No choice: IMF says developing countries must cut spending despite war shock
The IMF has warned that low-income developing countries must cut spending or face debt restructuring due to an energy shock caused by the U.S.-Iran conflict. The organization noted that these nations are particularly vulnerable due to high debt levels and rising inflation.
Why it matters
The warning highlights the severe economic consequences of geopolitical conflict on the world's most vulnerable economies.
The International Monetary Fund warned on Tuesday (October 13, 2026) 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.
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, inflation has become a problem," she said.
The U.S. war on Iran has plunged West Asia into conflict and sent global energy prices soaring, as Tehran's retaliatory action targeted Washington's Gulf allies and curtailed oil and gas supplies.
Get smarter about the news
Sign up free for a feed built around what you actually care about, Dive Deeper research on any story, and the full text of every article.
Create free accountAlready have an account? Sign in