Guyana’s rapid economic growth since the start up of oil production in 2019 was highlighted by the International Monetary Fund (IMF), with the Fund revealing in its 2023 Article IV consultation staff report that Guyana’s economy has tripled in that time.
According to the IMF, Guyana’s rapid economic growth owes much to oil production, which started with the <<<Liza Destiny>>> Floating Production, Storage and Offloading (FPSO) vessel in the Stabroek Block. According to the IMF, Guyana has per capita the largest oil reserves in the world and a higher real Gross Domestic Product (GDP) growth than any other country.
“The Guyanese economy has tripled in size since the start of oil extraction (end-2019), from one of the lowest GDP per capita in Latin America and the Caribbean in the early nineties. Oil production is ramping up rapidly, supporting the highest real GDP growth in the world in 2022 (62.3 per cent).”
“Going forward, oil production will continue to expand rapidly as four new fields will come on stream by end-2028. Sustained real non-oil GDP growth is also expected, as the Government continues to invest in human capital, lower energy costs, and build infrastructure, including for climate change adaptation. Real GDP is expected to continue to grow extremely fast in 2023 (38.4 per cent) and on average of 20 per cent per year during 2024-28,” the IMF said in the report.
According to the Fund, the People’s Progressive Party/Civic (PPP/C) Government has already started to invest heavily in Guyana’s overwhelming development needs, with the help of oil revenues that were first transferred to the budget in 2022.
The IMF further related that the Government’s fundamentals have been strong and there were no signs of inflationary pressures or overheating, associated with the government pumping a great deal of oil money into the economy.
Another observation made by the IMF was the Government’s efforts to stave off inflation. The IMF noted that given the medium-term risks of inflation as the economy expands, a continued focus on maintaining macroeconomic stability by sound policies was recommended.
Meanwhile, the Finance Ministry released a statement of its own in which it lauded the findings of the IMF, and noted that the Government was commended, not only for its fiscally-sound policies aimed at diversifying the economy but also for its management of inflation.
“Meanwhile, about inflationary pressures, the IMF noted that the Government introduced a suite of measures in 2022 and 2023, which has contributed to a decline in the inflation rate in 2023,” the Ministry said.
“The external current account recorded a large surplus in 2022, of 23.8 per cent of GDP, and another large surplus is expected in 2023. The IMF reported too that banks in Guyana are well capitalised and continue to improve their loan portfolios.”
Moreover, the Ministry noted that Guyana has been projected to achieve a zero overall fiscal balance by 2028, which would allow the economy to expand even more without macroeconomic imbalances.
Meanwhile, mention was made of a meeting that Finance Minister, Dr Ashni Singh had attended between the IMF and the World Bank in Marrakesh, Morocco. According to the Government’s statement, Dr Singh had informed the Bank of the Government’s priorities, including ensuring that Guyana avoids dependence on oil.
“We want to make sure that we have a growing, globally-competitive non-oil economy so we are using this period to invest in things like infrastructure to improve connectivity with our neighbours, increase the economic space in which we are operating, and therefore lay the foundation for more trade,” the Finance Minister had informed.
Further, Dr Singh had explained to the institutions the long road Guyana travelled, coming from a place where Guyana was once one of the most heavily-indebted poor countries, to a place where Guyana’s debt-to-GDP ratio was now 60 per cent.
“There was a time when Guyana’s debt-to-GDP ratio was more than 600 per cent and it took hard work to get us from where we were as a Heavily Indebted Poor Country (HIPC) with debt to GDP exceeding 600 per cent and debt service to revenue exceeding 100 per cent to bring us to a point where our debt-to-GDP ratio was about 60 per cent and that is before we started producing oil,” Singh further said.