## 1guyea2025001-print-pdf ## Source details **Canonical URL:** [1guyea2025001-print-pdf](https://www.imf.org/-/media/files/publications/cr/2025/english/1guyea2025001-print-pdf.pdf) ## Other formats - [Markdown version](/-/media/files/publications/cr/2025/english/1guyea2025001-print-pdf.pdf.md) - [Structured JSON version](/-/media/files/publications/cr/2025/english/1guyea2025001-print-pdf.pdf.json) --- ### Macro context, recent performance, and outlook - Growth and sectoral dynamics - Growth has been "averaging 47 percent per year since 2022." - Real GDP growth: "about 43½ percent in 2024, up from nearly 34 percent in 2023." - Real oil GDP increased "by nearly 58 percent in 2024 (from about 47 percent in 2023)." - Real non-oil GDP expanded "over 13 percent" in 2024. - Economy expected to grow "on average 14 percent per year over the next five years." - Real non-oil GDP growth projected to average "6¾ percent over the medium term." - Inflation, labor, and output gap - CPI inflation: "2.9 percent by end-2024, up from 2 percent at end-2023." - Inflation projected to increase in 2025 and "rise to 5½ percent over the medium term." - Annual salary increases run in low double digits. - Non-oil economy appears below potential but the output gap is closing. - External sector and reserves - Current account surplus "more than doubled in 2024, reaching about 24½ percent of GDP." - Non-oil exports grew "16 percent (14 percent in volume)." - Gross international reserves (GIR) increased, "surpassing US$1 billion." - Import coverage: "1.9 months of non-oil imports." - NRF assets reached "US$3.1 billion by end-2024 (12½ percent of GDP)." - Including NRF, improvement in import coverage of "2.4 (6.6) months of total (non-oil) imports" and "110 percent in terms of the Assessing Reserve Adequacy (ARA) metric." - Current account gap estimated at "3.8 percent of GDP." - Financial sector - Private and public sector credit grew "about 20 percent and 58 percent (from 16 percent and 32 percent in 2023), respectively" in 2024. - Credit to households increased "22 percent." - Average excess reserves: "1½ percent of GDP in 2024." - Non-performing loans (NPLs) declined to "0.8 percent of total assets as of September 2024," with provisioning at "80 percent of NPLs." ### Fiscal policy, NRF withdrawal rules, and public investment - NRF purpose and legal framework - NRF Act 2019 (replaced by NRF Act 2021) established a sovereign wealth fund to: delink public spending from volatile resource revenues; avoid loss of competitiveness; ensure intergenerational transfers; finance national development priorities or emergency expenditures associated with a major natural disaster. - The withdrawal rule from the NRF was modified in 2024 to increase the ceiling for withdrawals. - Fiscal outcomes and 2025 budget stance - Fiscal deficit widened from "5.1 percent of GDP (11.7 percent of non-oil GDP) in 2022" to "7.3 percent of GDP (21 percent of non-oil GDP) in 2024" driven by a surge in capital expenditure since 2022. - Non-oil revenues (about "26 percent of non-oil GDP") covered about "90 percent of primary current expenditure" in 2024. - Non-oil primary deficit increased to about "38 percent of non-oil GDP in 2024" reflecting higher capital expenditure partly financed by NRF withdrawals. - 2025 budget measures cost "1 percent of GDP in 2025" and include a one-off "GY$100,000 transfer for about 600,000 adults", free university education costing "0.3 percent of GDP", and a reduction in the personal income tax rate by "3 percent to 25 percent." - Staff estimates fiscal deficit will decline to "4.9 percent of GDP in 2025, from 7.3 percent of GDP in 2024." - NRF withdrawal rule mechanics and implications - 2024 revision raised maximum transfers to the budget in a given fiscal year for each additional US$1 billion deposits paid into the NRF in the preceding year. - Table (Maximum Amount That Can be Withdrawn from the NRF in Year T, Billions of U.S. dollars) - NRF inflow in Year T-1 — December 2021 Schedule — January 2024 Schedule - 1.000 — 0.875 — 1.000 - 2.000 — 1.250 — 1.950 - 3.000 — 1.290 — 2.850 - 4.000 — 1.320 — 3.700 - 5.000 — 1.350 — 4.200 - Illustration: If US$5 billion flows into the NRF, the maximum transfer the following year is US$4.2 billion compared to U$1.35 billion under the previous rule. - Assuming maximum annual transfers, capital expenditures remain about "12 percent of GDP in 2025" and by 2029 the transfer almost equates to capital expenditures. - Under the illustrative assumption that NRF withdrawals equate to capital spending and the non-oil primary deficit declines over time to intergenerational equity levels, NRF assets will peak at "about 360 percent of non-oil GDP in 2042." - Revised withdrawal rule lowers NRF build-up in relation to GDP versus the 2021 rule, but NRF assets still reach "over 210 percent of GDP by 2040" in staff projections. - Debt, buffers, and fiscal limits - Gross public debt projected to rise from "24 percent of GDP in 2024 to about 28 percent by 2026." - Statutory debt limits increased from "19 percent of GDP to 32 percent of GDP each in early 2024." - Assessment of risk of debt distress upgraded to "low risk"; risk of overall and external debt distress upgraded to "low" from "moderate" in previous DSAs. ### Scenarios, empirical analysis, and investment efficiency - Scenarios used in staff analysis - Baseline: follows the NRF schedule through 2032 then smooths oil transfers over time. - Scenario 1: equal per capita real investment spending through time. - Scenario 2: equal investment spending in percent of non-oil GDP through time. - Presentation shows tradeoffs between high investment, macro stability, and intergenerational equity; public capital spending and NRF asset trajectories presented in percent of non-oil GDP. - Empirical evidence on public investment and non-oil growth - OLS results (Determinants of Non-Oil Growth Rate): - Public investment in percent of GDP (-1): Coefficient 0.55, P-value 0.02 - Private investment in percent of GDP (-1): Coefficient 0.59, P-value 0.09 - Public investment post-oil (-1): Coefficient -0.01, P-value 0.98 - Real export growth: Coefficient 0.07, P-value 0.01 - Dummy for 2020 (Covid effect): Coefficient -0.15, P-value 0.00 - Interpretation: A one percent of non-oil GDP boost to public investment is associated with "a ½ percent growth (0.5 percent)." - Caveats: estimates subject to endogeneity and specification issues; impact depends on investment efficiency and leakages. - Capital spending needs and SDG alignment (Annex III methodology) - Benchmarking against middle-performance countries across education, health, infrastructure, water/sanitation, and energy using SUR estimation and adjustments for population density, efficiency, and GDP per capita. ### Monetary policy, exchange rate, and financial stability - Monetary stance and indicators - Broad money grew "25¼ percent" in 2024 (alternate excerpt reports "25.3 percent" in 2024). - Gap between official and market exchange rates reached almost "4 percent in late 2024." - Bank of Guyana sold about "$318 million in foreign currencies in 2024" and continued in early 2025. - Policy guidance: maintain broad money growth in line with non-oil GDP growth; provide sufficient FX to stabilize the market exchange rate; tighten monetary and macroprudential policies if overheating emerges. - Exchange rate regime - De facto stabilized arrangement (peg-like) judged appropriate given underdeveloped financial markets and accumulated foreign exchange buffers in the NRF; future consideration could be given to more flexible regimes supported by suitable frameworks. - Financial sector soundness and reforms - Capital adequacy well above regulatory requirements; NPLs at "0.8 percent of total assets as of September 2024" with provisioning at "80 percent of NPLs." - Stress tests: no amplification of systemic risks as of end-June 2024, though vulnerabilities in credit portfolios (agriculture, mining) identified. - Policy recommendations: improve risk monitoring, develop macroprudential tools, widen supervisory perimeter to quasi‑financial institutions and credit unions, deepen domestic capital markets. ### Structural, social, and inclusion policies - Social protection and poverty - Targeted transfers since 2022 have increased disposable income and reduced poverty. - One-off universal social transfer equaled "1.2 percent of GDP"; staff suggests making transfers more targeted and integrating them into a medium-term fiscal framework. - Need for updated household surveys: last was in 2019; rollout of new household survey planned for 2026. - Labor market and gender inclusion - Female labor force participation gap: "26 percentage points" (ILO estimate); participation rates: men "66 percent", women "40 percent"; regional averages "80 and 56 percent." - Female education attainment: Females "8.7 years", Males "8.5 years." - Secondary gross enrollment rates (2022): Females "88.6 percent", Males "82.5 percent." - Mean hourly wages (2021): Females GY$325.2, Males GY$378.3; implied gender wage gap "16 percent." - Potential GDP gains from closing gender gaps in 2019: "15.4 percent" (employment gap: "10.7 percent"; hours worked: "3.4 percent"). - Closing female/male participation alone could boost GDP by about "22 percent" (based on Ostry et al. (2018) complementarity estimate). - Policy actions: training, TVET expansion, child-care subsidies, free tertiary education, targeted scholarships (GOAL: "over 21,400 scholarships since 2021, representing 72 percent of total awardees"), and measures to reduce early marriage and adolescent pregnancy (over "30 percent of girls married by age 18"). - Climate, energy, and LCDS 2030 - LCDS 2030 aims to preserve forests and grow the economy fivefold over a decade. - In 2022, Guyana sold "37.5 million carbon credits ... for US$750 million", to be paid during 2022–32; 15 percent of credits supported Amerindian communities in 2023–24. - Gas-to-Energy project: transport gas via a 140-mile pipeline to feed a 300 MW combined-cycle plant (Phase 1) and add 250 MW in Phase 2; associated loan noted as "$526 million" supporting energy expansion. - Energy indicators: - Installed capacity: "337 MW"; fuel mix: fossil fuels "85.27 percent", biomass "12.46 percent", solar "2.26 percent", wind "0.01 percent." - Cost to produce electricity: "$0.32 per KWH." - Government solar investment planned: "US$72.4 million starting in 2025." - Proved natural gas reserves: "16 trillion cubic feet (Tcf) as of January 2024." - Daily oil production: "over 600,000 barrels per day and doubling by 2029"; oil production projected to reach "1.2 million barrels per day" by 2029 in Dutch-disease monitoring. - Governance, transparency, and AML/CFT - Progress: NRF and Public Accountability and Oversight Committee 2023 Annual Reports presented; monthly and quarterly NRF reports published by BoG. - Remaining gaps: timely publication of audit reports for some public companies and local authorities; need to meet EITI beneficial ownership transparency requirement and remove confidentiality constraints. - CFATF MER (2024) found significant improvement; priority actions include improving beneficial ownership transparency and implementing MER recommendations. ### External sector assessment and reserve adequacy - External position - External position at end-2024 assessed as stronger than level implied by fundamentals and desirable policies. - NIIP increased to "-21.4 percent of GDP at end-2024" from an average of "-96 percent of GDP since 2019." - Assets increased by "16.3 percent to US$5,531 million in 2024", mainly from NRF deposits of "US$828 million." - Current account and projected path - Current account surplus: "24.6 percent of GDP in 2024" (up from "9.9 percent in 2023"). - National savings increased to "38 percent of GDP" from "25 percent of GDP in 2023." - Staff projects current account surplus to moderate to "about 9 percent of GDP in 2025" and to rise to "around 20–22 percent of GDP by the end of the decade" as new fields come on stream. - Reserves and adequacy metrics - GIR at end-2024: "US$1 billion" (4.1 percent of GDP). - GIR adequacy (2024): "1.9 months of non-oil imports", "0.7 months of total imports", "34 percent of the ARA EM metric." - Selected adequacy indicators: - 2024: ARA EM Metric: "34.2"; ARA EM Metric Non-oil: "87.7"; 3 Months Imports: "25.1"; 3 Months Non-oil Imports: "68.2"; 20% of Broad Money: "14.4"; Short Term Debt: "23.3". - 2025Proj.: ARA EM Metric: "51.9"; ARA EM Metric Non-oil: "124.1"; 3 Months Imports: "38.7"; 3 Months Non-oil Imports: "104.2"; 20% of Broad Money: "10.8"; Short Term Debt: "14.6". - 2030Proj.: ARA EM Metric: "55.2"; ARA EM Metric Non-oil: "127.1"; 3 Months Imports: "101.1"; 3 Months Non-oil Imports: "130.1"; 20% of Broad Money: "8.4"; Short Term Debt: "53.1". - Under staff baseline, GIR will reach "about 10½ percent of GDP by 2030" and NRF assets "about US$13.3 billion (over 32 percent of GDP)" by 2030. ### Debt sustainability, risks, and stress tests - Public debt dynamics and DSA findings - PV of public debt-to-GDP ratio "oscillates around 20 percent of GDP through 2032." - Under baseline, total public debt projected to peak "slightly above 28 percent of GDP in 2026." - PV of public debt remains well below the benchmark of "35 percent of GDP." - Mechanical risk rating under standardized stress tests: "moderate"; staff judgment under customized scenarios: "low risk." - Customized shock weight on export standard deviation: "0.145." - NRF baseline profile: "213 percent of GDP by 2040." - Real interest rate assumption on new domestic borrowing: "about 4 percent." - Stress test outcomes (selected table excerpts preserved verbatim) - Examples of extreme scenario trajectories (table excerpts): - B3. Exports: "120 242 454 444 400 381 334 336 300 288 276" - C2. Natural disaster: "120 159 160 159 145 144 130 139 132 135 140" - Staff finds standardized shocks likely overstate risk because they capture volatility tied to the structural break from oil production; customized scenario excluding 2019–23 standard deviations shows no breaches. - Contingent liabilities and stress parameters - Default shock to contingent liabilities from SOE debt: "2 percent of GDP." - Aggregate contingent liability stress test inputs: total "(2 + 3 + 4 + 5) = 7.0 (in percent of GDP)." ### Dutch disease monitoring and policy guidance (Annex IV) - Key monitoring facts and projections - Oil sector expected to account for "60 percent of GDP." - Oil production projected to double by 2029 (reaching "1.2 million barrels per day"). - Five groups of indicators to monitor: real sector; external sector; monetary and financial indicators; fiscal indicators; governance indicators. - Assessment - Overall conclusion: Guyana’s economy does not yet show clear symptoms of Dutch disease. - Risks: excessive fiscal expansion could raise non-tradable prices, persistent inflation, and loss of competitiveness. - Policy recommendations - Public spending should align with capacity constraints and be anchored in a comprehensive medium-term fiscal framework with an explicit anchor; commitment to reach a zero overall fiscal balance over the medium term (by "2031") remains appropriate. - Strengthen multi-year budgeting, modernize public financial management, conduct regular expenditure reviews, and prioritize investment efficiency. - Monetary policy to maintain broad money growth in line with non-oil GDP and tighten if overheating signs emerge. - Continue structural reforms to support diversification and productivity. ### Governance, statistics, capacity development, and IMF engagement - Governance and anti-corruption - Authorities committed to strengthening governance and anti-corruption frameworks; progress since 2021 includes modernization of legislation, e-procurement, and hiring more magistrates and judges. - Priority actions: strengthen the Integrity Commission, comply with EITI beneficial ownership transparency, strengthen regulatory compliance in non-oil mining. - Statistics and capacity development - Key priorities: update National Accounts and price statistics; enhance external sector statistics; improve labor market data timeliness; publish 2022 census results; rollout household survey in 2026; complete Labor Force Survey. - Capacity development requested in revenue administration, statistics, banking supervision, debt management, and AML/CFT. - IMF engagement and recommendations - Staff supports LCDS 2030 objectives and provides policy advice through Article IV Consultation, capacity development, and monitoring. - Procedural note: next Article IV consultation proposed on the standard 12-month cycle. *Source: IMF staff report content as provided in the supplied PDF content unit.