IMF deputy director Petya Koeva Brooks told AFP on the sidelines of the organisation’s Annual Meetings in Bangkok that low‑income developing nations are forced to cut spending or risk debt restructuring as the Iran war‑fuelled energy shock pushes costs higher.
The energy shock has pushed fuel prices through the roof, and the ripple effect is now being felt in food, fertilizer and household bills. Inflation has surged to levels that were unseen in the post‑pandemic era, and debt levels have ballooned in tandem.
Koeva Brooks warned that oil‑importing countries that are net spenders on energy are in the most vulnerable spot, with consumption baskets heavily weighted toward expensive inputs. She urged these governments to offer narrow, targeted subsidies while rebuilding fiscal buffers.
If debt becomes unsustainable, IMF experts say orderly restructuring is preferable to a chaotic, later process that would cost much more. The World Economic Outlook flagged low‑income nations as at risk, highlighting the need for timely action.
The IMF’s 2026 growth forecast for advanced economies stands at 2.1%, buoyed by AI investments, but warned that a slowdown could dampen output worldwide. Climate risks, especially an intense El Nino, have already pushed up food prices.
In the coming months, IMF officials will push for debt restructuring talks by the end of 2026, while families in countries like Haiti see their grocery bills climb higher by the week. The next step will be a coordinated effort to secure affordable debt terms and targeted relief for the most vulnerable citizens.