Fragile and conflict-affected states are home to nearly 1 billion people facing many challenges—from low-capacity institutions and the limited provision of public goods to extreme poverty, forced displacement, and even war. Fragility and conflict are also linked to trends such as climate change, food insecurity, and persistent gender inequalities. The economic impact of the COVID-19 pandemic has been most severe in FCS, where per capita incomes are estimated to recover to 2019 levels only after 2024. If these trends persist, 60 percent of the global poor may live in FCS by 2030. FCS are at thus a significant risk of falling behind in their post-pandemic recovery, but also in achieving the Sustainable Development Goals. In addition, spillovers originating in FCS can also threaten macroeconomic stability and inclusive growth prospects in neighboring countries and regions.
Therefore, the IMF is stepping up its engagement with fragile states, including by completing its first FCS Strategy. This Strategy aims to provide robust, well-tailored, and longer-term support to help these vulnerable countries achieve macroeconomic stability, strengthen resilience, promote sustainable and inclusive growth, and exit fragility. While the Strategy is primarily focused on FCS, it is also relevant for countries at risk of becoming fragile and conflict-affected—whether due to internal factors or external shocks and spillovers
The IMF’s new FCS strategy has been developed through an extensive consultation process. The Fund has received feedback from over 55 organizations including the World Bank and regional development banks, the United Nations system, civil society organizations (CSOs), think tanks, and academia.
The IMF has had a long-standing engagement with fragile and conflict-affected states. Over the past decade, the Fund has provided emergency financial support worth US$7.5 billion to 28 economies considered FCS. During the COVID-19 pandemic, the Fund and the World Bank have actively supported the implementation of the G20 Debt Service Suspension Initiative (DSSI) in which 24 eligible FCS have requested to participate since 2020. FCS have also benefited from US$16.2 billion from the recent SDR allocation – which directly boosted foreign exchange reserves, supporting external stability and confidence. The FCS Strategy builds on this experience and lessons learned, providing a framework and a set of measures that will allow the Fund to better support its most vulnerable members. These include:
Greater tailoring of Fund engagement and instruments to the country-specific manifestations of fragility and conflict. The Strategy makes the case that the implications of fragility and conflict are macro-critical and directly relevant to the IMF’s mandate. It outlines principles of engagement to ensure that the IMF’s comparative advantage will be effectively leveraged to help country authorities in FCS achieve better macroeconomic outcomes. The Strategy also provides for stepped-up capacity development to strengthen economic institutions in FCS and greater agility of the IMF’s lending toolkit.
Closer proximity to our most vulnerable members. As exiting fragility and building resilience take time, the Strategy will lead to an expanded Fund presence in FCS to help country authorities respond to economic challenges associated with fragility and conflict, and deliver tailored support over the long run.
Stronger partnerships to amplify the Fund’s impact. Since progress in FCS requires a unified effort among partners, the Strategy spells out how the IMF will work with development, humanitarian, and peace actors who play a key role in helping FCS make progress.
The paper explores the drivers of political fragility by focusing on coups d’état as symptomatic of such fragility. It uses event studies to identify factors that exhibit significantly different dynamics in the runup to coups, and machine learning to identify these stressors and more structural determinants of fragility—as well as their nonlinear interactions—that create an environment propitious to coups.
The Ukraine Capacity Development Fund (UCDF), a trust fund managed and administered by the IMF, was formally launched on February 13, 2024 at an inaugural Steering Committee meeting held in Kyiv. The UCDF will provide substantial resources for the scaling up of technical assistance and training in support of the Ukrainian government’s ambitious economic reform agenda.
Improving people’s relationships with state institutions and ensuring access to services can foster conditions for greater peace and social cohesion in sub-Saharan Africa.
Financial stability is not only about managing inflation, employment rates and spending, it’s about understanding how those factors affect people in different places and in all kinds of circumstances. In this podcast, the United Nations High Commissioner for Refugees, Filippo Grandi, discusses how strategic partnerships between humanitarians and economists will help support the millions of forcefully displaced people in the world and provide a firmer footing for an economic recovery.
