Rising energy prices, higher borrowing costs and a strengthening El Niño are adding pressure on developing economies ahead of IMF-World Bank meetings.
Web Desk: Developing countries are facing mounting pressure from rising energy costs, higher borrowing expenses and a strengthening El Niño weather pattern, the United Nations Development Programme (UNDP) has warned.
UNDP Administrator Alexander De Croo said the combination of economic and climate pressures was pushing conditions closer to levels seen during the pandemic, when the G20 suspended debt payments for the poorest countries.
The warning comes ahead of the annual meetings of the International Monetary Fund and World Bank, scheduled to take place in Bangkok from October 12 to 18.
Rising Energy and Borrowing Costs
Higher energy prices are putting additional pressure on government budgets as countries attempt to shield households and businesses from rising fuel costs.
De Croo warned that the combination of these pressures could create a “domino effect” in which more countries are pushed into financial distress. He did not, however, call for a new round of debt relief.
Many governments have already used subsidies, tax relief and other measures to limit the impact of higher food and energy prices. But UNDP Chief Economist George Gray Molina said some governments began rolling back those measures in September as their fiscal resources came under increasing pressure.
Even middle-income countries have rapidly depleted fiscal buffers while trying to contain the impact of higher energy prices, Molina said.
El Niño Adds to Food Security Risks
The economic pressure is being compounded by a strong El Niño weather pattern.
The UN World Food Programme has warned that the 2026-27 El Niño could push at least 49 million additional people into acute food insecurity by the end of 2027 across 45 vulnerable countries. The projected increase would take the number of acutely food-insecure people in those countries from about 225 million to 274 million.
El Niño can disrupt rainfall and temperature patterns, increasing the risk of droughts in some regions and flooding in others.
The WFP expects the current El Niño to peak between September and December 2026, although its effects could continue through 2027 because of impacts on agricultural production and future harvests.
Crisis Spreading Across Countries
De Croo said UNDP surveys conducted since the beginning of the Middle East conflict indicated that its economic effects had spread beyond the immediate region.
According to UNDP, the crisis is affecting approximately 100 countries. Governments have attempted to protect consumers from higher oil prices, but rising debt and depleted fiscal resources are limiting their ability to maintain such measures.
UNDP said 22 of 26 countries surveyed considered the crisis a high or medium priority. Thirteen said it had added to an existing economic or fiscal crisis, while all 26 expected conditions to worsen.
Higher prices had also contributed to protests and social unrest in 10 countries during September, according to UNDP.
IMF and World Bank Meetings Ahead
Global financial policymakers are expected to discuss the economic challenges facing developing countries during the IMF and World Bank meetings in Bangkok.
The discussions are also expected to cover the global economy, artificial intelligence, climate change and other major international challenges.
UNDP officials said developments in oil prices and bond markets over the next 60 days would be particularly important for countries already facing financial pressure.
The agency has also urged governments to focus available resources on protecting the most vulnerable populations while continuing efforts to diversify energy supplies and strengthen food systems.
Those measures, however, are expected to take time, leaving many developing countries exposed to the immediate combination of higher energy costs, tighter financial conditions and climate-related risks.
