The International Monetary Fund has approved reforms to its Financial Sector Assessment Program (FSAP), a move that could have significant implications for African economies facing rising public debt, rapid digitalisation, expanding non-bank finance and growing exposure to cyber and climate-related risks.
The IMF Executive Board concluded its periodic review of the programme on September 3, reaffirming the FSAP as a central tool for monitoring financial stability and guiding policy reforms. The review comes as financial systems worldwide confront a more complex risk environment shaped by the increased role of non-bank financial institutions, digital financial services, artificial intelligence, crypto assets, cyber threats and climate shocks.
For African countries, many of which are working to deepen financial inclusion while safeguarding still-developing banking and capital-market systems, the reforms could lead to more tailored assessments of domestic risks and stronger links between IMF recommendations, policy surveillance and technical assistance.
The FSAP provides detailed examinations of a country’s financial sector, including banks, insurers, capital markets, payment systems, regulatory agencies and crisis-management arrangements. In emerging and developing economies, the IMF generally conducts the assessments jointly with the World Bank. In advanced economies, the IMF usually leads the process independently.
Since the programme was launched in 1999, the Fund has completed 416 assessments in 161 member countries, covering jurisdictions that account for nearly all global financial assets.
The IMF said the latest review reflects the rapid changes affecting financial systems across the world. Directors noted that the growing interconnection between banks, non-bank financial institutions and financial-market infrastructure requires a more system-wide approach to risk assessment.
This is particularly relevant for Africa, where traditional banking continues to expand alongside mobile money platforms, fintech companies, digital lenders, microfinance institutions, pension funds and other non-bank financial service providers. These developments have widened access to payments, savings, credit and insurance, but they have also created regulatory and supervisory challenges.
The rapid growth of mobile financial services in many African countries has made payment systems and digital infrastructure increasingly important to the stability of the wider financial sector. Operational disruptions, cyberattacks, fraud, data breaches or failures in major payment platforms could have broader economic effects, especially in countries where mobile money and digital payments are widely used by households and small businesses.
The Fund said risks related to digitalisation, artificial intelligence, crypto assets and stablecoins will receive greater attention under the revised programme. Climate risks will also remain a priority, an issue of growing importance for African economies vulnerable to droughts, floods, food insecurity and other climate shocks that can affect agricultural incomes, inflation, bank loan performance and public finances.
Under the reforms, the FSAP will adopt a more risk-based and modular approach. The scope of individual assessments will be shaped by stronger initial diagnostics intended to identify the most material vulnerabilities in each country.
The programme is structured around three areas: financial-sector risk analysis; financial stability policy frameworks; and the ability of authorities to manage and resolve financial crises. The IMF said future assessments would place greater emphasis on system-wide and emerging risks where appropriate, while tailoring coverage to national circumstances.
For African economies, this could mean assessments more closely focused on issues such as sovereign-bank links, foreign-currency pressures, high public debt, limited fiscal space, weak asset quality, financial inclusion, fintech supervision, climate-related credit risks and the resilience of payment infrastructure.
However, IMF Executive Directors cautioned that expanding the programme’s coverage should not displace core analysis of banking-sector stability. They also stressed the importance of clear standards, transparent prioritisation and early discussions with national authorities to ensure that assessments remain credible and are applied even-handedly across countries.
The Fund said the reforms are intended to make the programme more agile and allow it to respond more quickly to emerging risks. The approach is also expected to help preserve the programme’s global nature by balancing mandatory assessments of systemically important financial sectors with voluntary assessments requested by other member countries.
A key feature of the revised approach is closer integration between FSAP findings, the IMF’s regular Article IV consultations and capacity-development work.
Article IV consultations are the IMF’s routine assessments of a member country’s economic and financial policies. By linking FSAP recommendations more directly to these consultations, the Fund aims to ensure that financial-sector vulnerabilities identified during an assessment remain part of ongoing discussions with governments and regulators.
The IMF also said recommendations would be better prioritised, sequenced and made more practical for authorities. This is particularly important for low-income and developing economies, where implementation capacity may be constrained by staffing shortages, institutional gaps, limited data and competing policy priorities.
Directors supported allowing longer implementation periods when necessary, recognising that some reforms—such as upgrading banking supervision, strengthening resolution frameworks, improving cyber resilience or building data systems—require sustained investment and technical expertise.
For African regulators, the revised programme could therefore provide a clearer framework for sequencing reforms and mobilising support from the IMF, World Bank and other development partners.
The review also updated the methodology used to identify jurisdictions with Systemically Important Financial Sectors, known as SIFS. Countries designated as having systemically important financial sectors are subject to mandatory financial stability assessments as part of the IMF’s surveillance process.
IMF directors supported adding an element of staff judgment to account for systemically important financial-market infrastructure and gaps in cross-border data. They said the use of such judgment must be evidence-based, even-handed and periodically reviewed by the Executive Board.
Several directors called for greater consideration of regional linkages and transmission channels. That issue is especially relevant in Africa, where cross-border banking groups, regional payment systems, trade ties and shared currency arrangements can transmit financial stress from one country to another.
Financial instability in a major regional economy can affect neighbouring states through bank subsidiaries, trade finance, remittances, capital flows and exchange-rate pressures. The Fund said the reformed FSAP would seek to account more effectively for such evolving vulnerabilities.
The IMF also plans to improve transparency by publishing more information about its analytical methods and technical manuals, expanding use of its online database of published FSAP materials, and developing a communication strategy for mandatory assessments.
The Executive Board supported greater use of artificial intelligence to improve the efficiency of FSAP work, but stressed that any use of AI must be subject to strong safeguards for validation, accountability, data protection and confidentiality.
The Fund’s emphasis on AI reflects the technology’s increasing role in finance, where it is being used for fraud detection, credit scoring, customer service, compliance and risk management. Yet African policymakers face a dual challenge: harnessing AI and digital finance to expand inclusion while ensuring that new technologies do not expose consumers, financial institutions or public systems to unmanageable risks.
The IMF said the reforms are intended to keep the FSAP fit for purpose as financial systems become more interconnected, technology-driven and exposed to new forms of stress.
