--- title: "UNDP Warns of Poverty Spike Amid Energy Price Surge, El Niño, and Rising Borrowing Costs" url: https://noti.group/undp-warns-of-poverty-spike-amid-energy-price-surge-el-nino/ language: en publisher: "Noti Group" section: "Business" published: 2026-10-11T04:00:15.000Z updated: 2026-10-11T07:24:08.872Z id: 9bdd3fe8-f2e0-4892-8e13-3811c562d3a1 source: "The Guardian Business https://www.theguardian.com/business/2026/oct/11/developing-nations-triple-shock-energy-crisis-el-nino-borrowing-costs-un-warns" attribution: "Link to https://noti.group/undp-warns-of-poverty-spike-amid-energy-price-surge-el-nino/ and name Noti Group when you quote or summarize this story." --- # UNDP Warns of Poverty Spike Amid Energy Price Surge, El Niño, and Rising Borrowing Costs Developing countries are facing a severe triple threat: soaring energy costs, the devastating effects of El Niño, and rising borrowing costs. This dire situation has prompted the UN's development arm to call for immediate action from the international community. The UNDP's administrator, Alexander De Croo, emphasized the need for solidarity and global cooperation at the annual meetings of the IMF and World Bank in Bangkok this week. He highlighted the immense pressure on developing countries, which are being pulled in multiple directions by these compounding crises. According to a recent report published by the UNDP, titled No Time to Recover, up to 130 million of the world's poorest people have been shielded from the full impact of high energy prices since the Iran conflict began earlier this year. Emergency government measures have provided some protection, but the situation remains precarious. The report warns that these compounding crises - energy, climate, and debt - could push tens or even hundreds of millions of people back into poverty unless urgent support is forthcoming from the international community. Governments in developing countries are facing a severe shortage of resources to cushion their populations from the soaring costs of living. As a result, many governments are being forced to abandon traditional policies and allow price hikes to flow through, leaving citizens vulnerable to the effects of inflation. This decision is not taken lightly, but rather out of necessity due to the depletion of fiscal space. Governments' ability to absorb economic shocks has been severely compromised. The situation is further complicated by a perfect storm of factors, including El Niño, which threatens widespread crop failures and extreme weather events. The global bond sell-off has also driven up government borrowing costs, making it even more difficult for developing countries to finance their operations. The cost of borrowing is currently at 9%, a level that many experts consider unsustainable. The situation is expected to worsen over the coming months, with no clear signs of improvement on the horizon. According to De Croo, each of these factors - fuel prices, El Niño and bond markets - presents a significant challenge, and there are no indications that conditions will improve before spring. Low-income countries struggling with debt are being forced to cut back on essential public spending, including education budgets. According to a recent report by Debt Justice, these nations have reduced their education expenditures by an average of 8% since 2019, while overall public spending has decreased by 2%. This trend is particularly concerning as it affects the most vulnerable populations in these countries. The impact of high debt servicing costs on social services is undeniable. Heidi Chow, executive director of Debt Justice, emphasized that excessive debt levels are severely limiting people's access to healthcare and education. The organization is advocating for a comprehensive overhaul of the international debt system, including the cancellation of some debts and a revision of the IMF-administered common framework. Debt Justice is specifically calling for the outright cancellation of debts owed to high-interest lenders such as banks, hedge funds, and oil traders. According to Chow, urgent action is needed to alleviate the burden on these countries. The organization's demands reflect growing concerns about the unsustainable nature of international debt agreements. The UNDP acknowledges that some form of debt relief may be necessary for the most affected countries. However, officials emphasize that negotiating such agreements would require several months and more immediate action is required. In response, De Croo urged the international community to increase access to affordable finance, enabling these countries to continue supporting their vulnerable populations. The International Monetary Fund (IMF) managing director Kristalina Georgieva's call for spending restraint in developed countries has been welcomed by some as a way to tame bond yields. However, officials are also recognizing the need for coordinated policies specifically tailored to developing nations. Developing countries face unique challenges due to the energy crisis, El Niño, and rising borrowing costs, which can severely impact their ability to support vulnerable populations. To address this, a more targeted approach is needed, one that acknowledges the specific needs of these countries rather than simply relegating them to the end of the line. A coordinated policy for developing countries could provide much-needed time and space for necessary changes to be implemented, drawing on lessons from past financial crises such as the Covid pandemic. Central banks have previously employed measures like currency swap lines to prevent market freezes, and a similar liquidity boost could help mitigate current challenges. --- Source: [The Guardian Business](https://www.theguardian.com/business/2026/oct/11/developing-nations-triple-shock-energy-crisis-el-nino-borrowing-costs-un-warns) Published by Noti Group: https://noti.group/undp-warns-of-poverty-spike-amid-energy-price-surge-el-nino/