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IAS 29

Financial Reporting in Hyperinflationary Economies

IAS 29 requires the financial statements of an entity whose functional currency is that of a hyperinflationary economy to be restated into the measuring unit current at the end of the reporting period, using a general price index, so that historical-cost figures distorted by extreme inflation remain meaningful. [S1]

Effective 1990-01-01Related: IAS 21 · IAS 8 · IFRS 10 · IAS 1

Overview

In a hyperinflationary economy, reporting operating results and financial position in the local currency without restatement is misleading: money loses purchasing power at such a rate that comparing amounts from transactions at different dates, even within the same reporting period, is distorted. [S1] IAS 29 does not establish an absolute rate at which hyperinflation is deemed to arise; instead it lists characteristics of the economic environment that indicate hyperinflation — including cumulative inflation over three years approaching or exceeding 100%, a general preference for holding wealth in non-monetary assets or a stable foreign currency, and prices, wages or interest linked to a price index — requiring judgement based on the presence of several, not necessarily all, of these indicators. [S2]

Why it matters

Whether IAS 29 applies is not merely a technical footnote: once an economy is judged hyperinflationary, an entity's entire financial statements (including comparatives) must be restated into current purchasing power terms before any other IFRS is applied, layering a significant and unfamiliar adjustment on top of ordinary reporting. Getting the hyperinflation judgement wrong in either direction — applying it when not warranted, or failing to apply it when warranted — either needlessly complicates reporting or leaves users with historical-cost figures that no longer meaningfully reflect the entity's actual financial position.

Scope

Applies to the primary financial statements, including consolidated financial statements, of any entity whose functional currency is the currency of a hyperinflationary economy. It does not apply merely because an entity presents its financial statements in a hyperinflationary currency when that is not its functional currency; conversely, a subsidiary with a hyperinflationary functional currency must apply IAS 29 in its own financial statements before translation for consolidation into a parent with a non-hyperinflationary functional currency.

Key definitions

term
Hyperinflationary economy
definition
An economic environment characterised by indicators such as a general preference for holding wealth in non-monetary assets or a stable foreign currency, prices quoted in a stable foreign currency, credit sale terms reflecting expected purchasing power loss even over short periods, interest/wages/prices linked to a price index, and cumulative inflation over three years approaching or exceeding 100%.
term
General price index
definition
An index reflecting changes in general purchasing power, used to restate financial statement amounts into the measuring unit current at the end of the reporting period.
term
Monetary items
definition
Money held and items to be received or paid in fixed or determinable amounts of money, which are not restated because they are already expressed in the measuring unit current at the reporting date.
term
Non-monetary items
definition
Items (such as PPE, inventory, and most equity components) not already expressed in terms of the monetary unit current at the reporting date, which are restated by applying the change in the general price index from the date of acquisition (or contribution) to the reporting date.
term
Gain or loss on net monetary position
definition
The gain or loss arising from holding monetary items during a period of inflation, recognised in profit or loss and separately disclosed.

Recognition

Once an entity determines (based on the totality of relevant indicators, not a single mechanical threshold) that its functional currency is hyperinflationary, all amounts in the financial statements not already expressed in terms of the measuring unit current at the end of the reporting period are restated by applying a general price index. Monetary items are not restated (since they are already expressed in the current measuring unit); non-monetary items carried at historical cost are restated by applying the change in the general price index from the date of acquisition to the reporting date; non-monetary items already carried at a current value (e.g. certain fair-value-measured assets) are not further restated for the price index, since they are already current.

Initial measurement

Restatement is applied to the entity's existing historical-cost (or other measurement basis) financial statements as already prepared under other IFRS Standards; IAS 29 does not introduce a new initial recognition basis of its own but layers a purchasing-power restatement on top of amounts otherwise determined. The gain or loss on the net monetary position (arising because holding monetary assets loses purchasing power in inflationary conditions, while monetary liabilities correspondingly provide a purchasing-power gain to the holder of the liability) is calculated as the difference resulting from the restatement of non-monetary assets, equity, and income statement items, and the adjustment of index-linked assets and liabilities.

Subsequent measurement

At the end of each subsequent reporting period while hyperinflation continues, all comparative amounts from prior periods are also restated into the measuring unit current at the latest reporting date (not left in the units current at their original reporting dates), so that all amounts presented are expressed in a single, consistent, current purchasing-power unit. When an economy ceases to be hyperinflationary, an entity discontinues preparing and presenting financial statements in accordance with IAS 29, and the amounts expressed in the measuring unit current at the end of the previous reporting period become the basis for the carrying amounts in subsequent financial statements (i.e. restatement is not reversed retrospectively).

Presentation

Restated financial statements replace the unrestated statements entirely; IAS 29 does not permit presenting hyperinflation-restated information merely as a supplement to unrestated financial statements, nor as the sole financial statements without disclosure of the restatement basis. The gain or loss on the net monetary position is included in profit or loss and separately disclosed as a distinct line item, given its unusual nature and potential materiality.