* ### 1. Natural Resource Fund Withdrawal Rules and Capital Expenditures ___________________________ 20 ### 1. Natural Resource Fund Withdrawal Rules and Capital Expenditures ### Context and objectives - Guyana’s economic growth has outpaced regional peers over the past 15 years, with oil accelerating its transition into a high-income economy; growth has been "averaging 47 percent per year since 2022." - The authorities’ development strategy focuses on leveraging oil resources to improve wellbeing, build a transformed and prosperous Guyana, and address gaps in Sustainable Development Goals (SDGs). - The Low Carbon Development Strategy (LCDS) 2030 is a central policy framework aiming to preserve forests while growing the economy fivefold over a decade. - The NRF Act 2019 (replaced by the NRF Act 2021) established a sovereign wealth fund to: - delink public spending from volatile natural resource revenues; - ensure revenues do not lead to loss of economic competitiveness; - fairly transfer natural resource wealth across generations; - finance national development priorities or emergency expenditures associated with a major natural disaster. - The withdrawal rule from the NRF was modified in 2024 to increase the ceiling for withdrawals. ### Recent developments and macroeconomic performance - Real GDP growth: - "Robust oil and non-oil sector performance further strengthened real GDP growth to about 4 3½ percent in 2024, up from nearly 34 percent in 2023." - Real oil GDP increased "by nearly 58 percent in 2024 (from about 47 percent in 2023)." - Real non-oil GDP expanded "over 13 percent" in 2024. - Inflation and output gap: - CPI inflation reached "2.9 percent by end-2024, up from 2 percent at end-2023." - The non-oil economy appears to still be operating below potential, but the output gap is closing. - Annual salary increases run in low double digits. - Fiscal developments and capital spending: - The surge in capital expenditure since 2022 (first NRF transfers to the budget) led to a wider fiscal deficit: from "5.1 percent of GDP (11.7 percent of non-oil GDP) in 2022" to "7.3 percent of GDP (21 percent of non-oil GDP) in 2024." - Non-oil revenues (about "26 percent of non-oil GDP") covered about "90 percent of primary current expenditure" in 2024. - The increase in the non-oil primary deficit to about "38 percent of non-oil GDP in 2024" reflects the sharp increase in capital expenditure, partly financed by NRF withdrawals. - External sector and reserves: - Current account surplus "more than doubled in 2024, reaching about 24½ percent of GDP," driven largely by oil exports; non-oil exports grew "16 percent (14 percent in volume)." - Gross international reserves (GIR) increased, "surpassing US$1 billion." - Import coverage was "1.9 months of non-oil imports." - NRF assets reached "US$3.1 billion by end-2024 (12½ percent of GDP)," which would be equivalent to an improvement in import coverage of "2.4 (6.6) months of total (non-oil) imports" and "110 percent in terms of the Assessing Reserve Adequacy (ARA) metric." - The current account gap is estimated at "3.8 percent of GDP." - Financial sector and credit: - Private and public sector credit grew "about 20 percent and 58 percent (from 16 percent and 32 percent in 2023), respectively" in 2024. - Credit to households increased "22 percent," driven by mortgage loans and vehicle credit. - Bank lending to private enterprises in services, agriculture, and mining and quarrying increased at "about 20 percent" during 2024. - Banking sector soundness indicators: capital adequacy remains well above regulatory requirements; average excess reserves were "1½ percent of GDP in 2024." - Non-performing loans (NPLs) declined to "0.8 percent of total assets as of September 2024," with provisioning at "80 percent of NPLs." ### Outlook and projections - Growth and inflation projections: - The economy is expected to grow "on average 14 percent per year over the next five years," driven by robust oil production and a growing non-oil sector. - Real non-oil GDP growth is expected to average "6¾ percent over the medium term," about "3 percentage points higher than the pre-oil decade average." - Inflation is projected to increase in 2025 and "rise to 5½ percent over the medium term." - External position and NRF projections: - The current account surplus is projected to moderate to "about 9 percent of GDP in 2025" reflecting the purchase of an additional FPSO vessel before surging thereafter. - Under the staff’s baseline (fiscal path consistent with reaching a balanced budget over the medium term and the current NRF schedule): - GIR will reach "about 10½ percent of GDP by 2030." - NRF assets will amount to "about US$13.3 billion (over 32 percent of GDP)" by 2030, reflecting a gradual decrease in cost recovery outflows to oil companies. - Risks: - Upside risks: additional oil discoveries and productivity-enhancing investment could bolster long-term prospects. - Downside risks: overheating pressures could raise inflation and cause a real exchange rate appreciation beyond a balanced expansion; volatile commodity prices and climate shocks could negatively impact food inflation and the macro outlook. ### Authorities’ views - The authorities agreed growth prospects are highly favorable and attributed extraordinary growth to sound and sustainable policies. - They emphasized vigilance regarding risks, and stated policies are supporting a balanced growth path while building prerequisites for a globally competitive non-oil economy. - The authorities are addressing impediments to productivity, diversification, and industrialization, and remain focused on containing overheating risks that could lead to inflationary pressures and exchange rate appreciation. ### Fiscal policy discussion and NRF withdrawal framework - 2025 budget measures and fiscal stance: - The 2025 budget channels rising oil revenues into targeted transfers and high investment expenditures. - Measures include raising the old age pension, public assistance, child support, and a one-off "GY$100,000 transfer for about 600,000 adults." - Tax measures include a rise in the tax allowance and a reduction in the personal income tax rate by "3 percent to 25 percent." - All measures are estimated to cost "1 percent of GDP in 2025." - Free university education starting this year at a cost of "0.3 percent of GDP." - Staff estimates the fiscal deficit will decline to "4.9 percent of GDP in 2025, from 7.3 percent of GDP in 2024," with investment broadly unchanged. - NRF withdrawal rules and fiscal framework: - Fiscal policy follows self-imposed limits, ensuring accumulation of substantial savings in the NRF. - A higher ceiling for withdrawals introduced in 2024 allows high capital spending while closing the overall fiscal deficit over the medium term as oil revenues increase. - Under the illustrative assumption that NRF withdrawals (subject to the higher ceiling) equate to capital spending and the non-oil primary deficit (percent of non-oil GDP) declines over time to levels consistent with intergenerational equity, NRF assets will peak at "about 360 percent of non-oil GDP in 2042." - Debt and buffers: - Gross public debt is low and projected to rise from "24 percent of GDP in 2024 to about 28 percent by 2026." - Statutory debt limits for both domestic and external debt were increased from "19 percent of GDP to 32 percent of GDP each in early 2024." - The large size of NRF savings further mitigates vulnerabilities to large shocks. - The assessment of the risk of debt distress has been upgraded to "low risk" in the current debt sustainability analysis (DSA); the risk of overall and external debt distress has been upgraded to "low" from "moderate" in previous DSAs. ### Scenarios and staff analytical framing - Baseline and scenario descriptions used in staff analysis (as presented): - Baseline follows the NRF schedule through 2032 and then smooths oil transfers over time. - Scenario 1 assumes equal per capita real investment spending through time. - Scenario 2 assumes equal investment spending in percent of non-oil GDP through time. - Presentation of public capital spending and NRF asset trajectories across baseline and scenarios (percent of non-oil GDP) informs tradeoffs between high investment, macro stability, and intergenerational equity. *Source: IMF staff report excerpt — "1. Natural Resource Fund Withdrawal Rules and Capital Expenditures" from provided chapter content.* ### 19. While robust to oil price risks, the current ### 19. While robust to oil price risks, the current framework would be tested by significant appreciation pressures. ### Fiscal framework and public spending - Key findings - Since capital expenditures equate to the NRF transfers ( based on past oil revenues), these would decline in the event of a large negative oil price shock. - An excessively expansionary fiscal stance could lead to higher prices for non-tradables, persistent inflation, and loss of external competitiveness, jeopardizing macroeconomic stability and economic diversification. - Symptoms of overheating should be closely monitored (Annex IV). - Policy recommendations - Public spending should further align with capacity constraints, while monetary policy supports a balanced expansion of the economy. - A comprehensive medium-term fiscal framework with an explicit anchor would help strengthen fiscal discipline and transparency. - Commitment to reach a zero overall fiscal balance over the medium term (by 2031) remains appropriate, followed by a narrowing of the non-oil primary deficit over the projected lifespan of oil reserves to levels consistent with ensuring intergenerational equity. - Strengthen multi-year budgeting and modernize public financial management, including through medium-term investment programs for key spending sectors with World Bank support and building capacity in project monitoring and evaluation. - Expenditure guidance - Expenditure could be anchored on investment needs and outcomes, such as linked to achieving the SDG levels of benchmark countries (Annex III). - Performance-based budgeting is increasingly informing policy discussions, but the recent surge in current and capital expenditures merits regular expenditure reviews and household surveys to better assess the effectiveness of public spending and align policies with the needs and wellbeing of the population. - Investments in education and health contain a significant current expenditure future liability (e.g., wages, maintenance), underlining the importance of a properly costed and comprehensive medium-term expenditure framework. - Strengthening investment efficiency would help maximize investment’s impact on sustainable growth. - Key statistic - The one-off universal social transfer provided sizeable support equal to 1.2 percent of GDP. ### Monetary policy and exchange rate regime - Recent developments and indicators - In 2024, broad money grew 25¼ percent, driven mainly by an expansion in net domestic assets. - The gap between the official and market exchange rates has been rising since early 2023, reaching almost 4 percent in late 2024. - In response, the Bank of Guyana (BoG) sold about $318 million in foreign currencies in 2024 and continued to do so in early 2025. - Policy guidance - Monetary policy should remain vigilant, by maintaining broad money growth in line with non-oil GDP growth while providing sufficient foreign exchange to stabilize the market exchange rate. - If signs of overheating or imbalances become evident, further tightening of monetary policy, along with macroprudential policies as needed, would be necessary. - The BoG should continue enhancing its monetary policy toolkit beyond open market operations and reserve requirements, including by strengthening the interest rate channel. - Reducing excess liquidity, where needed, and deepening financial markets to ensure effective functioning of the interbank, domestic debt, and foreign exchange markets would enhance monetary transmission. - Exchange rate regime assessment - The current exchange rate regime of stabilized arrangement has served well as the nominal anchor. - Given underdeveloped domestic financial markets, weak monetary policy transmission mechanism, limited economic diversification, and accumulation of substantial foreign exchange buffers in the NRF, the de facto stabilized arrangement, acting as a currency peg that minimizes foreign exchange uncertainty about the oil related flows, is appropriate at this time. - In the future, consideration could be given to whether a more flexible exchange rate regime—supported by suitable policy frameworks—could best serve the economy in facilitating adjustment to terms-of-trade changes and helping maintain macroeconomic stability. - Authorities’ stance - The authorities agreed that the policy mix was appropriate and remain vigilant to inflationary pressures. - They concurred with the need to further tighten monetary policy if signs of overheating or imbalances emerge, using all available instruments, including through selling central bank securities and foreign exchange (FX) intervention. - While the BoG continued to provide FX to the market in 2025, it expected FX reserves to rise considerably later in the year largely on account of increased external disbursements. - The BoG would be interested in assessing, with IMF support, the merits of a more flexible exchange rate regime in the medium term. ### Financial sector policy and stability - Financial stability assessment - Financial stability risks remain largely contained. - As of end-June 2024, stress tests showed no amplification in the level of systemic or financial stability risks, but stress tests revealed increased vulnerabilities in the banks’ credit portfolios, mainly related to the agricultural and mining sectors, and foreign investment portfolios. - Ongoing reforms and capacity building - Authorities maintain indicators including credit-to-GDP measures, banking stability index, and a systemic risk matrix. - Progress is ongoing in updating Crisis Management and Supervision Guidelines to a broader industry level, closely monitoring sectoral lending exposures and related-party lending. - Improving data collection and statistics on corporate and household balance sheets and real estate prices will be critical to strengthen banking supervision and monitoring of systemic risks. - Policy recommendations - Continue to improve risk monitoring, develop macroprudential tools, and broaden regulatory coverage. - Enhance the macroprudential framework to link it to the banking supervisory framework, including by developing macroprudential tools. - Widen the supervisory perimeter to include quasi-financial institutions and credit unions. - Deepen domestic capital