The International Monetary Fund (IMF) has called for urgent strengthening of institutions and core economic capacities in fragile and conflict-affected states, warning that weak governance, low revenues and rising debt vulnerabilities would continue to suppress growth and heighten exposure to shocks.

It added that the risks have implications that extend beyond national borders.

In a new blog post, the IMF said that about one billion people across 38 fragile and conflict-affected countries face lower economic growth and greater vulnerability compared to more stable economies.

The Fund noted that the effects of fragility often spill across borders through insecurity, migration, refugee flows and trade disruptions.

It warned that the situation has worsened in recent years and could be further complicated by economic spillovers from ongoing conflicts in the Middle East.

Stressing that while economic policies alone cannot resolve fragility, they remain critical tools for promoting stability and rebuilding trust.

It stated: “While economic policies do not present easy solutions and cannot tackle all issues alone, they can significantly contribute to addressing fragility by promoting sustainable growth and job creation, prioritising key spending while keeping debt on a sustainable path, and tackling inflation.”

According to the IMF, fragility is often driven by weak state capacity, governance challenges, social tensions, poverty and inequality, as well as exposure to shocks such as rising food prices, all of which deepen uncertainty and constrain governments already operating with limited resources.

The report found that economic performance in fragile states has consistently lagged behind that of more stable countries.

For the poorest among them, median growth averaged 3.5 per cent compared to 4.6 per cent in stronger economies over the past two decades, with even weaker outcomes recorded in countries facing both conflict and institutional fragility.

It noted that slower growth reflects weak productivity and limited investment flows, largely due to underdeveloped financial systems, while constrained fiscal space continues to limit governments’ ability to invest in infrastructure, public services and social protection.

The IMF said tax revenues in many fragile states remain critically low, with a median tax-to-GDP ratio of about 10 per cent, far below the 15 per cent threshold considered necessary to support growth and development.

It warned that countries below this level would find it “extremely hard to foster growth, strengthen institutional capacity, and achieve development goals.”

Rising financing needs have also pushed many of these countries into precarious debt positions. The Fund disclosed that about three-quarters of the poorest fragile states are either at high risk of debt distress or already in it, a situation compounded by weak fiscal buffers and limited foreign exchange reserves.

It added that these vulnerabilities have left many economies unable to respond effectively to recent global shocks, leading to prolonged periods of weak growth and, in some cases, double-digit inflation.

The IMF stressed that addressing fragility is essential not only for affected countries but also for regional and global stability, urging governments to prioritise policies that strengthen core state functions such as economic management, service delivery and the development of efficient markets.

“Ultimately, sound economic policies and reforms are crucial for the well-being of the people in fragile states,” the Fund said, adding that such reforms help build trust, strengthen the social contract and create opportunities for citizens.

The report also highlighted the importance of political will, noting that national leaders must build broad coalitions to support reforms, even though such measures can be difficult to implement.

However, it argued that consistent reforms can create a virtuous cycle of improved governance, stronger institutions and higher revenue mobilisation.

For instance, it noted that improved tax administration could boost revenues, which in turn can be channelled into better public services and more transparent fiscal systems, thereby enhancing public trust and compliance.

The IMF further called on the international community to scale up support for fragile states through targeted policy advice, capacity development and financing, particularly for countries facing heightened risks of conflict.

It emphasised that early and well-targeted interventions are critical in preventing countries from sliding deeper into crisis.

Although the analysis focuses on fragile and conflict-affected states globally, its findings speak to Nigeria’s current realities, where low revenue mobilisation, rising debt pressures and inflation continue to test economic stability and reform efforts.