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. 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. 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. Some countries may find themselves entering a spiral of unsustainable borrowing on the back of the current turmoil. A timely and coherent response is needed, encompassing both concessional lenders and private financiers, to create fiscal space, reduce the risks of unsustainable debt, corruption and illicit financial flows, and catalyse a transition to a cleaner and more sustainable future
