‘Comical’ to claim that Govt spending driving country’s economic growth – Pres. Ali

President Dr Irfaan Ali has pushed back strongly against suggestions that government spending is the main engine of the country’s rapid economic growth, calling the argument “comical.”

According to the President, the growth reflects deliberate policy decisions, increased private investment, and diversification efforts.

“The claim that growth is driven by government spending rather than a strong non-oil economy reflects a fundamental misunderstanding of basic macroeconomics,” he posited during a live broadcast on Wednesday morning.

“If non-oil GDP is growing, it is because businesses are producing more, not because government is spending more. It is because productivity is increasing, businesses are producing more. Therefore, the question isn’t whether government is spending. It is whether that spending is leading towards expansion in economy. This question is whether that spending is leading to productivity,” he outlined.

President Ali further explained that non-oil GDP measures the value added or generated by non-oil sectors such as construction, manufacturing, agriculture, services, transport, and trade.

“Government spending is not a production sector. It does not appear in GDP unless a contractor builds, a supplier produces, a worker is employed, or a service is delivered,” he contended.

In fact, he explained that capital spending by the government is intended to support structural changes in the economy while recurrent spending is to ease short term pressures.

“Take the Dr Bharrat Jagdeo Demerara River Bridge, for example. Every single commuter is now saving time, saving time is saving money, they’re saving fuel, increasing productivity, carrying over more weight. All of that leads to expansion in productivity as a result of this capital expenditure that government invested in. As a consequence, government spending stimulates growth,” the Head of State noted.

In this regard, he contended that it is impossible for government to artificially inflate non-oil GDP growth.

“So, without real economic activity taking place, without real production taking place, without real value being created, without real jobs being created, there is no accounting framework that can artificially address GDP or change the GDP numbers. It is based on this production,” he asserted.

“The view expressed, therefore, by the parrots that government spending is responsible for economic growth and not the strong performance of the non-oil sector is therefore not only false but frankly comical,” he added.

Non-oil GDP increased continuously from 4.6 percent in 2021 to 14.3 percent in 2025.

Overall, Guyana’s economy expanded by 19.3 percent last year and is projected to grow by 16.2 percent this year. The non-oil economy is projected to grow by 10.8 percent in 2026.