BY OMOH GABRIEL, Business Editor

LAGOS – International Monetary Fund, IMF,  has said the global financial stability risks have risen sharply in recent months, as slower economic growth, market turbulence in Europe, and the credit downgrade of the United States have weighed on the global financial system.

“Financial markets have begun to question the ability of policymakers to command broad political support for needed policy actions,” IMF said in its latest Global Financial Stability Report.

“We are in the middle of a crisis of confidence, which is taking its toll on both the economy and the financial system” said José Viñals, Financial Counsellor and head of the IMF”s Monetary and Capital Markets Department, which produced the report. Improvements in financial stability over the past three years have been partly reversed, said Viñals.

The report said balance sheets—a snapshot of the assets and liabilities held by a government, financial institution or household—are strained by mounting debt or assets that have lost value. The IMF Global Financial Stability Report was released the day after the multilateral institution issued its outlooks on global growth and government debts and deficits, which show a weak and bumpy recovery from the crisis.

The IMF in the report said that the lack of progress to repair balance sheets has raised concerns about the financial health of governments in advanced economies, banks in Europe, and households in the United States. In Europe, concerns about government debt levels have spilled over to the region’s banking system, raising the cost of borrowing for many banks and reducing their market value.