Disclosure checklist

  • The fact that the financial statements and corresponding comparative figures for prior periods have been restated for changes in the general purchasing power of the functional currency.
  • Whether the financial statements are based on a historical cost approach or a current cost approach.
  • The identity and level of the price index used at the end of the reporting period, and the movement in the index during the current and prior reporting period.

Practical treatment

The practical discipline is treating the hyperinflation assessment as a genuine, evidence-based judgement each reporting period, not a one-off historical determination — the presence of several qualitative and quantitative indicators (not solely the three-year cumulative inflation figure) must be weighed together, and a national accountancy body or regulator's published position (where one exists) is a highly relevant, though not automatically conclusive, input to that assessment. Where IAS 29 does apply, restatement must be performed comprehensively and consistently across all non-monetary items and comparative periods, not selectively applied to some balances only. See nigeria_notes for the FRCN's own published position on this exact question for Nigeria.

Common mistakes

  • Applying (or not applying) IAS 29 based solely on the three-year cumulative inflation percentage, without weighing the other qualitative indicators the Standard also requires to be considered.
  • Presenting hyperinflation-restated figures as a supplementary disclosure alongside unrestated historical-cost financial statements, which IAS 29 does not permit once it is determined to apply.
  • Restating monetary items (which should not be restated, since they are already expressed in the current measuring unit) alongside non-monetary items.
  • Failing to restate comparative-period figures into the measuring unit current at the latest reporting date, leaving them expressed in stale, prior-period purchasing power units.
  • Reversing prior-period hyperinflation restatement retroactively once an economy ceases to be hyperinflationary, rather than treating the last restated amounts as the new cost basis going forward.

CFO checklist

  • Reassess, each reporting period, whether the entity's functional currency economy meets the IAS 29 hyperinflation indicators, weighing all relevant qualitative and quantitative factors together.
  • Monitor published positions from national accountancy bodies, standard-setters or regulators on the hyperinflation status of the entity's functional currency jurisdiction.
  • If IAS 29 applies, ensure restatement is applied comprehensively to all non-monetary items and consistently to all comparative periods presented.
  • Separately identify and disclose the gain or loss on net monetary position as a distinct line item.
  • Document the basis for concluding an economy is not hyperinflationary where cumulative three-year inflation is elevated but other qualitative indicators are not present.
  • If hyperinflation ceases, carry forward the last IAS 29-restated amounts as the new cost basis rather than reversing prior restatement.

FAQs

q
Our country's three-year cumulative inflation is around 100%, but people don't generally hold wealth in foreign currency or non-monetary assets, and prices aren't linked to an index — is our economy hyperinflationary under IAS 29?
a
Not necessarily. IAS 29 does not set an absolute numerical threshold; it requires judgement based on the totality of indicators, of which the three-year cumulative inflation figure is only one. If the other characteristic indicators (foreign-currency wealth preference, index-linked pricing, short-term credit terms reflecting purchasing power loss) are largely absent, an entity can reasonably conclude the economy is not hyperinflationary despite elevated cumulative inflation, though this judgement should be well documented.
q
Can we present both restated and unrestated financial statements, so users can choose which to rely on?
a
No. Once IAS 29 is determined to apply, the restated financial statements are the entity's IFRS financial statements; presenting IAS 29 information merely as a supplement to unrestated statements is not permitted.
q
Our economy stopped being hyperinflationary partway through the year — do we reverse the earlier restatement?
a
No. When an economy ceases to be hyperinflationary, the amounts expressed in the measuring unit current at the end of the previous (final hyperinflationary) reporting period become the basis for carrying amounts in subsequent financial statements; the restatement itself is not reversed retrospectively.

Nigeria application notes

Regulatory overlay

IAS 29 applies in full to Nigerian public interest entities whose functional currency meets the hyperinflation indicators, under the FRCN Act 2011 mandate. [S3] Similar questions have arisen for other African economies with elevated inflation; Malawi's professional accountancy institute, for example, publicly concluded (exercising professional judgement across all IAS 29 indicators) that its economy was not hyperinflationary despite meeting the cumulative inflation indicator on its own, illustrating that the assessment genuinely requires weighing multiple factors together rather than applying the three-year inflation figure mechanically. [S5]

Tax interaction (Nigeria)

IAS 29 restatement (where it applies) has no direct effect on the computation of Nigerian companies income tax, which is based on taxable profits determined under the Nigeria Tax Act 2025's own rules rather than IFRS-restated accounting profit; where IAS 29 does apply to a Nigerian entity in the future, preparers should expect the tax computation to continue running from the entity's ordinary (unrestated) records and reconcile any difference from the restated accounting profit through the normal IAS 12 tax reconciliation process. [S_TAX1][S_TAX2] Nigerian rates, thresholds, exemptions, incentives and filing rules referenced in this file (including CIT, VAT, withholding tax categories, government incentive schemes, and the small-company threshold) should be independently verified against the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, NIPC/NUPRC/CBN guidance, and current NRS practice at the reporting or filing date, since thresholds, rates and reliefs are subject to periodic revision and to sector- or entity-specific qualifying conditions. This file does not constitute legal or tax advice. [S_TAX1][S_TAX2]

