![]() The current crisis is expected to hit oil-exporting developing countries particularly hard, for two reasons:įirst, the dependence of many of these countries on a single commodity for their exports and revenues renders them extremely vulnerable to market volatility. The present crisis is happening in the wider context of a structural decline in the market for fossil fuels, driven by a commitment towards decarbonisation by a number of countries as well as the wider technological changes that are gradually making renewable energies the preferred energy option (Lahn and Bradley, 2020 Elgouacemi et al., 2020). Based on an oil price of USD 30 per barrel, the International Energy Agency projects that oil and gas revenues for a number of key producers will fall by between 50 to 85% in 2020, compared with 2019, yet the losses could be larger depending on future market developments (IEA, 2020). A timely and coherent response is needed, encompassing both concessional lenders and private financiers, to create fiscal space in oil-exporting developing countries, reduce the risks of unsustainable debt, corruption and illicit financial flows (IFFs), and catalyse a transition to a cleaner and more sustainable future.įragile, oil-exporting developing countries will be hard hit by the consequences of the Coronavirus (COVID-19) pandemic, and the opportunity exists to assist these countries to transition towards a low-carbon, more diversified and resilient economic futureĬountries that are net exporters of oil are experiencing an unprecedented double blow a global economic contraction driven by the COVID-19 pandemic and an oil market collapse with the benchmark price for United States crude oil, the West Texas Intermediate, briefly going negative for the first time in history (in April 2020). ![]() Some countries may find themselves entering a spiral of unsustainable borrowing on the back of the current turmoil, as oil-exporting developing countries have experienced an increased reliance on short-term and expensive non-concessional private borrowing in recent years, a significant proportion of which is backed by oil collateral. Although some countries might weather the current crisis on the back of sovereign wealth funds or relatively low public debt levels, this will not be the case for the majority of fragile oil-exporting countries, many of which are resource dependent and were already grappling with high levels of debt and multifaceted economic and social fragility before the present crisis. ![]() The double blow of Coronavirus (COVID-19) and the oil price shock is hitting oil-exporting developing countries particularly hard at a time when the fossil fuel industry is facing a process of structural decline. ![]()
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