across financial markets despite prevailing geopolitical tensions worldwide.

Jason Wu, the assistant director in the Monetary and Capital Markets Department at the IMF, said that the capital flows to emerging markets are increasingly driven by debt rather than foreign direct investment and equity.

He said that the raised concern was about the long-term financial stability outlook globally.

Mr Wu said that countries with stronger fiscal positions generally enjoy improved access to international markets and lower borrowing costs. He also underscored the need for sustained fiscal reforms to guard against sudden capital outflows.  

(NAN)