markets and foster financial inclusion. - Payments system and digitalization - In 2024, the BoG further enhanced Guyana’s payments system through legal and regulatory amendments, encouraging innovation and promoting awareness of digital payments (such as Guyana Automated Clearing House (G-ACH) System and Guyana Electronic Funds Transfer (G-EFT) Sub-System). - Authorities’ views - Authorities reaffirmed commitment to maintain financial stability and continue enhancing financial supervision. - They noted strong asset growth within the highly liquid banking system, improvements in NPLs, and increased profitability. - Stress test results indicated potential credit vulnerabilities under extreme shocks but reaffirmed the robustness of the financial system. - Authorities expressed interest in developing macroprudential tools and enhancing statistics, such as developing a residential property price index, including with IMF support. ### Structural policies: social, diversification, labor market - Social protection and poverty - Targeted transfer policies since 2022 have helped increase disposable income and reduced the poverty rate. - The recent one-off universal social transfer equaled 1.2 percent of GDP; making it more targeted and integrated into a medium-term fiscal framework could significantly contribute to further reducing poverty. - Given that the last household survey was conducted in 2019, it will be critical to conduct regular household surveys for timely monitoring of poverty and distributional trends and for assessing the current system of social assistance. - Economic diversification and labor market - Authorities implementing reforms to: (i) improve infrastructure and energy supply; (ii) support expansion of construction, hospitality, tourism, light manufacturing, agribusiness, and financial services; (iii) address labor shortages and skill mismatches through training, vocational education, and targeted immigration of skilled labor; and (iv) enhance opportunities for women by improving access to jobs, education, and healthcare. - Remaining priorities include boosting productivity through investment in education, lowering electricity cost (through the Gas-to-Energy project), increasing export diversification through high value-added products in agriculture and manufacturing, expanding the tourism sector, and addressing gender gaps, especially in labor force participation. - Key labor force statistics - According to International Labour Organization’s estimates, the female labor force participation gap in Guyana is 26 percentage points. - Guyana’s participation rates for men and women are 66 and 40 percent, respectively; regional averages are 80 and 56 percent. - Authorities’ views - Authorities highlighted progress in reducing poverty through social transfers and incentivizing employment. - They emphasized improvements in access to services and infrastructure and stressed focus on effective and easily verifiable execution of social programs. - They noted transfer programs to specific groups (children, newborn, disabled, workers, and retirees) and work incentives (higher personal income tax thresholds, lower tax rates) support production and productivity. - Authorities agreed labor shortages presented a challenge and highlighted the Local Content Act, training, and active labor market policies in addressing skills mismatches and increasing labor force participation, including of women. ### Climate, energy, governance, and anti-corruption - Climate and energy - Guyana combines a low-carbon pathway with earnings from preserving forest coverage. - In 2022, Guyana sold 37.5 million carbon credits (earned for the period 2016–20) for US$750 million, to be paid during 2022–32. - Fifteen percent of Guyana’s carbon credits were used to support over 200 Amerindian communities in 2023–24. - In early 2024, Guyana announced issuance of the world’s first carbon credits (7.1 million) eligible for use by airlines under the UN Carbon Offsetting and Reduction Scheme for International Aviation, and some credits have already been sold. - Support to the Amerindian communities amounted to 0.3 percent of GDP in 2023. - Authorities are advancing LCDS 2030 focusing on sustainable forestry and biodiversity, climate adaptation and resilience, and clean and renewable energy, including the Gas-to -Energy project. - Governance, transparency, and procurement - Progress has been made enhancing governance of the NRF and strengthening transparency in fiscal outcomes, procurement, and public sector services. - The NRF and Public Accountability and Oversight Committee 2 023 Annual Reports have been presented to the National Assembly; regular notifications of receipts of petroleum revenues are published in the Official Gazette; and the BoG publishes monthly and quarterly reports of the NRF’s financial performance. - Modernization of Guyana Revenue Authority (GRA) and procurement framework upgrades have improved operations, data analysis, risk management, IT systems, audit capacity, and public access to procurement information. - A single window system was launched in mid-2024 to facilitate doing business and streamline regulations, particularly related to building permits. - Remaining gaps and recommendations - Further efforts are needed for a more comprehensive reporting of fiscal operations, including timely publication of audit reports of some public companies and local authorities. - Development of an electronic procurement system and strengthening appraisal processes and project management capacity through training and peer reviews could raise efficiency. - Governance and anti-corruption frameworks are being enhanced, but further efforts are needed in extractive industries transparency, including meeting the beneficial ownership transparency requirement and removing confidentiality constraints to allow public disclosure of EITI data. - Strengthening regulatory compliance in the non-oil mining sector, hiring more magistrates and judges, and modernizing the judicial system are priorities to improve efficiency and the rule of law. - AML/CFT - Guyana’s Mutual Evaluation Report (MER) by the Caribbean Financial Action Task Force (CFATF), published in 2024, found significant improvement in understanding ML/FT risks via multiple ML/FT risk assessments, including a 2023 sectoral risk assessment on the Extractive Industries. - Priority actions include improving the transparency of beneficial ownership of legal persons and legal arrangements and implementing MER recommendations with strong political commitment. *Source: Excerpt from IMF staff report chapter on Guyana fiscal and macroeconomic policies.* ### 40. The authorities remain firmly committed to further strengthening governance and ### 1guyea2025001-print-pdf - 40. The authorities remain firmly committed to further strengthening governance and ### Governance and anti-corruption - Authorities remain firmly committed to further strengthening governance and anti-corruption frameworks, building institutional capacity in line with international standards. - Progress since creation of the multi-agency National Coordinating Committee on Anti-Corruption in 2021 includes: - modernizing legislation; - reducing corruption risks; - digitalizing public services (e.g., e-procurement); - strengthening the rule of law through hiring more magistrates and judges; - engaging with private sector. - Priority actions: - Strengthening the Integrity Commission, including the compliance framework for the submission of declarations. - Compliance with the EITI Standard recommendation on beneficial ownership transparency in extractive industries. - Strengthening regulatory compliance in the non-oil mining sector with emphasis on larger operators. ### Data and capacity development - Key statistical priorities: - Updating the National Accounts and price statistics to capture the rapidly evolving economy. - Further enhancing external sector statistics. - Improving the timeliness of labor market data. - Publishing the 2022 census results to assess welfare improvements and refine policies. - Capacity development (CD) focus areas provided or requested: - revenue administration; - statistics (national accounts, prices, external sector); - banking supervision; - debt management; - AML/CFT. - Additional CD needs discussed: - debt sustainability analysis and management; - macroprudential tools development; - a residential property price index; - assistance to help reassess the exchange rate framework. ### Authorities’ views on statistics and surveys - Ongoing modernization of official statistics to capture rapidly evolving structural changes. - Actions underway: - enhancements to national accounts, prices, and external sector statistics (with IMF support as needed); - finalizing the national census; - preparing rollout of a new household survey in 2026; - undertaking the Labor Force Survey. - AML/CFT/PF assessments: - Guyana completed two AML/CFT/PF National Risk Assessments; the third assessment is expected to be completed in the first half of 2026. ### Staff appraisal — Economic transformation and outlook - Structural transformation and recent performance: - Rapidly expanding oil production, strong non-oil output, and large-scale public infrastructure investment supported the highest real GDP growth rate in the world, averaging 47 percent per year since 2022. - Total and non-oil growth are projected at 10¼ percent and 13 percent in 2025, respectively. - Inflation edges up to around 4 percent by end-2025. - External and reserve developments: - In 2024, GIR increased by about US$114 million, surpassing US$1 billion. - NRF accumulated over US$1.1 billion, reaching US$3.1 billion. - External position assessed stronger than level implied by fundamentals and desirable policies and expected to improve as oil production expands. - Medium-term outlook and risks: - Economy expected to grow on average 14 percent per year over the next five years, driven by robust oil production and strong non-oil real GDP growth. - Upside risks: further oil discoveries and productivity gains. - Downside risks: overheating pressures and volatile commodity prices amid elevated global uncertainty. - Assessment of Guyana’s risk of debt distress upgraded to low risk in the DSA. ### Fiscal policy, savings, and NRF governance - Fiscal stance and recommendations: - Given development and investment needs, fiscal policy stance is appropriate; fiscal deficits should gradually close over the medium term. - Increase in the withdrawal ceiling from the NRF in early 2024 provided room to expand capital expenditure. - Overall fiscal deficit expected to gradually close by 2031. - Narrowing of the non-oil primary deficit should follow over the (conservatively) projected lifespan of oil reserves to ensure intergenerational equity and macroeconomic sustainability. - Implement a comprehensive medium-term fiscal framework with an explicit anchor and an operational target; further modernize public financial management systems; conduct regular expenditure reviews to assess spending efficiency and effectiveness in reaching the SDGs. - NRF reporting and transparency: - NRF reports presented to the National Assembly. - Bank of Guyana publishes regular reports of the NRF’s financial performance. - Authorities modernizing revenue administration capacity and upgrading the procurement framework. ### Monetary, financial sector, and macroprudential policy - Monetary policy stance: - Monetary policy remains appropriately tight, helping contain inflation. - Guidance: maintain broad money growth in line with non-oil GDP growth, continue careful liquidity management, and tighten monetary policy further if signs of overheating emerge. - Enhance the monetary policy toolkit, including strengthening the interest rate channel and deepening financial markets to improve monetary policy transmission. - Maintain consistent policies to support the current stabilized exchange rate regime; reassessment of the exchange rate framework could be beneficial as the economy transforms. - Financial supervision and macroprudential framework: - Scope exists to strengthen macroprudential framework and link it to the banking supervisory framework to respond to potential shocks to financial stability. - Improving statistics on corporate and household balance sheets and real estate prices is critical to support stronger banking supervision and move toward broad-based risk-based financial supervision. ### Inclusion, skills, and diversification - Staff supports authorities’ efforts to foster inclusive growth, economic diversification, and skill upgrading. - Key actions: - Address labor shortages and skill mismatches through training and vocational education. - Increase female labor participation. - Reforms and investments to boost productivity, trade connectivity, and export diversification are commended. ### Environment, climate resilience, and energy - Guyana’s initiatives: - Global pioneer in monetizing forest conservation. - Enhancing energy matrix and strengthening macroeconomic resilience. - Building resilience against sea level rise and flooding; promoting sustainable forestry and biodiversity conservation (LCDS 2030). - Gas-to-Energy project expected to secure reliable electricity provision countrywide as a transition toward cleaner energy sources over the longer term. ### AML/CFT, anti-corruption, and fiscal transparency - Staff supports continued efforts to strengthen AML/CFT and anti-corruption frameworks and enhance fiscal transparency. - Recent assessments by CFATF and MESICIC highlight progress in understanding ML/FT risks and advancing anti-corruption measures. - Ongoing reforms: - Strengthening the Integrity Commission; - expanding internal audit capabilities; - implementing the EITI recommendation on beneficial ownership transparency. - Remaining needs: - Ensure timely publication of all audit reports. - Strengthen regulatory compliance in the non-oil mining sector. ### Statistics modernization - Continued priority to modernize official statistics, particularly national accounts and price statistics to capture the rapidly evolving economy. - Household budget survey and regular labor force surveys will help shape and refine government policies. ### Procedural note - Proposed that the next Article IV consultation takes place on the standard 12-month cycle. ### Box: Natural Resource Fund (NRF) Withdrawal Rules and Capital Expenditures — key points and numbers - 2024 revision raised maximum transfers to the budget in a given fiscal year for each additional US$1 billion deposits paid into the NRF in the preceding year. - Illustration (if various flows to NRF in year T-1 range from US$1 billion to US$5 billion): - If US$5 billion flows into the NRF, the maximum amount that can be transferred to the budget the following year is US$4.2 billion compared to U$1.35 billion under the previous ruling. - Fiscal and investment implications: - Assuming the maximum annual budget transfer from the NRF, capital expenditures remain strong at about 12 percent of GDP in 2025 and by 2029 the transfer almost equates to capital expenditures. - Since non-oil revenues broadly cover current primary expenditures, limited recourse to debt financing over the medium term. - Revised NRF withdrawals remain consistent with the non-oil primary deficit narrowing over time and do not materially affect debt sustainability and savings accumulation. - Higher withdrawal rule lowers NRF build-up in relation to GDP compared to the 2021 withdrawal rule, but NRF assets still reach over 210 percent of GDP by 2040. - International comparisons of sovereign wealth fund size cited: - Chile: 4 percent of GDP in 2029. - Trinidad and Tobago: 32 percent of GDP in 