IMF report validates govt efforts

─ projects a 4.4% growth in Guyana’s economy

DPI, Guyana, Tuesday, June 18, 2019

The latest International Monetary Fund (IMF) report validates the government’s efforts, according to Finance Minister Winston Jordan. This, he said, was to be expected, despite the criticisms of the administration’s economic policies.

“We are happy that the IMF came and they did a thorough review. Two senior officers accompanied them on the latter part of the mission and everybody confirmed that the economy is doing well. The economy is well-managed and we are expecting a bigger growth this year and of course in 2020, we expect an explosion in growth.”

It is important to note, the Finance Minister said, that the findings were based on the assessment by an independent body. He described these as very important indicators, “even credible people in the media sometimes get suckered into making statements that have no validity. If you don’t want to take it from the government then you can take it from an independent source. They have no axe to grind, they have nothing to do with Guyana.”

According to Minister Jordan, the country’s economic performance has been broad-based across all sectors. This move, he explained, was intentional.  “That is what we intend to happen. The growth must not be pulled from one sector of the economy. It gives an indication that a broader set of people is benefitting from the growth, rather than it just be from mining or one aspect of mining or one aspect of agriculture and so on. You could see it and feel it in the country.”

The IMF projected a 4.4 per cent growth in Guyana’s economy, which it said will be driven by continued strength in the construction and services sectors ahead of oil production in 2020.

The mission reported that real GDP grew by 4.1 per cent in 2018, up from 2.1 per cent in 2017, led by the construction and services sectors. It said inflation remained steady at 1.6 per cent at the end of 2018, on the back of stable food prices and exchange rate.

According to the report, the start of oil production in 2020 presents an opportunity to scale-up capital and current spending at a measured pace over the medium term, to address infrastructure gaps and human development needs, while attenuating debt sustainability concerns at the same time.

The IMF team also supports the government’s proposed increase in investments to improve access to roads, electricity, and telecommunication services to enhance economic activities, including the hinterland. It said simultaneous investment in upgrading the education system is critical and would enhance skills and employment prospects.

The mission also welcomed the passage of the Natural Resource Fund (NRF) legislation for managing the country’s natural resource wealth; which it said underscores the authorities’ commitment to fiscal responsibility.

The IMF said last year, the current account deficit rose to 17.5 per cent of GDP, from 6.8 per cent in 2017. The deficit was largely financed by Foreign Direct Investment (FDI) related to the petroleum sector. Reserves stood at $105.6 billion (US$528 million) in December 2018.

The projection was made by an IMF staff team (mission), led by Arnold McIntyre, which visited Georgetown earlier this month and held discussions for the 2019 Article IV Consultation. The team met with Prime Minister Moses Nagamootoo, Finance Minister Winston Jordan, Attorney General and Minister of Legal Affairs, Basil Williams S.C., Central Bank Governor Gobind Ganga, other senior officials, representatives from the private sector, banks, the opposition party, labour unions, and other stakeholders.

IMF missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programmes, or as part of other staff monitoring of economic developments.