For commodity-exporting emerging market and developing economies (EMDEs), recent years have delivered something more unsettling than the usual commodity cycle of boom and bust. Overlapping shocks — from the pandemic to the Russian invasion of Ukraine and the conflict in the Middle East — have caused wide swings in commodity prices, weakened public finances, and raised debt. The core challenge for commodity exporters is not just managing price volatility but rebuilding the fiscal buffers needed to withstand it.
A widening fiscal gap
Start with revenues, and the picture is worrying. In the median commodity-exporting EMDE, government revenues averaged about 22 percent of GDP over 2020–25, well below the 27 percent average in commodity-importing EMDEs and slightly below what exporters themselves collected a decade earlier (Figure 1A). Energy exporters saw the largest decline from the previous decade, while revenues in agricultural exporters remained broadly unchanged at about 19 percent of GDP, the lowest among commodity exporters.
Meanwhile, median primary expenditure over 2020–25 remained unchanged from a decade earlier, at about 24 percent of GDP (Figure 1B). That aggregate masks real differences: metal and agricultural exporters increased spending, while energy exporters pulled it back, though not enough to bring it below revenues. The result is a widening fiscal gap, leaving fiscal positions exposed to another turn in commodity prices.
Mounting debt risks
That imbalance has resulted in a serious debt problem. The median government debt ratio among commodity-exporting EMDEs has nearly doubled since 2010, with notable spikes around the 2014–16 oil-price collapse and the COVID-19 shock (Figure 2A). Agricultural exporters carry the heaviest debt burden, at 57 percent of GDP, followed by metal exporters (48 percent) and energy exporters (41 percent). The consequences are showing up in debt distress indicators. Under the ‘Joint World Bank–IMF Debt Sustainability Framework for Low-Income Countries’ (LIC DSF), around 16 percent of commodity exporters are currently in debt distress — a share that rises to over 22 percent among agricultural exporters (Figure 2B).
Interest payments add to the pressure. Agricultural and metal exporters spend a higher share of their government budgets on interest payments than commodity importers do, despite their lower debt-to-GDP ratios. Similarly, although energy exporters have the lowest median debt ratios, their interest payments are broadly comparable to those of commodity importers. The implication is that commodity exporters pay more to borrow, a likely sign that markets view them as riskier borrowers with more limited market access.
