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Paper short abstract

Resource-backed borrowing ties sovereign finance to future oil revenues. Using African oil exporters, this study shows that RBL exposure amplifies pro-cyclical fiscal adjustment during price shocks and weakens policy space, underscoring the need for stronger disclosure and transparency reforms.

Paper long abstract

Resource-backed borrowing links sovereign finance to future commodity revenues through export prepayment, repayment-in-kind, and collateral/escrow arrangements. This paper examines how these structures reshape policy space in oil-dependent African borrowers, focusing on Nigeria, Angola, Chad, and the Republic of Congo. Building on the World Bank’s publicly identified set of 30 resource-backed loans in Sub-Saharan Africa (2004–2018), we extend the inventory with more recent publicly reported crude-backed facilities and restructuring episodes, including Nigeria’s large crude-oil prepayment facility and Angola’s renegotiated repayment mechanics.

Empirically, we combine (i) a sector/country mapping of RBL structures (repayment channel, tenor, offtaker/lender type) with (ii) an event-study around negative oil-price shocks using IMF commodity prices and export/fiscal series (UN Comtrade; IMF WEO/IFS). We test whether RBL reliance is associated with sharper pro-cyclical adjustment, measured by changes in capital spending, social spending proxies, arrears, and reserve drawdowns relative to non-RBL peers. We then process-trace how opacity and earmarked repayment channels alter bargaining dynamics during downturns and restructurings. The paper concludes with actionable reforms: minimum disclosure of repayment formulas/escrow balances, stress-testing clauses, and harmonized transparency standards for creditor coordination.