2040. - Timor-Leste: zero by 2040. - Transition in balanced budget timing: - Balanced budget is not achieved until 2031 (2028 previously). - Table: Maximum Amount That Can be Withdrawn from the NRF in Year T (Billions of U.S. dollars) - NRF inflow in Year T-1 — December 2021 Schedule — January 2024 Schedule - 1.000 — 0.875 — 1.000 - 2.000 — 1.250 — 1.950 - 3.000 — 1.290 — 2.850 - 4.000 — 1.320 — 3.700 - 5.000 — 1.350 — 4.200 ### Box: Does Public Investment Stimulate Non-Oil Growth in Guyana? — empirical findings - Historical relationship: - Public investment expenditures in Guyana have historically boosted real non-oil growth over 2003–23. - Public investment historically higher than private investment and rose sharply once government started receiving oil revenues. - OLS regression results (Determinants of Non-Oil Growth Rate): - Public investment in percent of GDP (-1): Coefficient 0.55, P-value 0.02 - Private investment in percent of GDP (-1): Coefficient 0.59, P-value 0.09 - Public investment post-oil (-1): Coefficient -0.01, P-value 0.98 - Real export growth: Coefficient 0.07, P-value 0.01 - Dummy for 2020 (Covid effect): Coefficient -0.15, P-value 0.00 - Interpretation: - A one percent of non-oil GDP boost to Guyana’s public investment is associated with a ½ percent growth (0.5 percent), comparable to estimates for OECD and emerging market economies and slightly higher than estimates for small states in Asia-Pacific and oil exporters. - The public investment coefficient declines in the oil boom period suggesting absorptive capacity constraints, but that effect is insignificant. - Caveats: estimates subject to endogeneity and model specification caveats; impact size depends on investment efficiency and leakages. _Italic: Source — IMF staff report content as provided in the supplied PDF content unit._ ### Box 3. Country Engagement ### Box 3. Country Engagement ### Low Carbon Development Strategy (LCDS) 2030: objectives and vision - Builds on LCDS 2009 for a climate-focused sustainable development. - Envisages preserving Guyana’s standing forests and using its vast oil resources to: - invest in urban and rural development; - protect the coast and hinterland from climate change; - promote efficiency water use; - align the education and health sectors with low carbon development; - as a result, raise GDP fivefold over a 10-year period. ### Main implementation challenges - Capacity constraints that can pose risks to macroeconomic stability and sustained growth. - Significant resources on the revenue side ease financing constraints, including to import capital for domestic infrastructure and other projects. - Labor shortages can slow economic expansion and lead to high wage inflation. - Labor market data (although not recent) suggests considerable labor availability in the country, but building the required skills would take time. ### IMF engagement, advice, and monitoring - Fund staff engages the authorities through the Article IV Consultation process, supporting them with policy advice and capacity development. - Staff’s policy advice aims to ensure that Guyana’s exceptional revenue windfall is best harnessed to: - support implementation of the authorities’ ambitious development plans; - ensure macroeconomic stability; - achieve inclusive and resilient growth. - Recommended policy priorities supported by staff: - increase expenditure on education, health, and infrastructure while guided by a longer-term fiscal anchor to ensure fiscal sustainability; - adopt more targeted transfers to the poor, included in the medium-term fiscal framework. - Monitoring and diagnostics: - conduct regular household and labor surveys to better monitor outcomes of government policies and quickly assess skill and other bottlenecks; - improve the quality and timeliness of statistics. ### Gender, inclusion, and labor market recommendations - Authorities’ strategy to enhance economic opportunities for women is welcomed given the low level of female labor participation in the economy. - Closing gender gaps would require: - improving access to jobs, education, health and childcare services; - reducing wage disparities; - ending child marriage; - tackling gender violence. - Making the labor market more inclusive by boosting female labor force participation would also help address labor shortages and facilitate economic expansion. ### Capacity development and fiscal transparency - The Fund is providing capacity development (CD) in several areas, including statistics and revenue administration. - Continued efforts should: - strengthen fiscal transparency; - conduct regular public investment (and climate) assessments to enhance the efficient use of resources and achieve higher economic gains. *Source: Box 3. Country Engagement, 1guyea2025001-print-pdf* ### Annex I. Overview of the Energy Sector in Guyana ### Annex I. Overview of the Energy Sector in Guyana ### Historical Context - Guyana historically relied on fossil fuels and, to a lesser extent, hydropower and biomass; some parts of the population lacked access to reliable electricity. - The Demerara River has been a central focus for hydroelectric projects but progress has been slow and faced challenges such as the risk of flooding. - The cost to produce electricity is currently $0.32 per KWH, which is amongst the highest in the region. - Government expectation (2024 and 2025 Budget Speeches): the cost of electricity will be reduced by half by fostering alternative energy resources and investing in energy infrastructure. - Guyana Power and Light (GPL) is a vertically integrated, state-owned monopoly on power generation; current energy laws granting GPL a monopoly complicate private renewable energy investment. ### Energy Sources of Guyana Hydropower - Hydropower is considered viable given abundance of rivers, rainfall, and waterfalls. - Two hydropower projects, including Amaila Falls, are expected to add 370 megawatts (MW) to Guyana’s power generation matrix by 2035 (included in LCDS 2030). - Works on 1.5 MW and 0.72 MW mini-hydropower facilities at Kumu and Moco Moco, respectively, were substantially completed by end 2024. - Upgrades to primary distribution networks at Ituni, Kumaka and Kwakwani are expected to be completed by the end of 2025. Oil Discoveries - Stabroek Block discoveries by ExxonMobil and partners (since 2015) are transformative. - Estimated recoverable oil and natural gas resources of more than 11 billion barrels of oil equivalent (boe). - In May 2015 ExxonMobil announced a significant oil find at a depth of 17,825 feet (5,719 feet of water), 120 miles off the coast of Guyana (Liza 1). - To date: Liza 1 plus 45 other discoveries in the Stabroek Block and 6 in other blocks; the only unsuccessful well was Skipjack. - All successfully drilled wells to date contain high-quality or “sweet” crude. - With the three currently producing projects, Guyana’s daily production is over 600,000 barrels per day and doubling by 2029. Natural Gas and Natural Gas Liquids - Proved natural gas reserves are estimated to be 16 trillion cubic feet (Tcf) as of January 2024. - Gas-to-Energy project: transport associated natural gas from Liza Destiny and Liza Unity FPSOs via a 140-mile-long offshore pipeline to feed a 300-megawatts (MW) combined-cycle power plant and a natural gas liquids processing facility. - Project goals include reducing carbon emissions and diversifying the energy mix; associated gas is currently reinjected. - Phase 1: power a 300 MW power plant. Phase 2: adds a 250 MW power plant; government sought proposals for a phase 2 developer. Phase 2 could take two years to develop and serve as a stand-in for the delayed 165 MW Amaila Falls hydropower project. Solar Energy - Guyana averages 12 hours of daily sunlight throughout the year, supporting solar potential. - Solar initiatives focus on remote and underserved communities; larger scale wind and solar projects expected to contribute more between 2027 and 2032. - GEA reported distribution of 26,398 solar units in 2023. - Solar PV Home Energy Systems project aims to add 30,000 solar photovoltaic (PV) units. - PV mini grids already installed provide renewable electricity to over 245 communities. - Government plans to invest US$72.4 million in solar photovoltaic plants starting in 2025. Wind and Biomass - As of May 2024, Guyana had one operational biomass power plant: Skeldon Biomass Power Plant (East Berbice-Corentyne) operational since 2008 with two steam turbines and 30 MW generating capacity; primary fuel: bagasse. - Guyana’s biofuels sector accounts for 0.02 percent of total energy production. - Guyana joined the Global Biofuels Alliance (GBA) in September 2023. ### Guyana’s Energy Policy and Infrastructure Energy infrastructure and investments - Substantial investments in offshore drilling platforms, pipelines, and onshore processing facilities to support the oil industry. - GEA (Guyana Energy Agency) is responsible for developing national energy policy and securing implementation. - MNR (Ministry of Natural Resources) oversees GGMC, GFC, and the Guyana Gold Board and is responsible for natural resource policy development and oversight. Electricity system statistics and losses - Installed electrical capacity: 337 MW, by fuel mix: fossil fuels 85.27 percent, biomass 12.46 percent, solar 2.26 percent, wind 0.01 percent. - Electricity demand in 2018: 124.9 MW. - Access to electricity as of 2020: 89.7 percent of urban population and 80.3 percent of rural population. - Over a quarter of electricity is lost during transmission and distribution due to poor infrastructure; GPL loses approximately 25 percent of produced electricity. - Official targets: double energy efficiency by 2030 and approach 100 percent renewable energy generation by 2040 (noting potential interference from fossil fuel development). Short- and medium-term measures - Short term: 28.9 megawatt (MW) of emergency power installed at the Columbia substation; two power ships rented to provide 96 MW of electrical power. - Medium term: works progressing on Gas-to-Energy project; $40.8 billion was spent to advance works, including installation of 9,018 of 9,614 joints of a deepwater natural gas pipeline. - Installation of transformers is expected to be completed by the end of 2025 to supply an additional 300 MW of power to the grid. Grid modernization and distribution upgrades - Government actions to prepare offtake capacity: replaced and upgraded over 4,000 transformers and constructed approximately 2,800 km of distribution network. - Advanced works on a new 69 kilovolt (kV) transmission line from Kingston to Sophia. - In the 2024 Budget, works were expected to be completed on upgrading substations at Columbia, Good Hope, No.53 Village, and Sophia. - Government advancing mini-grid systems and household-level solutions for hinterland communities. Regulatory framework and governance - Government measures to strengthen regulatory institutions, improve transparency, and share energy resource benefits. - 2019: changes adopted to the wear and tear schedule of the Income Tax Act for capital investments in renewable and alternative energy and further tax exemptions for hybrid or electric cars and electric motorcycles. - Absence of grid tie-in legislation to allow resale of power to the state-owned entity may affect feasibility studies; GPL has brokered public-private partnerships using fossil fuel-based generators. Environmental and social considerations - Transition from heavy oil to domestically produced natural gas expected to have environmental benefits, although methane emissions may increase. - Authorities and international partners are developing strategies to balance economic growth with environmental stewardship and protect biodiversity and local communities’ rights and well-being. *Annex I. Overview of the Energy Sector in Guyana* ### Annex II. External Sector Assessment ### Annex II. External Sector Assessment ### Overall Assessment - The external position of Guyana at end-2024 was stronger than the level implied by fundamentals and desirable policies. - The real effective exchange rate (REER) against currencies of trading partners remained largely unchanged in 2024. - Gross international reserves (GIR) increased by US$114 million, reaching US$1 billion. - Reserve adequacy: - 1.9 months of non-oil imports. - 0.7 months of total imports. - 34 percent of the Assessing Reserve Adequacy Emerging Markets metric. - Deposits to the Natural Resource Fund (NRF) keep growing fast. - As oil production surges, the external position becomes stronger, allowing further accumulation of GIR and resources in the NRF. - The outlook remains favorable, without clear inflationary and appreciation pressures as of now, but close monitoring is needed as the oil sector expands. - The current exchange rate regime of stabilized arrangement has served well as the nominal anchor, reducing foreign exchange uncertainty from oil related flows. - Potential policy responses (medium term): - Continue structural reforms to reduce poverty. - Enhance labor market skills through investment in education. - Improve the business environment to promote private investment, increase productivity, and foster diversification in the economy. ### Foreign Asset and Liability Position and Trajectory Background and recent developments: - Guyana’s NIIP has increased in recent years due to persistent current account surpluses. - In 2024, the high current account surplus (24.6 percent of GDP) improved the NIIP by around US$5 billion until the third quarter. - The NIIP has averaged about -96 percent of GDP since 2019, increasing to -21.4 percent at end-2024. - Assets increased by 16.3 percent to US$5,531 million in 2024, mainly from increases in deposits to the NRF (US$828 million). - Liabilities declined by 19.3 percent to US$10,830 million owing to oil cost recovery by oil companies. Assessment and recommendations: - Guyana’s NIIP is expected to increase over the medium term due to projected CA surpluses, accumulation of assets in the NRF, and gradual reduction of cost recovery by oil companies. - Strengthening the investment and risk management of the NRF would help support the NIIP in the long term through higher returns. - Note: Currently, the NRF assets are held at the Federal Reserve Bank of New York earning overnight deposit interest at the prevailing federal funds rate. Key 2024 numbers (% GDP): - NIIP: -21.4 - Gross Assets: 22.4 - Debt Assets: 2.6 - Gross Liab.: 43.8 - Debt Liab.: n/a ### Current Account Background and recent developments: - Guyana’s current account increased its surplus to 24.6 percent of GDP in 2024, after moderating to 9.9 percent in 2023. - Rampant increase in oil production of 58 percent drove an increase of 55 percent in total exports despite lower oil prices. - The current account surplus remains larger than the previous year due to a temporary halt in oil-related imports as no floating facilities (FPSOs) were completed in 2024. - National savings increased to 38 percent of GDP, from 25 percent of GDP in 2023. - Aggregate investment remained at 14 percent of GDP, driven by its public component. - Going forward, oil related imports will continue to lead to fluctuations in the current account, but steadily increasing oil production will sustain structural current account surpluses in the short and medium term. - Saving-investment balance: - Private saving surplus is driving the current account in the near term. - Contribution of public sector will increase over time reflecting accumulation of NRF assets and improvements in fiscal balances. Assessment: - Staff’s assessment is that the external position in 2024 was stronger than the level implied by fundamentals and desired policies. - Given the predominant and increasing