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Finland's banks face pressure from global financial tightening, IMF says

Man walks past the IMF logo at HQ in Washington

OSLO (Reuters) - Finland should strengthen the liquidity buffers of its banks to prepare for tighter global financial conditions putting pressure on the financial industry, the International Monetary Fund said in a review of the Nordic country on Thursday.

"The tightening of global financial conditions will put pressure on Finland's large and interconnected financial system with high exposure to household indebtedness," the IMF wrote.

This calls for "further strengthening banks' liquidity buffers, improving the macro-prudential toolkit, and - when circumstances allow - reinstating capital buffers," it said.

Aftershocks from Russia's war in Ukraine have worsened Finland's overall economic outlook, and extra government spending has put the country's debt on a riskier path, according to the U.S.-based institution.

The IMF's economists recommended reversing the government's fiscal impulse next year, partly by better targeting energy support measures, followed by a gradual plan to consolidate public finances.

(Reporting by Terje Solsvik, editing by Essi Lehto)