IAS 29 Update 2026: Hyperinflationary Economies and Key Financial Reporting Considerations as of 30 June 2026
Executive summary
According to data in the World Economic Outlook (WEO) report issued by the International Monetary Fund (IMF) in April, and based on economic conditions that currently exist, certain countries will be considered to be hyperinflationary from 30 June 2026. Therefore, reporting entities in those countries will be required to apply IAS 29 'Financial Reporting in Hyperinflationary Economies'. Consequently, any entities with interim or annual financial reporting requirements at 30 June 2026 or thereafter should reflect IAS 29 in their IFRS financial statements.
The main change relates to two countries previously considered hyperinflationary. The WEO report identifies that Burundi and Sierra Leone will no longer considered hyperinflationary as of 30 June 2026 due to the predicted decline in inflation numbers from the succeeding three-year period from 30 June 2026.
This means that from 30 June 2026 onwards there are ten countries around the world where IAS 29 should be applied, when entities want to state they are in full compliance with IFRS Accounting Standards. These countries are Argentina, Haiti, Iran, Lebanon, Malawi, South Sudan, Sudan, Turkey, Venezuela and Zimbabwe.
Countries that will continue to be monitored include Angola, Egypt, Myanmar, Nigeria, Syria and Yemen. For the time being, they are not considered hyperinflationary, but we will be keeping a close eye on further inflation data from these countries. Entities in these countries should consider the information available at the reporting date to determine whether IAS 29 is applicable.
Note: While the Philippines is not included among the economies identified as hyperinflationary in this update, Philippine entities with investments or operations in the affected jurisdictions should assess the implications of PAS 29 on their financial reporting and group reporting requirements.
Recapping the requirements of IAS 29
IAS 29 lists factors that indicate when an economy is hyperinflationary. One of the indicators of hyperinflation is if cumulative inflation over a three-year period approaches or is in excess of 100 per cent.
The mechanics of restatement
IAS 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 agreement;
- non-monetary items carried at current amounts at the end of the reporting period (such as net realizable value and fair value) are not restated;
- all other non-monetary assets and liabilities are restated;
- monetary items (i.e. money held and items to be received or paid in money) are not restated because they are already expressed in terms of the monetary unit currency at the end of the reporting period, and
- all items in the statement of comprehensive income should be expressed using the measuring unit current at the end of the reporting period, so all amounts need to be restated from the dates when the items of income and expenditure were originally recorded in the financial statements.
Other important factors that should be taken into consideration when applying IAS 29
IAS 29 sets out specific requirements on how to restate prior period comparatives. It requires corresponding figures for the previous reporting period to be 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 reporting period.
IAS 29 may result in the creation of additional temporary differences under IAS 12 ‘Income Taxes’. This is because the restatement of items under IAS 29 will often lead to adjustments to the carrying amounts of items without corresponding changes to their tax bases — IAS 12 requires these adjustments to be recognized in profit or loss.
Impairment testing should also not be overlooked. IAS 29 requires any restated non-monetary items to be reduced when it exceeds its recoverable amount, even if those assets were not previously considered impaired under historical cost accounting. It will be important when preparing financial statements to consider whether the restatement of asset carrying values affects the results of impairment tests that were conducted in previous reporting periods, and whether there are any indicators of impairment for assets that were not tested for impairment in previous periods.
IFRIC decisions relating to hyperinflation
The IFRS Interpretations Committee (IFRIC) have previously considered a number of accounting issues in relation to dealing with hyperinflation. These include:
- 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.
We encourage careful consideration of these issues when preparing IFRS financial statements and applying IAS 29.