This note provides operational advice and information to help staff implement the IMF Strategy for Fragile and Conflict-Affected States (FCS) approved by the Executive Board on March 9, 2022. Topics covered include (i) the new IMF FCS classification methodology, which is aligned with that of the World Bank; (ii) the preparation of Country Engagement Strategies (CES) that will be rolled out across FCS to ensure that Fund engagement is appropriately tailored to country-specific manifestations of fragility and/or conflict; (iii) advice on tailoring the thematic focus of Article IV consultations and Fund analytics to FCS, as well as on the prioritization, design, and implementation of capacity development (CD) projects in fragile contexts; (iv) guidance on making full use of the flexibilities of the lending toolkit; (v) guidance on engaging in specific FCS situations, including building accountable institutions to exit fragility, cases of rising fragility risks, active conflict, post-conflict, and addressing the impact of external shocks and spillovers; and (v) strengthening partnerships with humanitarian, development, and peace actors, in accordance with the Fund’s mandate. Dedicated annexes provide additional information on the CES process, addressing good governance in FCS, program design, and country examples of Fund engagement in FCS.
This paper contributes to the research on the macroeconomic origins of conflict. Based on a sample of 133 low- and middle-income countries over a 30-year period, it analyses to what extent changes in a country’s commodity terms-of-trade (ToT) can explain an increase in the incidence and intensity of conflicts through their effect on aggregate income. While the evidence from previous studies on the link between macroeconomic conditions and conflict is rather inconclusive, we find a significant relationship.
Fragile and conflict-affected states, home to 1 billion people across more than 40 countries, are at particular risk in this era of economic uncertainty. After struggling with poverty, low-capacity institutions, governance challenges, violence, and other risks for decades, these countries must now contend with the scars of the pandemic and Russia’s invasion of Ukraine. Accordingly, the international community must work together to help ensure their stability as a global public good—or else spillover effects associated with fragility and conflict become even more disruptive.
Based on internal data, this paper finds that the capacity development program of the IMF’s Statistics Department has prioritized technical assistance and training to fragile and conflict-affected states. These interventions have yielded only slightly weaker results in fragile states than in other states. However, capacity development is constantly needed to make up for the dissipation of progress resulting from insufficient resources that fragile and conflict-affected states allocate to the statistical function, inadequate inter-agency coordination, and the pervasive impact of shocks exogenous to the statistical system. Greater coordination with other capacity development providers and within the IMF can help partially overcome low absorptive capacity in fragile states. Statistical capacity development is more effective when it is tailored to countries’ level of fragility.
Fragile and conflict-affected states are home to nearly 1 billion people and confront some of the greatest challenges among the world’s economies. 220 million people live within 40 miles from a major conflict event and 155 million globally are acutely food insecure. Franck Bousquet is the deputy director, coordinating the Fund's work in fragile and conflict-affected states. In this podcast, Bousquet talks about the growing costs associated with fragility and conflict, and how the IMF is trying to help.
The chart of the week illustrates how the pandemic exacerbated income divergence between the fragile and conflict-affected states and the rest of the world.
Building on the Fund’s long-standing experience in FCS, the Strategy will further articulate the IMF’s role in helping countries to exit from fragility. It will also identify and propose specific measures to enhance the impact of the Fund’s engagement over the next three years.
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Public financial management and technical assistance in fragile states.
Properly managed public investment in infrastructure is crucial to address protracted fragility.
International partners must support the continent's most vulnerable countries to adapt to extreme weather.
Climate vulnerability and underlying fragilities, like conflict, exacerbate each other.
Strengthening state capacity must adapt to more frequent economic shocks, greater political instability, and fewer resources.
Escalating insecurity, political instability including military takeovers climate change, and overlapping economic shocks are challenges in one of the poorest parts of the world.
IMF work shows that fragile countries' average economic losses from climate change are four times worse than when a storm, drought, or flood hits other countries.
Revenue Forecasting and Analysis (RFAx) - Online Course
Virtual Training to Advance Revenue Administration (VITARAx) Online Course
A discussion on the policy challenges faced by fragile and conflict-affected states and the need for increased support from the international community.
Average economic losses for fragile countries are four times worse than when a storm, drought, or flood hit other countries.
Remarks by Managing Director on Somalia reaching the HIPC completion point.
