Countries that import or export commodities are frequently subject to commodity price volatility that can impact national income. Fiscal accounts are exposed to government revenue or expenses that are linked to commodity prices or state-owned enterprises (SOEs) that operate a commodity business.
Countries have exposure to agricultural products, energy, metals, and other traded products like weather and environmental indices. Hedging these risks can stabilize a sovereign’s revenue/expense stream, which allows countries to maintain fiscal space to provide basic services to citizens and deliver on development goals.
World Bank Treasury provides assistance in building capacity and helping develop customized hedging strategy that meets the country’s specific risk management needs. These services are available to both IBRD and IDA member countries.