role of the oil sector, the assessment uses the Consumption Allocation Rules model. - The Consumption Allocation Rules in real per capita terms suggest a CA norm of 20.8 and a CA gap of 3.8 percent of GDP. - Although medium-term uncertainties exist due to structural transformation, staff assesses the external position was stronger than implied by fundamentals and desired policies. EBA-lite / model results (2024): - Consumption Model 1/ CA-Actual: 24.6 - Investment Model 2/ CA-Actual: 24.6 - REER Model 3/ CA-Actual: 24.6 - CA Norm (from model): 20.8; 10.4 - Adjustments to the norm (+) - CA Gap: 3.8; 14.2; 1.2 - o/w Relative policy gap - Elasticity: -0.4; -0.4; -0.4 - REER Gap (in percent): -8.9; -33.3; -2.8 - Note: 3/ Based on the EBA-lite 3.0 methodology ### Real Exchange Rate Background and recent developments: - The REER remained broadly stable in 2024 (appreciating 0.1 percent), driven by low domestic inflation relative to main trading partners, despite an appreciation of the nominal effective exchange rate (NEER). - The NEER appreciated by 1.2 percent in 2024, after appreciating 1.4 percent in 2023, led mostly by developments of the U.S. dollar vis-à-vis other currencies (mainly Japan and China). - Guyana’s main trading partners are the United States, Trinidad and Tobago, China, and Japan. - In 2024, inflation in Guyana was lower than in the United States and Japan, and slightly above Trinidad and Tobago and China. Assessment: - Based on the Consumption Allocation Rules model, the REER in 2024 was undervalued by 8.9 percent. - Although the model suggests an undervalued REER, there are currently few signs of inflationary pressures. - Over the medium term, as the oil sector and the non-oil economy expand, appreciation of the REER is expected to gradually narrow the CA gap. ### Capital and Financial Accounts Background and flows: - Led by oil foreign direct investment (FDI) flows, the capital and financial accounts recorded a net outflow equivalent to 24.1 percent of GDP at end-2024. - Net FDI recorded an outflow of US$5,497 million in 2024 compared with US$1,141 million in outflows in 2023 (7 percent of GDP). - The large increase in outflows in 2024 is the result of expected rise in repatriation of investment by oil operators of US$13,208 million (54 percent of GDP), which more than offset oil FDI inflows of around US$7,487 million (30 percent of GDP). - Non-oil net FDI increased to US$224 million in 2024 from US$111 million in 2023, reaching 1 percent of GDP. - Public sector: - Financial account recorded inflows of government oil revenue into the NRF equal to US$2,568 million (10 percent of GDP). - Withdrawals from the NRF to the fiscal budget of US$1,586 billion (6.4 percent of GDP). - New NRF withdrawal rule became operative in 2024; both inflows and withdrawals to the NRF are expected to grow as oil revenues increase and authority’s development plans occur. - Public external debt, mostly to multilateral institutions, increased in 2024 along with disbursements of US$498 million (2 percent of GDP). - New borrowing of around US$1.4 billion is expected in 2025 from bilateral lenders. Assessment and risks: - As oil production continues expanding, pockets of vulnerability might emerge in the financial account if external shocks materialize. - In the medium term, expansion of the oil sector will remain funded by FDI, supporting stability of the external position. - However, as the share of oil exports in total exports increases, external shocks to oil prices and production could affect oil related FDI and government revenues from oil. - Buffers against external shocks are projected to strengthen as the fiscal deficit aligns with gradual elimination of the non-oil fiscal deficit by 2030, and external debt remains constrained by statutory ceilings. - NRF savings are projected to continue increasing, providing an alternative source of funding for capital spending and expenditures associated with major natural disasters. ### Reserves Level and FX Intervention Background and levels: - GIR at end-2024 reached US$1 billion, equivalent to 4.1 percent of GDP. - GIR adequacy: - 1.9 months of non-oil imports. - 0.7 months of total imports. - Reserves accumulation in 2024 was driven mainly by increase in oil FDI outflows and deposits to the NRF, together with FX interventions of around US$318 million to accommodate FX demand as the market exchange rate with respect to the U.S. dollar depreciated by around 4 percent. - As of end-2024: - GIR were 34 percent of the ARA EM metric. - GIR were 16.3 percent of broad money (M2). - GIR were about 1,300 percent of short-term debt. - Stock accumulated in the NRF increased to US$3.1 billion (12.5 percent of GDP) in 2024. - If the NRF stock were included, it would be equivalent to an improvement in reserves coverage of 2.2 (6.3) months of total (non-oil) imports and 104 percentage points in terms of the ARA metric. Assessment and projections: - The NRF is expected to accumulate substantial buffers by 2030, whereas Guyana’s level of GIR is projected to gradually exceed most adequacy metrics in the near term. - Under the new withdrawal rules from the NRF to government’s budget, NRF savings are projected to reach about US$13.3 billion (32.3 percent of GDP) by 2030. - Currently, GIR level is below recommended coverage in months of imports and the ARA EM metric; both metrics improve significantly when computed using non-oil exports and non-oil imports, respectively, reaching adequate coverage by end-2025. - Adequacy across other metrics indicates that the current level of GIR provides adequate buffers against capital flight and limited market access in the event of adverse shocks. Selected adequacy indicators and projections (excerpted from table): - 2024: ARA EM Metric: 34.2; ARA EM Metric Non-oil: 87.7; 3 Months Imports: 25.1; 3 Months Non-oil Imports: 68.2; 20% of Broad Money: 14.4; Short Term Debt: 23.3 - 2025Proj.: ARA EM Metric: 51.9; ARA EM Metric Non-oil: 124.1; 3 Months Imports: 38.7; 3 Months Non-oil Imports: 104.2; 20% of Broad Money: 10.8; Short Term Debt: 14.6 - 2030Proj.: ARA EM Metric: 55.2; ARA EM Metric Non-oil: 127.1; 3 Months Imports: 101.1; 3 Months Non-oil Imports: 130.1; 20% of Broad Money: 8.4; Short Term Debt: 53.1 - Adequate Range provided: 100-150 for ARA metrics; 100 for 3 Months Imports/Non-oil Imports; 100 for 20% of Broad Money; 100 for Short Term Debt. ### Annex III (brief): How to Gauge Guyana’s Capital Investment Needs - Objective: Assess Guyana’s investment needs to achieve selected Sustainable Development Goal (SDG) outcomes by aligning costing with countries with average SDG performance. - Approach: - Benchmark expenditures using SDG outcomes in education, health, infrastructure, water/sanitation, and energy. - Select comparator group as the middle-performance group across these five sectors. - Estimate cost functions where per capita costs are the product of sector GDP ratios and real GDP per capita in PPP terms. - Key assumptions: - Guyana’s education and health costs are projected forward through 2024 based on budget outcomes; 2020 per capita GDP is extended using annual real per capita growth rates. - Beyond 2024, sectoral expenditures assumed constant in relation to total public investment except for energy. - Comparator country expenditures remain constant in percent of GDP; per capita GDP grows by average per capita growth rate among emerging markets. - For energy, Guyana cost per kwh used is 29 cents; middle performance country uses IMF’s SDG costing framework at 26 cents per kwh. - Innovation: Include population density as a determinant of unit cost of providing services; efficiency proxied by World Economic Forum efficiency indexes. - Estimation method: Seemingly unrelated regression (SUR) model used to estimate unit cost functions and control for correlated unexplained factors. Selected econometric results (Health and Education SUR): - Health expenditure per capita regressors: - Under five mortality rate: -0.828 *** - Population density: 0.0732 - Health care efficiency: -0.905 * - Population density*mortality rate: -0.0532 * - High income dummy variable: 0.411 *** - Low income dummy variable: -0.645 *** - Private education dummy variable: 1.214 *** - Constant: 11.06 *** - Correlation (health and education): 0.210 - Breusch-Pagan Chi2: 7.771 *** - N: 177 - R2 (health): 0.8848 - Education expenditure per capita regressors: - Test scores: 3.406 * - Population density: 0.0732 - Education Efficiency: -0.236 - Population density*test score: -0.0185 - High income dummy variable: 0.543 - Low income dummy variable: -1.286 ** - Constant: -12.09 - R2 (education): 0.3249 - T statistics are reported in parentheses in the source. - Significance legend: * p<0.05, ** p<0.01, *** p<0.001 *Source: IMF staff calculations and Annex II. External Sector Assessment (content unit).* ### 6. The constrained SUR coefficients in ### 6. The constrained SUR coefficients in ### Empirical findings: health, education, and infrastructure cost relationships - Health and education relationships: coefficients have the expected signs — lowering the mortality rate and raising test scores is costly; countries with lower population density spend more to achieve comparable increases in health and education services. - Efficiency impacts: - Efficiency improvements lower costs controlling for the output measure in both sectors, with the impact on health spending significant. - The assumption of constraining the population density coefficients to be equal is accepted at the 5 percent level of confidence. - Infrastructure relationships: - The magnitude of the population density effect on costs is higher in infrastructure. - Increased efficiency raises infrastructure costs; the infrastructure efficiency variable has a positive impact on costs, suggesting the component being picked up is a measure of quality separate from the logistics service. - Replacing the logistics index with energy consumption and using public investment per capita as a proxy for energy spending: a 1 percent increase in energy consumption costs 0.4 percent in per capita investment costs. - The population density coefficient remains negative but is smaller than other specifications; the efficiency coefficient is positive, consistent with results using the logistics index. ### Constrained SUR coefficient estimates (selected) - Health and Infrastructure (Logistics) - Under five mortality rate: -1.02 *** - Logistics Index: -0.44 - Population density (health equation): 0.06 (t-statistic (1.34)) - Population density (infrastructure equation): -1.04 *** - Health care efficiency: -0.88 ** - Infrastructure efficiency: 2.21 *** - Population density*mortality rate: -0.06 *** - Population density*logistics index: 0.63 *** - Constant (health): 11.75 *** - Constant (infrastructure): 4.36 *** - Correlation (health and infrastructure): 0.108 - Breusch-Pagan Chi2: Chi = 5.457 ** - N: 466 - R2 (health): 0.8597 - R2 (education): 0.5327 - T statistics shown in parentheses; significance: * p<0.05, **p<0.01, ***p<0.001 - Health and Infrastructure (Energy) - Under five mortality rate: -0.784 *** - Energy consumption per capita: 0.410 *** - Population density (health equation): 0.0518 - Population density (infrastructure equation): -0.349 *** - Health care efficiency: -0.613 *** - Quality of infrastructure: 0.619 *** - Population density*mortality rate: -0.0504 *** - Population density*energy consumption: 0.0299 *** - High income dummy variable (health): 0.508 *** - High income dummy variable (infrastructure): 0.162 ** - Low income dummy variable (health): -0.586 *** - Low income dummy variable (infrastructure): -0.0421 - Constant (health): 10.34 *** - Constant (infrastructure): 1.781 *** - Correlation (health and infrastructure): 0.0413 - Breusch-Pagan Chi2: Chi2 = 1.819 - N: 1064 - R2 (health): 0.8766 - R2 (infrastructure): 0.7951 - T statistics shown in parentheses; significance: * p<0.05, **p<0.01, ***p<0.001 ### Guyana expenditure levels and density adjustment - Controlling for Guyana’s low population density, per capita expenditures for education, health, WASH, and infrastructure reach benchmark country levels by 2028–30. - In 2020 Guyana’s expenditure level was considerably below the benchmark country (except for infrastructure). Since 2020, per capita expenditures on education, health, infrastructure, and WASH have surpassed benchmark country levels; energy per capita expenditure is converging. - Adjusting Guyana’s expenditure profile for the high costs of its low population density shifts expenditures downward; expenditure parity with the benchmark country occurs in 2028–30 for all categories except WASH and energy. - Visual series shown: Real Per Capita Education Expenditures, Real Per Capita Health Expenditures, Real Per Capita Infrastructure Expenditures, Real Per Capita Water and Sanitation Expenditures, Real Per Capita Energy Expenditures (all indexed in PPP, 2017 international $). ### Annex IV: Framework to analyze possible symptoms of Dutch disease - Motivation and scope: - Proposes a multisector monitoring framework using sectoral and survey data for Guyana to detect symptoms of Dutch disease; recommends continued monitoring of high-frequency indicators, in addition to inflation and the real exchange rate, as an early warning tool. - Key macro facts and projections: - Guyana is projected to remain one of the fastest growing economies by 2029 driven mainly by the oil sector. - Oil sector expected to account for 60 percent of GDP. - Oil production projected to double by 2029 (reaching 1.2 million barrels per day). - Rapid growth in oil and non-oil economy could imply distortions: high inflation, appreciation of the real exchange rate (RER), and reallocation of capital and labor weakening the non-oil economy. - Five groups of indicators to monitor: - Real sector indicators: shares of manufacturing, agriculture, services, real estate prices, sectoral concentration, wages and prices in non-tradables. - External sector indicators: shares of non-oil exports, composition of imports, current account dynamics, REER developments, and sovereign wealth fund savings versus conversion to local currency. - Monetary and financial indicators: growth in monetary aggregates relative to non-oil GDP, sectoral credit allocation shifts. - Fiscal indicators: reliance on oil revenues, composition of public spending (current vs capital), use of sovereign wealth fund to smooth spending. - Governance indicators: rule of law, regulatory quality, data disclosures, business environment, and institutional quality. ### Empirical assessment for Guyana (summary of findings) - Overall conclusion: Guyana’s economy does not yet show clear symptoms of Dutch disease. - Real sector: - Pre-oil: economy relied on services and agriculture; small food-related manufacturing sector. - Post-oil: agricultural sector declined as a share of non-oil GDP; traditional services decreased as a share of non-oil GDP; manufacturing and non-oil traditional mining remained stable with slight expansion; construction sector steadily increased its share. - Inflationary pressures remain moderate, driven mainly by internationally determined food prices and contained by government policies; housing component of inflation has not contributed significantly to recent inflation. - Labor market (data limited to 2017Q3–2021Q3): - Mean hourly nominal wage growth: tradable sector 17 percent; non-tradable sector 19.4 percent. - CPI grew by 12 percent over the same period. - Wage distribution and regression analysis: no statistically significant differences in wages between tradable and non-tradable sectors; regression suggests a wage premium in the public sector. - Share of non-tradable employment in total employment