From June 30, 2026, there are 10 countries around the world whose economies will be considered hyperinflationary. Entities whose functional currency is the currency of one of these countries and that have June 30, 2026 reporting requirements will have to reflect the requirements of IAS 29 Financial Reporting in Hyperinflationary Economies in their IFRS financial statements.
Situation
According to the April 2026 World Economic Outlook (WEO) publication issued by the International Monetary Fund (IMF) and based on economic conditions that currently exist, certain countries are considered to be hyperinflationary as of June 30, 2026. Therefore, reporting entities in those countries will be required to apply IAS 29. Consequently, any entities with interim or annual financial reporting requirements as at June 30, 2026 or thereafter should reflect the requirements of IAS 29 in their financial statements prepared in accordance with International Financial Reporting Standards (IFRS Accounting Standards).
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 June 30, 2026 due to the predicted decline in inflation numbers from succeeding three-year period from June 30, 2026.
From June 30, 2026 onwards, there are 10 countries around the world where IAS 29 should be applied when entities whose functional currency is the currency of one of these countries want to state their IFRS financial statements 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 are currently being 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.
IFRIC decisions relating to hyperinflation
The IFRS Interpretations Committee (IFRIC) has 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.
Our thoughts
IAS 29 is not a standard that can be quickly implemented, particularly in group situations. Careful consideration needs to be given to the IFRIC guidance dealing with situations where there is a hyperinflationary parent that has subsidiaries that also report in a hyperinflationary currency versus situations where a non-hyperinflationary parent has subsidiaries that report in a hyperinflationary currency. Also, be mindful of how a hyperinflationary parent with subsidiaries that do not report in a hyperinflationary currency should be accounted for given the requirements set out in IAS 21 The Effects of Changes in Foreign Exchange Rates.
Any reporting entities considering IAS 29 for the first time will have to adapt their existing accounting systems to be able to process the hyperinflationary adjustments. It is important they understand the mechanics of adjusting for hyperinflation so they can restate in their financial statements both current and comparative periods.
