IAS 29 Hyperinflation reporting alert: December 2024
The World Economic Forum’s latest 2024 report shows changes in the list of countries suffering hyperinflation. Most notably, Laos has joined the list of countries requiring the application of IAS 29. This addition is particularly relevant for Thai businesses with operations in neighbouring countries.
Myanmar’s economic situation also demands attention. The World Bank projects a 1% contraction in GDP by March 2025 due to ongoing conflict and economic instability, placing it on high alert for potential hyperinflation in 2025.
Another change is the removal of Yemen and Zimbabwe as of June and December 2024, respectively, from the list of countries suffering hyperinflation. The current list of countries requiring the application of IAS 29 as of 31 December 2024, includes the following:
- New Additions: Laos and Malawi
- Existing Countries: Argentina, Ethiopia, Ghana, Haiti, Iran, Lebanon, Sierra Leone, South Sudan, Sudan, Suriname, Turkey, and Venezuela
IPTF Monitoring of highly inflationary countries
The International Practices Task Force (IPTF) of the Centre for Audit Quality (CAQ) monitors countries with high inflation rates. While the IPTF’s criteria for identifying ‘highly inflationary’ countries resemble those for hyperinflationary economies under IAS 29, the lists differ.
According to the IPTF’s November 2024 discussion document, the following countries have three-year cumulative inflation rates exceeding 100%, but are not currently classified as hyperinflationary under IAS 29:
- Egypt
- Nigeria
In addition, South Sudan is projected to exceed the 100% threshold, although it is already classified as hyperinflationary under IAS 29. This difference highlights the nuanced criteria between IPTF and IAS 29 classifications.
Action items for Thai groups
- Laotian operations:
Implement IAS 29 immediately for December 2024 financial reporting. - Myanmar operations:
- Establish robust inflation monitoring systems.
- Conduct a comprehensive review of accounting systems to evaluate readiness for potential application of IAS 29.
- Make preparatory adjustments to align with future requirements if designation occurs.
Technical reminders
- The cumulative three-year inflation threshold for the application of IAS 29 is approximately 100%.
- Required restatements include:
- Non-monetary assets and liabilities
- Comprehensive income items
- Prior period comparatives
- Consider tax implications under IAS 12.
- Perform impairment testing after restating financial statements.
By addressing these updates and action items promptly, entities can ensure compliance with IAS 29 and mitigate risks associated with hyperinflationary economies. Our technical team is ready to assist with specific implementation guidance for affected operations.
For further reading and resources on hyperinflation reporting and IAS 29, see the following links:
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