remained stable around 55 percent between 2017Q3–2021Q3. - Unemployment rate: 14.5 percent in 2021Q3. - Labor force participation rate: 49.6 percent in 2021Q3. - Youth unemployment rate: 31.9 percent in 2021Q3. - External sector: - REER does not show strong signs of appreciation nor a break in trend after the start of oil production and remains in line with the CPI trend. - In 2024 the (market) nominal exchange rate with respect to the US dollar depreciated despite FX interventions by the Central Bank; the REER remained broadly unchanged due to relatively low domestic inflation. - The appreciation of the REER since the start of oil production in 2019 versus the period 2010-2018 amounts 6.3 and 8.9 percent, respectively. - Increasing imports in recent years driven mostly by oil-related services and capital goods and funded by FDI, suggesting no direct impact on domestic inflation nor in the money supply through foreign exchange. - Monetary and financial sector: - Broad money growth in 2024: 25.3 percent. - Broad money growth is about 7 percent higher than nominal non-oil nominal GDP growth. - Credit growth in 2024: 19.8 percent, mostly through real estate mortgage loans and motor cars. - Agriculture and manufacturing sectors have also benefited from credit expansion, suggesting some sectoral credit diversification. - Fiscal sector: - Higher oil revenues have translated into higher revenues overall. - Current expenditure as a share of total government expenditure has decreased in favor of capital spending, containing demand pressures on the non-tradable sector. - Government spending growth expected to align with non-oil GDP growth in the medium term while accumulating savings in the Natural Resource Fund (NRF). - Current NRF transfer rule suggests further accumulation of resources while constraining withdrawals to development priorities or natural disasters. - Government advised to remain mindful of long-term capital spending needs, including capital efficiencies and absorption capacity. - Governance: - Guyana has shown important progress in improving governance. - Based on Worldwide Governance Indicators (WGI), Guyana is within the medium range for rule of law, regulatory quality, and government effectiveness compared with other oil-exporting countries, implying room for improvement. - Guyana established the NRF in 2019 and modified the NRF Act in 2021 to strengthen accountability and transparency; the rule specifies annual transfers to the budget to finance development needs and savings for future generations. ### Policy recommendations and monitoring priorities - Continue close monitoring and expand key indicators to assess potential symptoms of Dutch disease. - Leverage Guyana’s initial conditions that mitigate immediate symptoms: limited food-related manufacturing, relatively flexible labor markets, an operating SWF, and considerable slack in the economy. - Monitor high growth in construction and services to foresee and proactively address inflationary pressures. - Medium-term strategy priorities: - Develop and implement a medium-term fiscal framework to smooth spending. - Support economic diversification, including export diversification strategies and expansion of the manufacturing sector through structural reforms and investment programs. - Enhance productivity in non-oil tradable sectors by improving the business environment, investing in resilient infrastructure, ensuring reliable and affordable energy supply, investing in human capital, and strengthening governance. - Continue strengthening Dutch disease mitigation policies, including prudent NRF rules and attention to capital spending efficiency and absorption capacity. *Source: IMF staff calculations and Guyana authorities (excerpt from content unit).* ### References ### References ### Key cited works - Bhattacharya, R. and Park, D. (2024) “A Suggested Medium-Term Fiscal Framework for Guyana” IMF Working Paper No. 2024/151 - International Monetary Fund (2023) “Guyana: 2023 Article IV Consultation”. Country Report No. 2023/379 - Robinson, J.A., R. Torvik, and T. Verdier (2006). “Political foundations of the resource curse”. Journal of Development Economics 79.2: 447-468 - Sachs, J. and A. Warner (1997). “Sources of slow growth in African economies”. Oxford: Oxford University Press. - Sachs, J. and A. Warner (2001). “The curse of natural resources”. European Economic Review, 45 (4-6), 827-838 - van der Ploeg, F. (2011). "Natural Resources: Curse or Blessing?" Journal of Economic Literature, 49 (2): 366–420. - Venables, A. J. (2016). "Using Natural Resources for Development: Why Has It Proven So Difficult?" Journal of Economic Perspectives, 30 (1): 161–84. *Source: References section of the PDF content unit.* --- ### Risk Assessment Matrix (Annex V) ### Global risks — likelihood, impact, and policy responses - Trade policy and investment shocks - Likelihood: High - Impact: Medium. "Supply and demand volatility increase commodity price volatility. Excessive volatility reduces confidence and adversely affects growth and spending plans. Higher commodity prices increase inflation but strengthen external and fiscal balances." - Policy Response: - "Tighten monetary policy, if needed, to contain inflationary pressures." - "Tighten the fiscal framework to build buffers and use them, if necessary, to avoid sudden adjustment if oil revenues fall." - "Further strengthen safety nets and provide temporary targeted support to vulnerable households." - "Continue investing in renewable energy and domestic production to reduce exposure to international prices." - Commodity price volatility - Likelihood: Medium - Impact: Medium. "Higher commodity prices increase inflation. While higher oil prices strengthen the external and fiscal balances, excessive volatility reduces confidence and adversely affects growth and spending plans." - Policy Response: same as for trade shocks (see above). - Regional conflicts - Likelihood: Medium - Impact: Medium. "Higher commodity prices increase inflation but also support the external and fiscal balances. Trade disruptions weigh on domestic activity." - Policy Response: - "Tighten monetary policy, if needed, to contain inflationary pressures." - "Make investments to diversify supply chains." - "Continue investing in domestic production and renewable energy to reduce exposure to international prices." - Climate change - Likelihood: Medium - Impact: High. "Damage to infrastructure, agriculture, and mining results in economic, social, and fiscal costs." - Policy Response: - "Continue implement the Low Carbon Development Strategy." - "Build resilience, including through resilient infrastructure, disaster insurance, and access to contingent credit facilities." - "Use fiscal framework buffers, such as the Natural Resource Fund to support the economy." - Cyberthreats - Likelihood: High - Impact: Medium. "Disruption is widespread, including to socioeconomic activities and financial market stability." - Policy Response: - "Strengthen financial stability and resilience frameworks, including AMF/CFT framework." ### Domestic risks — likelihood, impact, and policy responses - Political tensions (including runup to 2025 elections) - Likelihood: Medium - Impact: High. "Political tensions worsen governance. Social unrest and political instability adversely affect growth. A political crisis delays policy implementation ( like the budget approval in 2020)." - Policy Response: - "Increase efforts to continue improving governance. Ensure strength of political institutions." - "A precautionary stabilization buffer could be set up to finance essential expenditures." - Adverse Dutch disease effects - Likelihood: High - Impact: High. "Excessively expansionary fiscal stance boosts domestic spending, leads to higher prices for non-tradables and persistent inflation. Appreciation pressures reduce external competitiveness. High government spending crowds out private credit and raises efficiency and governance concerns." - Policy Response: - "Gradually scale up public spending to not exceed capacity constraints." - "Embed fiscal plans in a medium-term framework to ensure sustainability." - "Tighten monetary policy, along with macroprudential policies as needed, to stem overheating pressures." - "Continue structural reforms in public procurement and anti-corruption frameworks." *Source: Annex V of the PDF content unit.* --- ### Progress on Previous Article IV Policy Recommendations (Annex VI) ### Fiscal policy recommendations and authorities’ response - Recommendation: "Complement the Natural Resource Fund Act with a fiscal responsibility framework ... Design a comprehensive fiscal policy framework ... Set a path for the non-oil primary balance consistent with the withdrawal ceilings from the NRF ..." - Authorities’ Response: Broadly consistent - "The Natural Resources Fund Bill, No. 21, was signed into law by the President at the end of 2021 and included a new rule for withdrawals from the NRF to the budget based on a simplified step formula that allows for increasing savings accumulation in the NRF. The withdrawal rule was amended in 2024. Recent budgets have not spelled out a medium-term anchor for fiscal policy (beyond the debt limits)." ### Monetary and exchange rate policies - Recommendation: "Continue containing inflationary pressures by keeping increases in broad money below non-oil GDP growth and tightening monetary policy further if signs of overheating or imbalances arise. Increase efforts to deepen financial markets and review the exchange rate framework ..." - Authorities’ Response: Broadly consistent - "Monetary policy was appropriately tight, helping moderate the effects of expansionary fiscal policy and contain inflation. Deepening the financial markets to strengthen the monetary policy transmission and allowing increased exchange rate flexibility, if needed, remain areas for future action." ### Financial sector policy - Recommendation: "Continue to improve systemic risk monitoring through stress testing and strengthen financial sector supervision." - Authorities’ Response: Broadly consistent - Progress highlights: - Amendments to the Bank of Guyana’s Act to provide emergency liquidity assistance (ELA) to deposit taking financial institutions. - Amendments to Part VIII of the Financial Institutions Act (FIA) for orderly resolution of a failing institution. - National Payment System (NPS) law to facilitate the establishment, regulation and oversight of a modern national payment system. - Deposit Insurance Act to foster financial stability by protecting depositors and by contributing to the resolution of member institutions. - Ongoing work updating Crisis Management and Supervision Guidelines, closely monitoring sectoral lending exposures and related-party lending. ### Structural reforms - Recommendation: "Structural reforms and infrastructure investment are needed to support economic diversification and higher and inclusive growth." - Authorities’ Response: Broadly consistent - Actions: implementing reforms to improve infrastructure and energy supply; support economic diversification; address potential labor shortages and skill mismatches through training, vocational education, and targeted immigration of skilled labor; enhance opportunities for women; shift energy mix toward cleaner and more renewable energy. ### Governance - Recommendation: "Continue to strengthen governance, anti-corruption and AML/CFT frameworks ... follow up on implementation of the Extractive Industries Transparency Initiative recommendations." - Authorities’ Response: Broadly consistent - Actions and assessments: - "Guyana’s MER by CFATF found a significant improvement in Guyana’s efforts to improve its understanding of ML/FT risks." - "The latest review of MESICIC acknowledged Guyana’s progress in anti-corruption efforts." - "The authorities are strengthening the Integrity Commission, particularly the compliance framework for the submission of declarations." - "Internal audit capabilities are expanding, and more effort is needed to ensure a timely publication of audit reports of some public companies and local authorities." - "Following the latest EITI report, the authorities are working to implement the beneficial ownership transparency recommendation." *Source: Annex VI of the PDF content unit.* --- ### Assessment of Gender Gaps in Guyana (Annex VII) ### Introduction and overall findings - Despite progress, "gender gaps in labor market participation remain high in Guyana." - Policy focus recommended: "boosting human capital, increasing female labor force participation, addressing gender wage gaps, improving access to infrastructure and public services such as reproductive and healthcare services, ending child marriage and addressing violence against woman." - Composite indicators: "overall gender inequality remains below regional averages but exceed those observed in most countries with comparable levels of development." ### Education attainment - Females have higher years of education than males: - Females: 8.7 years - Males: 8.5 years - Secondary education gross enrollment rates (2022): - Females: 88.6 percent - Males: 82.5 percent - Gap with regional average: - Females: 9.5 percentage points - Males: 8.7 percentage points - Tertiary education gross enrollment rates (2012): - Females: 15.5 percent - Males: 7.6 percent - Regional (2012): 42.1 percent ### Labor markets - Labor force participation gap: "sizeable at around 23 percentage points in 2023." - Unemployment rates (2022): - Overall: 12.4 percent - Females: 14 percent - Males: 11.4 percent - Youth unemployment rates: - Females: 32 percent - Males: 21.4 percent - Overall: 25.7 percent - Labor force participation trends: "most of this decline is explained by a decreasing participation of males rather than by a significant increase in females entering the labor market." ### Gender wage gap and decomposition - Mean hourly wage (Labor Force Survey): - Females: GY$325.2 - Males: GY$378.3 - Implied gender wage gap: 16 percent (2021) - Regional context: "According to Urquidi and Chalup (2023), the regional average in LAC is 20 percent, with a median of 15 percent." - Oaxaca-Blinder decomposition findings: - The gender wage gap is "mostly explained by differences in the coefficients and the interaction term." - Observable features (endowments) go in the opposite direction because "females in the sample are more educated and experienced than males, therefore partially offsetting the difference implied by the other two terms." - Quantitative decomposition result quoted: - "Adjusting female’s endowments levels to the levels of males would reduce females’ wages by 15.8 percent, while adjusting female’s coefficients to the levels of males’ coefficients would increase females’ wages by 30.8 percent." ### Sectoral employment patterns - Female employment concentration (73 percent of female employment): "wholesale and retail trade, education, public administration, accommodation and food services, and administrative and household services." - Male employment concentration (61 percent of male employment): "agriculture, manufacturing, construction, mining, transportation." - Occupation skill distribution: "Although representing a smaller fraction in employment, there were more female than male employees in highly skilled occupations, while more male than female employees held jobs with medium levels of skill (ILO, 2023)." ### Potential macroeconomic gains from closing gender gaps - Estimated potential GDP gains from closing gender gaps in 2019: 15.4 percent - From closing gender gaps in employment: 10.7 percent GDP gain - From closing gaps in hours worked: 3.4 percent GDP gain *Source: Annex VII of the PDF content unit.