The International Monetary Fund (IMF) has stated that many low-income developing countries need to cut their spending due to the financial strain caused by the ongoing energy crisis linked to the war in Iran. This warning was issued during the IMF’s Annual Meetings held in Bangkok on October 13, 2026.
IMF officials noted that countries heavily reliant on oil imports are facing the toughest challenges. They are struggling with high debt levels and rising inflation, which have worsened after years of economic shocks. Petya Koeva Brooks, a deputy director at the IMF, explained that these countries have limited options to support their citizens during this crisis.
The conflict in the Middle East has driven up global energy prices, affecting not only fuel costs but also the prices of essential goods, including fertilizers. The IMF has recommended that governments provide targeted subsidies to help those most affected while also working to improve their financial stability and manage their debts.
Koeva Brooks emphasized that low-income countries are particularly vulnerable, as their spending is often heavily focused on energy and food. She stated that many of these nations are either in debt distress or close to it, and they need to consider restructuring their debts to avoid worsening financial situations.
In its latest World Economic Outlook, the IMF also highlighted that while advanced economies may experience growth due to investments in artificial intelligence, developing countries are likely to face significant challenges. The report indicated that if AI investments slow down, it could negatively impact economic growth worldwide.
Additionally, climate-related risks, such as those from the El Niño weather phenomenon, are contributing to rising food prices. Koeva Brooks warned that the effects of these climate changes could lead to even greater economic challenges in the future.
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