November 2025 Hyperinflation Update
Executive Summary
According to data in the World Economic Outlook (WEO) report issued by the International Monetary Fund (IMF) in October 2025 and based on economic conditions that currently exist, certain countries will be considered to be hyperinflationary at 31 December 2025. Entities in these jurisdictions are therefore required to apply PAS 29 ‘Financial Reporting in Hyperinflationary Economies’ in interim or annual financial statements ending on or after that date.
The WEO report indicates that Ghana, Lao PDR, and Suriname are no longer considered hyperinflationary as of 31 December 2025, due to projected declines in inflation over the subsequent three‑year period.
Accordingly, as of 31 December 2025, PAS 29 applies in twelve countries: Argentina, Burundi, Haiti, Iran, Lebanon, Malawi, Sierra Leone, South Sudan, Sudan, Turkey, Venezuela, and Zimbabwe.
Angola, Egypt, Myanmar, and Nigeria continue to be monitored but are not currently considered hyperinflationary.
Countries with historically high inflation but insufficient reliable data, including Syria and Yemen, require entities to assess applicability of PAS 29 based on information available at the reporting date.
Recapping the Requirements of PAS 29
PAS 29 sets out indicators for determining when an economy is considered hyperinflationary. One of the key indicators of hyperinflation is when the cumulative inflation rate over a three‑year period approaches or exceeds 100%.
The mechanics of restatement
PAS 29 requires amounts in the statement of financial position that are not already expressed in terms of the measuring unit current at the end of the reporting period, are restated by applying a general price index.
In summary:
- assets and liabilities linked by agreement to changes in prices, such as index‑linked bonds and loans, are adjusted in accordance with the specific contractual terms
- non‑monetary items carried at current amounts at the end of the reporting period (for example, net realizable value and fair value) are not restated, as they are already expressed in terms of the measuring unit current at the reporting date
- all other non‑monetary assets and liabilities are restated from the date of acquisition or incurrence by applying a general price index
- monetary items (i.e., cash and items to be received or paid in a fixed or determinable number of pesos) are not restated, since they are already expressed in terms of the Philippine peso measuring unit current at the end of the reporting period, and
- all items in the statement of comprehensive income are required to be expressed using the measuring unit current at the end of the reporting period. Accordingly, all income and expense items are restated from the dates when they were initially recognized in the financial statements.
Other important factors that should be taken into consideration when applying PAS 29
PAS 29 sets out specific requirements for the restatement of prior‑period comparative information. Corresponding figures for the previous reporting period are restated by applying a general price index so that the comparative financial statements are presented in terms of the measuring unit current at the end of the current reporting period.
PAS 29 may result in the creation of additional temporary differences under PAS 12 ‘Income Taxes’. This is because the restatement of items under PAS 29 will often lead to adjustments to the carrying amounts of items without corresponding changes to their tax bases. PAS 12 requires that the resulting deferred tax effects be recognized in profit or loss, unless the deferred tax relates to items recognized outside profit or loss.
Impairment testing should also not be overlooked when applying PAS 29. Restated non‑monetary assets are required to be tested for impairment and written down to their recoverable amount when their restated carrying amount exceeds that recoverable amount, even if the assets were not previously considered impaired under historical cost accounting.
IFRIC decisions relating to hyperinflation
The IFRS Interpretations Committee (IFRIC) whose agenda decisions are adopted locally through PFRS, has considered several issues related to hyperinflation, including:
- translating a hyperinflationary foreign operation and presenting exchange differences
- accounting for cumulative exchange differences before a foreign operation becomes hyperinflationary
- presenting comparative amounts when a foreign operation first becomes hyperinflationary, and
- consolidation of a non-hyperinflationary subsidiary by a hyperinflationary parent.
Considerations should be given to these issues when preparing PFRS financial statements and applying PAS 29.