IMF says poorer oil importers may have to cut spending

The International Monetary Fund (IMF) said on Tuesday that low-income developing countries hit by the energy shock from the Iran war may have “no choice” but to cut spending or restructure their debt.

IMF deputy director of research Petya Koeva Brooks made the remarks in Bangkok, where the IMF and World Bank Annual Meetings are being held. She said heavily indebted oil importers face the hardest choices.

“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 IMF’s World Economic Outlook, released on Tuesday, raised the forecast for global growth in 2026, mainly because of AI-related investment in advanced economies. It named net oil importers outside the AI supply chain as the most exposed to the war’s effects.

Sri Lanka imports its oil, so global energy prices bear directly on fuel costs in the country.

Koeva Brooks said that where debt is unsustainable, an orderly and timely restructuring is better than waiting.