* *Source: 1guyea2025001-print-pdf - References* ### 8. Considering the complementarity of female and male labor suggests that gains from ### 8. Considering the complementarity of female and male labor suggests that gains from ### Complementarity and GDP gains - Based on 2019 data, following Ostry et al. (2018) which considers the complementarity of female and male skills, fully closing the gender gap in labor force participation alone could boost GDP by about 22 percent, similar to the gains expected for the average emerging market and developing economy. ### Early marriage, adolescent pregnancy, and growth impacts - More than 30 percent of girls are married by the age of 18 in Guyana. - High rates of early marriage are associated with high rates of adolescent (and risky) pregnancy— increasing the risk of maternal death and putting pressure on the health sector, and resulting in lower secondary enrollment rates for girls. - Following Mitra et al. (2020), ending early marriage in Guyana could potentially increase per capita growth by 1.2 percentage points. - Guyana has launched a plan of action for the elimination of cervical cancer by 2030, aimed to screen over 211,000 women between the ages of 21-60 years. ### Policies to reduce barriers and increase incentives to entry - Key barriers to labor force entry and low participation rates, especially for youth and women, include teenage pregnancy and reproductive health, early marriage, lower tertiary education completion rates and skills mismatch, household and care responsibilities, and lower wages associated with female employment. - National policy framework: - Authorities have published the National Gender Equality and Social Inclusion (GESI) policy aimed to address exclusion and promote gender equality. - Ambitious structural ongoing reforms and high public spending plans target key barriers associated with gender inequality. - Health access: - Construction of a world class pediatric and maternal hospital in Ogle, and a new hospital in New Amsterdam, with ongoing work in six regional hospitals. - Plan of action for the elimination of cervical cancer by 2030 to screen over 211,000 women aged 21-60. - School health program expanded to primary schools and aims to reach over 7,000 students in the nursery and primary levels. - Tertiary education and skill mismatch: - University of Guyana Student Loan Write-Off Program benefiting 3,500 students. - Guyana Online Academy of Learning (GOAL) scholarship program awarded to women over 21,400 scholarships since 2021, representing 72 percent of total awardees. - In 2024, approximately 4,000 individuals joined Technical and Vocational Education Training (TVET) programs focusing on agro-processing, fiber optics, and construction. - Guyana’s first National Hospitality Training Institution is being built in Berbice to boost tourism. - Women Innovation and Investment Network (WIIN) and the Board of Industrial Training (BIT) have trained over 23,700 women since 2020. - Household and care responsibilities: - Ministry of Health has provided home-based care over 1,500 elderly in different regions and expects to expand in the following years. - Working Parents Childcare Subsidy is expected to benefit around 700 children in 2024. - Total licensed childcare facilities increased to 336 and two new day and night care centers are expected to be completed by end-2024. - Gender violence and social norms: - The Family Violence Bill was passed in the National Assembly. - The Gender Equality Seal Program was completed in 2024, offering a training manual to guide organizations on eliminating gender-based gaps, increasing women's roles in decision-making, eradicating sexual harassment at work, and promoting inclusive communication. - The Gender Affairs Bureau trained more than 3,000 senior government officials and community leaders in social inclusion and gender mainstreaming. ### Summary implications for policy - Closing the gender gap in labor force participation could yield large macroeconomic benefits (about 22 percent of GDP). - Addressing early marriage and adolescent pregnancy could raise per capita growth (estimated potential increase of 1.2 percentage points). - Current policy measures span health, education and skills, childcare and care services, and gender-based violence prevention—targeting key constraints to female labor force participation. *Source: STAFF REPORT FOR THE 2025 ARTICLE IV CONSULTATION, Guyana, International Monetary Fund.* ### 1. The coverage of public sector debt is central government and central government ### Coverage of public sector debt and debt framework ### Scope and definitions - Coverage of public sector debt: central government and central government guaranteed (PPG) debt, including state-owned enterprise (SOE) debt since SOEs are not allowed to borrow directly. - External debt defined by residency principle. - Central government domestic debt between 2020 and 2024 included a central government‑guaranteed five-year syndicated loan amounting to G$16.5 billion (2.1 percent of GDP) raised by National Industrial and Commercial Investments Limited (NICIL) for restructuring GuySuCo, which has now been paid off. - Central government does not issue explicit or implicit guarantees on sub‑national and local government debts; these are excluded from the debt sustainability analysis (DSA). - Borrowing by the Social Security Administration is included in the report’s debt coverage. - Authorities indicated no public‑private partnership debt (PPP) as of end‑2024 (PPP stock = zero). - Assets in the Natural Resource Fund (NRF) are outside the DSA perimeter but materially affect risk assessment. ### Contingent liabilities stress test design (customized) - Default shock to contingent liabilities from SOE debt: 2 percent of GDP (reflecting uncertainty over inclusion of all government‑guaranteed debt in public debt stock). - PPP stress test not used because PPP stock is zero. - Financial market shock: 5 percent of GDP (default minimum value). - Aggregate contingent liability stress test inputs: total (2 + 3 + 4 + 5) = 7.0 (in percent of GDP). - Note: the 2 percent SOE default shock is applied when government‑guaranteed debt is not fully captured in public debt definition. *Source: Text Table 2 parameters and narrative.* --- ### Background on debt composition and recent developments ### Key facts on composition - Total public gross debt fell considerably since 2020 after oil production began, though the pace moderated recently due to a sharp rise in investments partly financed by debt. - Over the past two years, public sector borrowing dominated by domestic debt; some foreign exchange investment costs covered by NRF withdrawals, reducing external financing needs. - External debt accounts for about 40 percent of total public sector debt. - Creditor composition of external debt (end‑2023): multilateral creditors accounted for about 68 percent; bilateral (including China) and private creditors comprised the remainder. IDB is the largest multilateral creditor; China is the largest bilateral creditor. - Domestic debt mostly consists of treasury bills with a large surge over the past two years purchased by the central bank. - Debentures represent securitization of the inherited overdraft at the Bank of Guyana during 2015–20 and currently total about 4 percent of GDP (declining over time as paid off). - The external debt is fully covered by the current NRF stock, limiting foreign exchange financing risks. ### Fiscal framework and ceilings - Authorities committed to fiscal prudence: reducing the fiscal deficit over time and contracting external loans on concessional terms. - Statutory ceilings raised in 2024: maximum amount transferable from NRF increased; statutory ceilings on domestic and external debt raised to about 32 percent of GDP each (2024 values). - Projections: both domestic and external debt projected to remain well below these limits, with total public debt peaking at slightly above 28 percent of GDP in 2026 under baseline assumptions. - NRF assets projected to rise to over 32 percent of GDP by 2030. ### Institutional and transparency reforms - Government worked with the World Bank on debt transparency and management under Sustainable Development Finance Policy (SDFP): increasing periodicity and coverage of debt statistics, strengthening debt management policy, publication of a comprehensive fiscal risk statement, audited financial statements for key SOEs, and primary/secondary market treasury bill data. - Progress on public investment management (PIM): sectoral medium‑term public investment planning and pre‑appraisal of new capital investments rolled out to eight sectors (agriculture, public works (FY23), education, health (FY24), Home Affairs, Human Services, Security, Housing and Water, and Energy (FY25)). --- ### Macroeconomic assumptions and medium‑term outlook ### Growth, inflation, and external sector - Since start of oil production (end‑2019) Guyana averaged 47 percent per year growth over 2022–24. - Real GDP growth: 43½ percent in 2024, up from nearly 34 percent in 2023. - Oil production: about 660 thousand barrels per day (2024). - Real oil GDP increased by 58 percent in 2024. - Non‑oil economy: averaged 12 percent growth over last three years; expanded about 13 percent in 2024. - Outlook: economy expected to grow above 14 percent on average over the next five years, driven by oil production and strong non‑oil sector growth. - Non‑oil GDP growth: projected average of 6¾ percent over the medium term. - Inflation (CPI): projected to increase in 2025 and rise to 5½ percent over the medium term; staff also projects inflation (measured by CPI) to average 5 percent over 2025–34. ### Fiscal and external balances - Fiscal deficit: rose to over 7 percent of GDP in 2024; assumed to improve over the medium term to gradually reach overall balance. - Non‑oil primary deficit: gradually narrows over the projected lifespan of oil reserves. - Current account: projected to rise to around 20–22 percent of GDP by the end of the decade as new oil fields (Uaru and Whiptail) come on stream and oil investment expenditures level off. - Gross international reserves: projected steady buildup from 2024 to about $4.3 billion (over 10 percent of GDP) by 2030. - Medium‑term fiscal financing: combination of domestic and foreign funding; NRF transfers partially finance investment. ### Investment and NRF rules - Authorities use oil proceeds to fund investment plans aligned with Low Carbon Development Strategy 2030. - NRF transfer rule changes permit increased annual transfers to cover development needs while NRF assets continue to increase. - In staff scenario, capital expenditures through 2030 are aligned with expenditures for education, health, infrastructure, energy, and water and sanitation of middle performing countries. - Beyond 2030, capital expenditures projected to follow a smoothed version of current NRF transfer rule (historical oil revenue basis implying lagged adjustment to expenditures if oil prices fall). --- ### Debt sustainability analysis (DSA) — external and public debt ### External DSA: baseline and customized scenario findings - All external PPG debt indicators remain below policy relevant thresholds for the next 10 years under the baseline scenario. - PV of external PPG debt: rises through 2028 (continued external borrowing) and falls afterwards to current levels by 2034 as existing debt is amortized and little additional debt is incurred due to large financing available from oil revenues. - By end of decade fiscal deficit fully financed by domestic borrowing. - Large residuals over medium term reflect buildup of part of the annual current account surplus in the NRF (which reaches over 210 percent of GDP by 2040). - Mechanical risk assessment under standardized historical stress tests is moderate in baseline, but standardized shocks likely overestimate risk because they capture volatility tied to the structural break from oil production and do not fully account for medium‑term benefits (productivity gains, diversification, climate resilience, substantial NRF buffers). - Customized scenario: excludes years 2019–23 from standard deviation calculations for export shocks and scales export shock by government’s oil export revenue share weight 0.145; under this customized scenario there are no breaches in external sustainability indicators from the export shock. ### Public debt (general findings) - Total public gross debt has declined since 2020 but investment‑related borrowing has moderated the decline recently. - External debt share ~40 percent of total; multilateral creditors about 68 percent of external debt at end‑2023. - Domestic debt surge mainly via treasury bills purchased by the central bank; debentures ~4 percent of GDP. - Under baseline, total public debt peaks slightly above 28 percent of GDP in 2026 and remains below statutory ceilings (~32 percent of GDP for domestic and external each). - Debt carrying capacity classification: country CI for 2024 is 2.53; classification considered "Weak" in Text Table 4. --- ### Risks, scenarios, and realism checks ### Upside and downside risks - Upside: additional oil discoveries and investment boom financed by oil revenues could support non‑oil growth above baseline. - Downside: price pressures from rapid expansion may raise inflation and exchange rate appreciation, hurting non‑oil competitiveness; adverse climate shocks and volatile commodity prices could harm food inflation and macro outlook. ### Realism tools and forecast evaluation - Forecast errors of past external debt projections are low and comparable to low‑income country averages. - Debt forecasts have tended to be slightly higher than outcomes associated with stronger growth (which lowers the debt ratio); large residuals primarily reflect NRF buildup. - Realism of fiscal adjustment: primary balance path aligned with staff recommendation to preserve some oil wealth for SDG advancements and infrastructure, taking absorptive capacity into account. - Projected public capital spending levels out at around 10 percent of GDP in the medium term. --- *Source: IMF staff report chapter on Guyana public debt coverage, macroeconomic assumptions, and DSA.