IMF lauds Guyana’s economic growth despite major challenges

The International Monetary Fund (IMF) has commended Guyana’s significant economic growth, notwithstanding the numerous challenges encountered since the PPP/C attained the governing chair in August 2020.

The financial agency, on Tuesday said it welcomed the wide-ranging economic recovery, following the pandemic-induced recession, prolonged election impasse, the general increase in prices due to the May/June floods, and the war in Ukraine, among other things.

The PPP/C Government was successful in the implementation of a number of containment and mitigation measures to combat the devastating COVID-19 pandemic, while it provided additional public resources to the health system.

Apart from establishing robust restrictions, government administered COVID vaccines across the population, and started reopening the economy in a phased manner in 2021.

Guyana endured a five-month protracted political impasse orchestrated by the previous APNU+AFC Administration back in 2020. However, the PPP/C Administration was subsequently declared winner at the March 2 polls, following the election crisis.  

As a result, the 2020 budget was approved in September, affecting confidence and forcing increased reliance on direct financing from the central bank, as external funding slowed.

The nation was also negatively impacted by floods due to the unprecedented high-level May-June rains in 2021.

The floods affected the agricultural sector as well as economic activity in the hinterland in 2021.

During this period, government made a number of strategic interventions to support those communities which were affected. 

The war in Ukraine has also contributed to inflation increase, owing to higher food and fuel prices, and supply-side disruptions.

Meanwhile, oil Gross Domestic Product (GDP) is expected to grow over 100 per cent in 2022, and by about 30 per cent on average per year during the period 2023 to 2026.

According to the IMF, Guyana’s commercially recoverable petroleum reserves are expected to reach over 11 billion barrels, one of the highest levels per capita in the world.

The IMF executive board highlighted that the increasing oil production could also address development needs, and build substantial buffers to absorb shocks.

The executive directors lauded the massive decline in public debt and favourable debt dynamics going forward, government’s commitment to maintain debt sustainability, and stressed the importance of anchoring fiscal policy in a medium-term framework.

IMF saw merit in government’s approach to revise the monetary policy framework over the medium to long-term to ensure it is well suited for the economy’s needs, allowing more flexibility in the exchange rate to absorb shocks and help maintain competitiveness.

Accordingly, the financial body commended the administration’s move to amend the Natural Resource Fund (NRF) Act, which encouraged continued prudent management of oil revenues.

Moreover, the directors called for moderately ramping up public investment by constraining the annual non-oil overall fiscal balance to not exceed the expected oil transfers.

The IMF also encouraged government to continue improving the targeting of social spending.