Oxfam Report Finds IMF Austerity Measures Heighten Economic Vulnerability to Global Shocks

Countries implementing austerity measures under International Monetary Fund (IMF) loan programs are, on average, around twice as vulnerable to economic fallout from the war against Iran and the escalating climate crisis, according to a new analysis released by Oxfam International ahead of the World Bank and IMF Annual Meetings in Bangkok, Thailand.

The analysis examined 28 countries with ongoing traditional IMF loan programs, excluding Ukraine due to its wartime program status. Oxfam reported that 24 of these nations are currently required to carry out fiscal austerity cuts. According to the organisation, these 24 countries were already dealing with significant economic vulnerabilities before the conflict began, including a 51 percent food insecurity rate, external debt servicing that is roughly 1.5 times higher than the rest of the world, and a 22 percent real-terms drop in official development assistance between 2021 and 2024.

Oxfam highlighted several individual country programs where fiscal consolidation demands are substantial. In Ecuador and Guinea-Bissau, governments are required to make austerity cuts exceeding 4 percent of gross domestic product (GDP). Sierra Leone faces fiscal adjustments projected to surpass 5 percent of GDP, which Oxfam noted amounts to more than five times the nation's annual healthcare budget. Additionally, Bolivia's loan program includes required austerity measures equivalent to 8.5 percent of GDP by 2029.

A broader review by Oxfam of 161 loans across 81 countries indicated that between 2018 and 2025, the median required spending cut reached 1.7 percent of GDP, compared to 0.3 percent between 2012 and 2017. The analysis also showed that median social protection floors in low-income nations with IMF programs fell from 29 percent to roughly 14 percent of public spending over the same timeframe.

The findings follow the conclusion of the IMF's 2026 Review of Program Design and Conditionality on September 14, which recommended "frontloaded" adjustments that require immediate spending reductions rather than gradual cuts over time.

Oxfam International Executive Director Amitabh Behar stated that rather than providing relief mechanisms as it did during previous crises, the IMF is requiring spending reductions that weaken social protections. In response to these conditions, Oxfam called on the IMF to introduce emergency lending mechanisms similar to the food shock window established after Russia's invasion of Ukraine, ease fiscal targets for heavily impacted nations, and issue a new allocation of Special Drawing Rights to supply international liquidity.

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