* ### 15. The PV of the public debt-to-GDP ratio also remains well below the benchmark of ### The PV of the public debt-to-GDP ratio also remains well below the benchmark of 35 percent of GDP ### Debt dynamics and stress-test findings - Under the baseline scenario, the PV of the public debt-to-GDP ratio remains well below the benchmark of 35 percent of GDP. - The PV of public debt "oscillates around 20 percent of GDP through 2032 before rising slightly at the end of the 10-year forecast period." - Standardized stress tests for shocks to growth, exports, and commodity prices likely overestimate effects on debt dynamics, reflecting large standard deviations caused by recent structural changes in the economy. - Under a customized scenario (mirroring the external debt analysis), the public debt threshold is not breached in response to the export shock. - The customized shock specification: "The customized shock uses an export growth standard deviation pre 2019 and applies a 0.145 weight to it corresponding to the government’s oil export revenue share." ### Medium-term domestic financing risks and assumptions - "Medium-term domestic financing risks are extremely limited." - Domestic debt dynamics: - Domestic debt ratio rose considerably between 2019 and 2021 to prefinance development spending before substantial oil revenues arrived in 2022. - Since 2022, domestic debt issuance has fallen in relation to GDP and to the debt stock and is broadly stable over the medium term as the projected fiscal deficit declines to zero. - Financing assumptions are conservative: - Real interest rate on new domestic borrowing is assumed to be "about 4 percent" whereas it is currently negative. - Specific note: "The negative domestic debt financing in 2025 is associated with the large availability of external financing that is more than enough to finance the fiscal deficit." ### Risk rating, buffers, and scenario judgements - Mechanical debt risk rating under standardized stress tests remains "moderate" (as in the 2023 AIV DSA). - Staff judgement upgrades the assessment to "low risk" under the customized scenario that: - Excludes volatility caused by the structural economic shift during initial years of oil production. - Controls for the limited impact of an export shock on government oil revenues. - Large buffers cited: - "Projected very high ratio of assets to GDP in Guyana" (NRF dynamics). - Automatic expenditure reductions from oil price shocks limit spending in adverse price scenarios. - NRF projection: The baseline profile of the NRF reaches "213 percent of GDP by 2040." - Comparator sovereign wealth funds range: "4 percent of GDP (Chile in 2029) to 32 percent of GDP (Trinidad and Tobago)." - If a higher oil production profile is assumed, "the stock of NRF assets in relation to GDP would likely double." - Baseline oil production profile is conservative: it only covers fields with positive environmental impact assessment and is "only half of the projection of private sector oil analysts (e.g., Rystad Energy)." - Automatic fiscal rule: "Since transfers to the budget are a function of previous oil receipts, they automatically decline in line with falling oil prices, putting a limit on the expenditure envelope." ### Public financial management, debt management, and data transparency - Guyana has "a history of prudent debt management policy" and is "continually strengthening its public financial and investment management practices" and could expand data availability. - Current practices: - Uses debt tracking software supported by the Commonwealth. - Issues debt updates twice yearly (annual budget and six-month budget update). - Planned upgrades: - Authorities are working to upgrade to "The Commonwealth Meridian" to generate quarterly debt statistics. - Suggested data publication improvements: - Publish data on new external borrowing, amortization, and debt service by creditor. ### Authorities’ views - Authorities "broadly shared Fund staff’s assessment," emphasizing: - Growing size of the NRF (already larger than the public external debt). - Temporary nature of large self-financed oil investment imports. ### Key numerical projections and indicators (selected exact figures from tables and text) - PV of public debt-to-GDP trajectory: "oscillates around 20 percent of GDP through 2032." - Benchmark: "35 percent of GDP." - Customized shock weight on export standard deviation: "0.145." - NRF baseline profile: "213 percent of GDP by 2040." - Comparator sovereign wealth fund range: "4 percent of GDP (Chile in 2029) to 32 percent of GDP (Trinidad and Tobago)." - Real interest rate assumption on new domestic borrowing: "about 4 percent." - Noted historical/forecast values (from tables): - External debt (nominal) series excerpt: "17.1 10.7 10.5 9.0 13.6 14.6 14.6 14.7 13.3 9.1 2.9 22.1 12.2" (2021–2044 series as presented). - Real GDP growth (in percent) excerpt: "20.1 63.3 33.8 43.6 10.3 23.0 21.0 13.3 11.8 -4.7 -2.8 18.0 10.6" (2021–2044 series as presented). - PV of PPG external debt-to-GDP ratio excerpt: "......2.7 3.2 6.1 7.0 7.4 7.8 7.3 5.2 1.2" (as presented). - Public sector debt (percent of GDP) excerpt: "41.2 24.8 26.7 24.3 28.0 28.6 27.6 26.7 26.5 26.2 25.9 25.1 25.0 25.2 25.2 24.7 40.6 26.3" (2021–2044 series as presented). - PV of public debt-to-GDP ratio excerpt: "......18.9 18.4 20.5 21.0 20.5 19.8 20.5 20.7 20.8 20.5 20.8 21.4 23.0" (as presented). - Debt service-to-revenue and grants ratio excerpt: "129.0 83.9 44.3 42.5 29.5 19.4 18.5 17.6 14.8 21.1 23.3 23.4 23.7 26.9 34.9" (as presented). - Sensitivity/threshold context: - Mechanical risk rating under standardized tests: "moderate"; judgment-adjusted rating: "low risk." - Tailored test and bound test tables indicate multiple scenario outcomes and thresholds but require tables for full numeric context. *Source: IMF staff estimates and projections, as presented in the supplied content.* ### 2. Primary balance00000001111 ### 1guyea2025001-print-pdf - 2. Primary balance ### Sensitivity analysis and stress tests: key outcomes and mechanics - The public DSA includes sensitivity analysis for key indicators of public debt over 2024–34, covering: - Alternative scenarios (A1: Key variables at their historical averages in 2024-2034), bound tests (B1–B6), and tailored tests (C1–C4). - Variables in tests include real GDP growth, GDP deflator (in U.S. dollar terms), non-interest current account in percent of GDP, and non-debt creating flows. 3/ Includes official and private transfers and FDI. - Threshold and benchmark mechanics: - Thresholds are reported (e.g., repeated "10" sequence and "14" sequence in tables for different indicators). - TOTAL public debt benchmark is reported as 35 (repeated) across the horizon in the table header: "TOTAL public debt benchmark3535353535353535353535". - A bold value indicates a breach of the benchmark/threshold (table note). - Stress test coverage and default assumptions: - All additional financing needs generated by shocks under the stress tests are assumed to be covered by PPG external MLT debt in the external DSA. Default terms of marginal debt are based on baseline 10-year projections. - Market financing tests marked "n.a." where not applicable. - The public DSA allows for domestic financing to cover additional financing needs generated by the shocks under the stress tests in the public DSA. - Staff conclusion on stress-test results: - The IMF’s customized stress test scenario demonstrates no breach of any external debt thresholds when realities such as NRF savings are reflected. ### Debt indicators and projections (selected metrics and illustrative outcomes) - Debt stock and buffers: - Gross public debt: 24.3 percent of GDP (text). - NRF savings: US$3.1 billion by end-2024. - Representative stress-test scenario outcomes shown in tables and figures (selected reported series and labels): - Baseline and scenario tabulations for 2024–2034 include many series for PV of debt-to-GDP ratio, PV of debt-to-exports ratio, PV of debt-to-revenue ratio, debt service-to-exports ratio, debt service-to-revenue ratio, and debt service-to-revenue ratio (figures and tables). - Figures identify the "most extreme shock" per indicator; the most extreme shock frequently identified as "Exports 1/" for several indicators in figures. - Table excerpts show large scenario-dependent variations (examples preserved exactly as in the source tables): - Baseline series (one table excerpt): "Baseline1820212020202121202121". - A. Alternative Scenarios (A1 example): "A1. Key variables at their historical averages in 2024-2034 2/1817171717181920212223". - B. Bound Tests (examples): "B1. Real GDP growth1821232323242627272930"; "B3. Exports1845817672696865615856". - C. Tailored Tests (examples): "C1. Combined contingent liabilities1827262423242424242425"; "C3. Commodity price1822232526282930313234". - Selected outcome snapshots from table cells (preserved formatting and values where presented): - Baseline (another table block): "Baseline120 109 117 120 111 112 101 107 100 103 105" - A1 (same block): "A1. Key variables at their historical averages in 2024-2034 2/120 93 95 100 96 100 94 103 103 108 112" - B1 (same block): "B1. Real GDP growth120 112 128 135 129 135 125 138 134 142 150" - B3 (same block): "B3. Exports120 242 454 444 400 381 334 336 300 288 276" - C2 (same block): "C2. Natural disaster120 159 160 159 145 144 130 139 132 135 140" - Debt-service and ratio trajectories in figures illustrate ranges up to multi-hundred percent for some stress scenarios (e.g., axes in figures show up to 350 for PV-of-debt-to-exports and up to 500 in other charts), reflecting severe stress outcomes under extreme shocks presented in the DSA figures. ### Recent macroeconomic developments and outlook (staff and authorities statements) - Statement dates: - Statement by the IMF Staff Representative: May 2, 2025. - Statement by Mr. André Roncaglia, Mr. Felipe Antunes, and Ms. Kimberly Roberts (on behalf of Guyana): May 2, 2025. - Growth performance and outlook: - Real GDP growth climbed to 43.6 percent in 2024. - Real oil GDP expansion: 57.7 percent in 2024. - Non-oil activity increase: 13.1 percent in 2024. - Medium-term outlook described as "highly favorable" with growth projected to remain robust under the government’s diversification strategy. - External risks and tariffs: - Under the April 2 U.S. tariffs (paused for 90 days on April 9), Guyana will face a 38 percent tariff on its exports to the United States. - Only 2 percent of GDP in exports is subject to the tariff. - 90 percent of Guyana’s exports to the United States—comprising almost entirely petroleum, with small shares of gold and aluminum—is exempt from the April 2 tariffs. - Aluminum faces a 25 percent tariff as per Section 232 of the Trade Expansion Act. - Oil price assumptions and impact: - Compared to the staff report, the April 2025 WEO assumes on average about 5 percent lower oil prices over the medium term, with prices converging to the original projections by 2030. - The staff note that a temporary oil price decline would have a limited impact on macroeconomic projections given Guyana's policy framework, external position, low breakeven oil price, and long-term nature of production plans. - Staff conclusion on appraisal: - Recent developments do not alter the thrust of the staff appraisal. ### Fiscal policy, natural resource management, and debt commentary - Fiscal stance and priorities: - Narrowing the non-oil primary deficit in the medium term remains a priority. - Current fiscal expansion is described as deliberate, focused on strategic investment in infrastructure, human capital, and climate resilience aligned with LCDS 2030. - Policy framework includes long-term savings and integration of oil revenues through the Natural Resource Fund (NRF). - NRF and budget rule: - The revised NRF withdrawal rule was enacted in 2024 and provides increased flexibility to support national development priorities. - Guyana’s 2025 national budget prioritizes targeted social transfers and major initiatives in education, healthcare, and infrastructure. - Debt sustainability and capacity: - Debt sustainability described as "robust, with low risk of debt distress and debt carrying capacity significantly strengthened." - The authorities express regret that the DCC assessment does not capture Guyana’s transformation and note that the DCC is assessed as "weak" under current methodology; they call for reconsideration of DCC rigidity for exceptional cases like Guyana. ### Monetary policy, financial stability, and payments modernization - Monetary aggregates and inflation: - Money supply expanded by 25.3 percent in 2024 (primarily due to growth in net domestic assets). - Inflation remained moderate at 2.9 percent in 2024. - Authorities note the need to keep broad money growth more closely aligned with non-oil GDP. - Exchange rate regime: - The current de facto stabilized exchange rate regime is judged to have served Guyana well and remains appropriate. - Authorities are open to studying a possible future transition to a more flexible exchange rate arrangement, subject to careful consideration. - Financial sector soundness and reforms: - Banking sector: capital adequacy ratio exceeds regulatory requirements, non-performing loans have declined, provisioning levels remain strong. - Supervisory perimeter expanding to include non-bank financial institutions; data collection on households and corporate balance sheets is being improved. - Payments modernization: expansion of Guyana Automated Clearing House and development of digital transfer mechanisms. - Crisis preparedness and inclusion: - Reforms underway to strengthen supervisory tools, crisis management frameworks, financial inclusion, and digital payments infrastructure. ### Structural reforms, inclusive growth, human capital, and climate - Structural reforms and investment: - Government focused on diversification, infrastructure (highways, bridges, hospitals, schools), and measures to reduce poverty and improve labor market participation. - Social transfers and tax reforms: - Recent social transfer programs and tax reforms have supported household incomes and reduced vulnerability. - Authorities aim to strengthen targeting and efficiency of social transfers, working with development partners to enhance data and delivery. - Human capital and labor market: - Commitments include free university education, tuition-free technical and vocational training rollout, and expansion of digital and physical infrastructure. - Local Content Act noted as instrumental in boosting employment and capacity-building. - Measures to increase women’s labor force participation, childcare access, and close wage gaps continue. - Climate and environmental stewardship: - LCDS 2030 provides the blueprint for forest preservation, climate resilience, and sustainable growth. - Monetization of carbon credits has funded Amerindian communities and sustainable development initiatives. - Gas-to-Energy Project supported by a $526 million loan will more than double energy generation capacity, reduce carbon footprint, reduce electricity costs, and expand access. ### Governance, transparency, and capacity development - Governance and transparency measures: - Continued emphasis on strengthening governance, enhancing transparency, and combating corruption. - Modernization of revenue administration and public procurement systems is advancing. - Publication of NRF reports and progress toward EITI recommendations, including beneficial ownership transparency. - AML/CFT frameworks being enhanced in alignment with CFATF findings. - Transition to digital governance platforms for procurement and service delivery. - Capacity development priorities with IMF support: - Authorities welcome Fund technical assistance in statistics, revenue administration, and macroprudential policy. - Plans to collaborate on strengthening data, risk-assessment tools, financial stability protections, and reassessing the exchange rate framework. *Source: Country authorities; and staff estimates and projections (content unit: 1guyea2025001-print-pdf - 2. Primary balance).* ### Conclusion ### Conclusion ### Development objectives - Guyana is determined to utilize its natural resource revenue as a catalyst for sustainable, inclusive, and resilient development. ### Institutional and policy foundations - The authorities recognize that this transformation must be underpinned by strong institutions, sound macroeconomic policies, and continued engagement with development partners. - The government also remains cognizant of the challenges that accompany rapid resource-driven growth. ### Commitments and priorities - Guyanese authorities reiterate their commitment to maintaining a stable macroeconomic environment and ensuring that their resource endowment translates into tangible improvements in living standards for all Guyanese, while avoiding the pitfalls associated with resource dependency. ### Partnership with the IMF - As a valued partner in its development, the authorities look forward to collaborating very closely with the IMF, through capacity development and strong surveillance and policy support. *Source: Conclusion, 1guyea2025001-print-pdf* --- _Source: https://www.imf.org/-/media/files/publications/cr/2025/english/1guyea2025001-print-pdf.pdf_