'No Choice': IMF Says Developing Countries Must Cut Spending Despite War Shock
The IMF said heavily indebted oil importers face rising energy costs, inflation and debt distress, and may need targeted subsidies or restructuring.
- On Tuesday, the International Monetary Fund warned that low-income developing countries face an energy shock from the Iran war and have "no choice" but to cut spending or face debt restructuring.
- The ongoing US-Iran conflict has sent energy prices soaring as Tehran's retaliatory action targeted Washington's Gulf allies, curtailing oil supplies and bleeding into fertiliser and other sectors.
- Oil-Importing nations lacking exposure to the artificial intelligence boom are most vulnerable, Koeva Brooks noted, as consumption baskets heavily weighted toward energy and food make adjustments "much much more difficult."
- Conversely, the IMF raised its 2026 global growth forecast to 2.1 per cent, with advanced economies in AI supply chains like Taiwan and South Korea posting significantly higher figures.
- Intense El Nino activity in the Pacific raises climate risks that have already pushed up prices for rice and beverages, compounding pressure on vulnerable regions already strained by energy and debt crises.
11 Articles
11 Articles
No choice: IMF says developing countries must cut spending despite war shock
"Unfortunately, after years of the global economy being hit by shock after shock, debt levels have increased quite a lot, and at the same time, inflation has become a problem," says IMF deputy director of research
Radio France Internationale
'No choice': IMF says developing countries must cut spending despite war shock
Speaking to AFP on the sidelines of the organisation's Annual Meetings in Bangkok, IMF deputy director of research Petya Koeva Brooks said heavily indebted, oil-importing countries were facing the worst of the energy shock, and had difficult choices in helping their citizens through the crisis. "Unfortunately, after years of the global economy being hit (by) shock after shock, debt levels have increased quite a lot, and at the same time, inflati…
‘No choice’: IMF says developing countries must cut spending despite war shock
The International Monetary Fund warned on Tuesday that while low-income developing countries were dealing with the disproportionate impacts of the Iran war-fuelled energy shock, many had "no choice" but to cut spending or potentially face debt restructuring.
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