## How Fragile States Can Gain by Strengthening Institutions and Core Capacities

_IMF Blog, March 18, 2026_

## Source details

**Canonical URL:** [How Fragile States Can Gain by Strengthening Institutions and Core Capacities](https://www.imf.org/en/blogs/articles/2026/03/18/how-fragile-states-can-gain-by-strengthening-institutions-and-core-capacities)

## Other formats

- [Markdown version](/en/blogs/articles/2026/03/18/how-fragile-states-can-gain-by-strengthening-institutions-and-core-capacities/index.md)
- [Structured JSON version](/en/blogs/articles/2026/03/18/how-fragile-states-can-gain-by-strengthening-institutions-and-core-capacities/index.json)
- [Bundle manifest](/en/blogs/articles/2026/03/18/how-fragile-states-can-gain-by-strengthening-institutions-and-core-capacities/bundle-manifest.json)

## Bibliographic details
- Authors: Paul M Bisca, Alexei Miksjuk, Christian Mumssen, Gaelle Pierre
- Published: March 18, 2026

---

### Overview and context
- Some 1 billion people across 38 fragile and conflict–affected states experience lower economic growth and are more vulnerable to shocks than those in other countries.
- Fragility and conflict spill across borders through cross-border insecurity, migration and refugee flows, and trade disruptions.
- The situation has worsened in recent years and may be further complicated by economic spillovers from the conflict in the Middle East.
- Fragility often involves weak state capacity, governance challenges, social tensions, poverty and inequality, and high vulnerability to shocks such as food-price hikes.
- Conditions associated with fragility can also emerge in other low-income countries, emerging markets, or some advanced economies.

### Economic costs and key statistics
- Median economic growth for the poorest fragile states averaged 3.5 percent versus 4.6 percent for their more stable counterparts in 17 of the past 20 years.
- Growth was even lower where institutional fragility was coupled with conflict and abundant natural resources.
- Weaker productivity growth and more limited foreign and domestic investment underlie slower growth in the poorest fragile states; investment is hindered by underdeveloped financial systems.
- Median ratio of tax revenue to economic output in the poorest fragile states is about 10 percent.
- IMF research indicates that if low-income countries have a tax ratio below 15 percent, they will find it extremely hard to foster growth, strengthen institutional capacity, and achieve development goals.
- Some three quarters of the poorest fragile states are at high risk of, or in, debt distress.
- Low fiscal and foreign exchange reserves constrain the ability to support economies in downturns and to stabilize when needed.
- Many of these countries experienced growth scarring after recent global shocks; some suffer from double-digit inflation.

### Policy findings and priorities
- Economic policies cannot solve fragility alone but can significantly contribute by:
  - Promoting sustainable growth and job creation.
  - Prioritizing key spending while keeping debt on a sustainable path.
  - Tackling inflation to stabilize economies.
- Strengthening the core functions of government is central to progress:
  - Stabilizing the economy.
  - Delivering public services.
  - Supporting efficient markets, including financial sector development.
- Strengthening institutions and core capacities helps build trust, strengthen the social contract, and deliver visible benefits that can increase legitimacy.

### Implementation challenges and opportunities
- National leaders face the key challenge of building and sustaining broad coalitions to support effective policies and reforms.
- Even in difficult contexts, reforms can create a virtuous circle (example: better tax administration can raise revenues → improve public services and fiscal transparency → strengthen legitimacy → enhance tax compliance → raise more revenue).
- The poorest fragile states face acute resource constraints that limit public spending and crisis response capacity.

### Role of the international community
- International support is important and should be tailored:
  - Policy advice.
  - Capacity development.
  - Financing.
- For countries with intense fragility and high risk of conflict, targeted support is especially critical.
- Early and targeted support for countries facing growing risk of fragility can prevent deterioration into worse crises.

### Concluding message
- Sound economic policies and reforms are crucial for the wellbeing of people in fragile states.
- Priority actions center on strengthening institutions, building trust, and reducing vulnerability so that countries can leave fragility behind.

*Authors: Paul M. Bisca, Alexei Miksjuk, Christian Mumssen, Gaëlle Pierre — March 18, 2026.*

---


## References

- [Macroeconomic Challenges of Fragility and Policies for Stability and Growth](https://www.imf.org/en/publications/departmental-papers-policy-papers/issues/2026/02/17/macroeconomic-challenges-of-fragility-and-policies-for-stability-and-growth-572226)

_Source: https://www.imf.org/en/blogs/articles/2026/03/18/how-fragile-states-can-gain-by-strengthening-institutions-and-core-capacities_