WASHINGTON, DC – The International Monetary Fund (IMF) has formally endorsed Nigeria’s ongoing bank recapitalisation drive, stating that stronger capital buffers will help shield the financial system from external shocks and bolster resilience amid mounting global uncertainty.
Tobias Adrian, the IMF’s Financial Counsellor and Director of the Monetary and Capital Markets Department, made the remarks during the presentation of the Global Financial Stability Report at the IMF/World Bank Spring Meetings in Washington DC on Tuesday.
Mr Adrian said robust fiscal positions remain critical for emerging markets such as Nigeria to withstand volatile capital flows, 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 financial stress worldwide. Building a well-capitalised banking sector, he noted, is essential to sustaining global financial stability – particularly as economies confront persistent uncertainty, tightening financial conditions, and evolving risks across international capital markets.
According to Mr Adrian, the benefits of bank recapitalisation become most evident during stress periods, as stronger capital positions enable financial institutions to absorb shocks, sustain lending, and support broader economic stability.
He also emphasised that ensuring debt sustainability and maintaining stronger fiscal positions are foundational to the IMF’s engagement with countries, especially across sub-Saharan Africa, where tailored programmes address diverse economic challenges and vulnerabilities.
On capital flows to sub-Saharan Africa, Mr Adrian 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. Despite these significant shifts, price reactions have remained relatively contained, reflecting broadly healthy global risk appetite. He called for continued investor confidence across financial markets in spite of prevailing geopolitical tensions.
Jason Wu, Assistant Director in the IMF’s Monetary and Capital Markets Department, added that capital flows to emerging markets are increasingly driven by debt rather than foreign direct investment and equity – a trend that raises concerns about long-term financial stability. Countries with stronger fiscal positions, he noted, generally enjoy improved access to international markets and lower borrowing costs. Mr Wu underscored the need for sustained fiscal reforms to guard against sudden capital outflows.
(Report sourced from NAN)
