UNDP warns developing countries face overlapping crises from energy costs and El Nino

October 2, 2026 at 09:03 AM2 min

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The United Nations Development Programme warned on Friday that rising energy costs, a super El Nino and soaring borrowing costs are pushing developing countries toward conditions similar to the pandemic. UNDP Administrator Alexander De Croo said the situation could trigger a domino effect of financial distress, but stopped short of calling for new debt relief. The warning comes ahead of the IMF-World Bank annual meetings in Bangkok from October 12 to 18.

Key Facts

UNDP Administrator Alexander De Croo said the overlapping crises could push many countries into financial distress, but he did not call for a new round of debt relief.
The strongest El Nino weather effect since 1950 is expected to plunge 49 million more people into food insecurity by the end of 2027.
UNDP surveys showed the war had morphed from a regional conflict into a crisis affecting approximately 100 countries.
UNDP said higher prices contributed to protests and social unrest in 10 countries in September.
Twenty-two of 26 nations surveyed by UNDP rated the crisis as a high or medium priority, and all 26 judged that the worst was still to come.

Crisis Drivers

Rising energy costs, a super El Nino and soaring borrowing costs are increasing pressure on developing countries, with conditions nearing those of the pandemic when the G20 suspended debt payments for the poorest nations. Government borrowing costs have hit their highest in several decades on heightened concerns about inflation as the Iran war drives up energy prices. The strongest El Nino weather effect since 1950 is expected to trigger more floods in some regions and droughts in others. UNDP Administrator Alexander De Croo said the war had morphed from a regional conflict to a crisis affecting approximately 100 countries.

Fiscal Strain

Many governments have taken steps to shield citizens from the surge in oil prices, but their fiscal coffers are now running low and debt levels are rising. UNDP Chief Economist George Gray Molina said a major shift was seen in September, as some governments began to allow higher energy prices to flow through to citizens and started rolling back subsidies, tax relief and other steps. Even middle-income countries had rapidly depleted their fiscal buffers as they raced to mitigate rising energy prices. Molina said bond market and oil price developments over the next 60 days would be crucial.

Social Impact

Higher prices had already contributed to protests and social unrest in 10 countries in September, UNDP said. Twenty-two of 26 nations surveyed by UNDP rated the crisis as a high or medium priority. Thirteen of the surveyed nations said the crisis came on top of an existing economic or fiscal crisis. All 26 surveyed nations judged that the worst was still to come.