Positive economic growth for Guyana in 2019
─ oil production 2020 presents opportunity to scale-up capital and current spending
─ economy to grow by 4.4 percent
DPI, Guyana, Tuesday, June 18, 2019
The International Monetary Fund (IMF) has 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 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, Minister of Legal Affairs and Attorney General 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.
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 commencement 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.
“To address skills gap and satisfy an expected increase in labor demand, Guyana could adopt more liberal or open immigration policies, including free movement of all categories of workers from other CARICOM countries. Promoting more flexible working arrangements could help increase female labor participation.”
Further regulatory and administrative reforms, including property rights and insolvency regime and reducing bureaucratic red-tape, would help strengthen competitiveness, the report stated.
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.
“To ensure fiscal responsibility is achieved, the mission recommends complementing the NRF legislation with a fiscal framework that constrains borrowing and achieves a balanced budget in the near- to medium-term,” the report stated.
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 better-than-expected outturn was largely supported by stronger revenues arising from the pick-up in economic activity, as well as continued improvements in tax administration and the tax amnesty programme which relaxed interest and penalties on payments of outstanding taxes.”
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.