FX considerations

The FRCN's hyperinflation assessment and Nigeria's naira exchange rate environment are closely related but analytically distinct questions: naira volatility and depreciation are relevant context feeding into the qualitative IAS 29 indicators (such as whether the population prefers holding wealth in foreign currency), but currency depreciation and inflation are not the same thing, and CBN monetary policy indicators (interest rates, reserve requirements) provide useful supporting context for assessing the broader macroeconomic environment referenced in the FRCN's position. [S6]

SME practical note

Because the FRCN has taken and maintained a formal 'not hyperinflationary' position for Nigeria, Outliers' Nigerian SME and corporate clients generally do not need to apply IAS 29 restatement at present; however, Outliers recommends checking for any updated FRCN communication before each annual reporting cycle, given how closely elevated Nigerian inflation and naira volatility track several of the qualitative IAS 29 indicators, and given that this is exactly the kind of position that could change with a material shift in economic conditions.

Common Nigerian pitfalls

  • Assuming Nigeria is (or is not) hyperinflationary based on inflation headlines alone, without checking the FRCN's current published position and underlying analysis.
  • Treating the FRCN's 'not hyperinflationary' position as a permanent determination rather than a live position requiring periodic reassessment.
  • Conflating naira exchange rate depreciation (an IAS 21 question) with the separate IAS 29 hyperinflation assessment.
  • Failing to reconcile IFRS-restated accounting profit (in the hypothetical event IAS 29 did apply) with the Nigerian tax computation, which would continue on an unrestated basis.

FRC pronouncements

The FRCN issued a formal position statement, most recently reaffirmed in January 2025, concluding that Nigeria is not a hyperinflationary economy for IAS 29 purposes, notwithstanding a three-year cumulative inflation rate exceeding the indicative 100% threshold, based on its assessment of the full set of IAS 29 indicators considered together; this is a live, actively-monitored position rather than a permanent determination, and should be reassessed for the current reporting year (checking for any updated FRCN statement) before finalising the conclusion that IAS 29 restatement is not required for Nigerian entities. [S4]

Worked examples

Restating a non-monetary asset for hyperinflation (illustrative, non-Nigerian scenario)

An entity operating in a hyperinflationary economy (for illustration, not representing a current Nigerian conclusion) holds land acquired for ₦100,000,000 three years ago, when the general price index was 120. The general price index at the current reporting date is 480.

Facts

Workings

Restatement factor: 480 / 120 = 4

Restated carrying amount of land: 100,000,000 x 4 = 400,000,000

Restatement adjustment: 400,000,000 - 100,000,000 = 300,000,000

Journal entries

Restate the carrying amount of land to the measuring unit current at the reporting date, with the restatement adjustment recognised within the hyperinflation restatement effect for the period.

AccountDr (₦)Cr (₦)
Land (property, plant and equipment)300,000,000
Hyperinflation restatement reserve / gain on net monetary position (profit or loss, as applicable)300,000,000

Documenting the hyperinflation indicator assessment (Nigeria)

A Nigerian entity's audit team performs its annual assessment of whether Nigeria's economy meets the IAS 29 hyperinflation indicators for the current reporting year, referencing the FRCN's most recently published position alongside the entity's own review of the qualitative indicators.

Facts

Workings

The entity concludes, consistent with the FRCN's published position and its own review of the qualitative indicators, that IAS 29 restatement is not required for the current reporting year.

This conclusion is documented, dated, and will be revisited at the next annual reporting cycle rather than assumed to hold indefinitely.

Sources & citations

  1. [S1]IAS 29 Financial Reporting in Hyperinflationary Economies — IFRS Foundationaccessed 2026-07-18
  2. [S2]IAS 29 Financial Reporting in Hyperinflationary Economies — IFRS in Brief — Moore Globalaccessed 2026-07-18
  3. [S3]IFRS - Use of IFRS Standards by jurisdiction: Nigeria — IFRS Foundationaccessed 2026-07-18
  4. [S4]FRC's Position on IAS 29 – Financial Reporting in Hyperinflationary Economies — Financial Reporting Council of Nigeriaaccessed 2026-07-18
  5. [S5]IFRS Alert: Hyperinflationary economies — Grant Thornton Internationalaccessed 2026-07-18
  6. [S6]Monetary Policy Decisions — Central Bank of Nigeriaaccessed 2026-07-18
  7. [S_TAX1]Nigeria Tax Act, 2025 has been signed – highlights — EY Globalaccessed 2026-07-18
  8. [S_TAX2]Nigeria's 2025 Tax Reform Acts Explained: Key Changes — Baker Tilly Nigeriaaccessed 2026-07-18
Last reviewed 2026-07-18 · Reviewer: Rafiu Olawuyi, FCA (Author / Technical Reviewer)