Press Release: Statement by an IMF Mission to Guyana
July 27, 2012Press Release No. 12/279
July 27, 2012
An International Monetary Fund (IMF) mission visited Guyana from July 17-27 to conduct the Fund’s yearly review of the Guyanese economy. At the conclusion of the visit, Ms. Therese Turner-Jones, the IMF Mission Chief for Guyana, released the following statement today in Georgetown:
“Despite a deteriorating external environment, including the deepening euro-zone crisis, Guyana’s economy continues to be resilient. In 2011, the economy recorded another year of impressive growth of more than 5 percent driven in part by high commodity prices, foreign direct investment, and domestic credit expansion to the private sector. Real Gross Domestic Product (GDP) is projected to grow by about 4 percent this year supported by increased activity in bauxite, gold, rice and the services sectors, which should offset any expected fall off in sugar production. While inflation remained low, staff noted a marginal drop in gross foreign reserves to about four months of imports at end-June 2012, as capital imports rose. Staff commended the authorities for their continued prudent macroeconomic management. Going forward, infrastructure projects led by construction of the hydro power plant at Amaila Falls (AFHP) along with private mining investments should sustain growth levels at around 5 percent.
“Discussions with authorities centered on how to maintain fiscal and debt sustainability while reducing poverty through continued inclusive growth in the context of the Low Carbon Development Strategy. With growth expected to remain robust over the medium term, and given Guyana’s significant investment requirements, including in the AFHP project, policy buffers need to be strengthened. Fiscal consolidation should be intensified, including by reassessing the high level of energy subsidies and implementing more targeted social safety nets. In addition, staff encouraged the authorities to accelerate reform at the National Insurance Scheme (NIS), the Guyana Sugar Company (GUYSUCO), and the Guyana Power and Light (GPL), and limit other potential contingent fiscal liabilities. Staff welcomed progress on the Millennium Development Goals (MDGs), along with ongoing efforts by the authorities to build consensus around priorities for meeting Guyana’s social and developmental needs.
“While the banking system remains liquid and well capitalized, continued vigilance is warranted, particularly against the backdrop of rapid credit expansion. Staff welcomed the continued decline in nonperforming loans, and the advanced plans for introducing a credit bureau, and urged the authorities to further strengthen their Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) regime in line with the recommendations made by the Caribbean Financial Action Task Force (CFATF) in its July 2011 assessment report.
“The IMF Executive Board is expected to discuss Guyana’s Article IV consultation in September 2012. The mission would like to express its gratitude to the authorities and all Guyanese stakeholders, with whom it had the privilege of exchanging views, for their availability and excellent collaboration.”