IMF Executive Board Concludes 2022 Article IV Consultation with Guyana
IMF News, September 27, 2022
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- Published: September 27, 2022
Macroeconomic developments and outlook
- Non-oil economic growth recovered in 2021 following the pandemic-induced recession in 2020 and a protracted political transition, despite being negatively impacted by floods.
- Inflation increased markedly since 2021 owing to the floods and supply-side disruptions, as well as continually rising fuel and food prices.
- Oil production has increased significantly:
- Oil GDP is expected to grow over 100 percent in 2022, and by about 30 percent on average per year during 2023-26.
- Overall real GDP growth rate is projected to be 57.8 percent in 2022.
- Guyana’s commercially recoverable petroleum reserves is expected to reach over 11 billion barrels.
- Potential macroeconomic outcomes:
- Upside risks: higher global oil prices and additional gas and oil discoveries.
- Downside risks: volatility in global oil prices, a slowing global economy, or rapid increases in investment which could lead to macroeconomic imbalances.
Executive Board assessment — key judgments
- Directors welcomed the broad-based economic recovery in 2021 and the unprecedented high real GDP growth supported by a steep rise in oil production and accommodative policies.
- Directors highlighted that increasing oil production could help transform the economy, address development needs, and build substantial buffers to absorb shocks.
- Considering volatility in global oil prices and the challenges of managing natural resources, Directors emphasized:
- The need for continued prudent policies and structural reforms, assisted by Fund technical assistance, to avoid buildup of macroeconomic vulnerabilities, ensure inclusive growth and intergenerational equity, and address structural weaknesses and climate challenges.
- Fiscal and debt management:
- Directors welcomed the significant decline in public debt and favorable debt dynamics going forward and the authorities’ commitment to maintain debt sustainability.
- Importance of anchoring fiscal policy in a medium-term framework.
- Encouraged restraint in using oil revenues before the passage of the recent amendments of the Natural Resource Fund Act and urged continued prudent management of oil revenues.
- Recommended moderately ramping up public investment by constraining the annual non-oil overall fiscal balance to not exceed the expected oil transfers.
- Encouraged continued improvements in the targeting of social spending.
- Exchange rate and monetary policy:
- Directors agreed exchange rate stability serves Guyana’s current needs best.
- Emphasized the importance of measures to further develop and deepen financial and foreign exchange markets as oil production increases.
- Saw merit in revising the monetary policy framework over the medium to long-term to allow more flexibility in the exchange rate to absorb shocks and help maintain competitiveness.
- Financial sector and regulatory issues:
- Commended authorities’ efforts to maintain financial stability and promote financial inclusion.
- Welcomed progress in implementing the 2016 FSAP recommendations and the commitment to fully implement the recently strengthened AML/CFT framework.
- Encouraged further efforts to strengthen the regulation of digital payments.
- Structural reforms, governance, and climate:
- Called for continuation of broad-based reforms to address structural weaknesses and diversify the economy, noting significant human development and infrastructure needs.
- Commended progress in strengthening Guyana’s anti-corruption framework and fiscal transparency and encouraged continued progress on implementation of Extractive Industries Transparency Initiative (EITI) recommendations.
- Commended efforts to build resilience to climate change as envisioned under the Low Carbon Development Strategy.
Key statistics and projections (selected)
- Real GDP growth (annual percent change):
- 2021: 23.9
- 2022: 57.8
- 2023: 25.2
- 2024: 21.2
- 2025: 28.2
- 2026: 25.5
- 2027: 3.3
- Real Non-Oil GDP (annual percent change):
- 2021: 4.6
- 2022: 7.2
- 2023: 5.0
- 2024: 5.1
- 2025: 5.2
- 2026: (not shown for 2026 in table)
- Real Oil GDP (annual percent change):
- 2021: 56.9
- 2022: 116.1
- 2023: 36.8
- 2024: 28.3
- 2025: 36.5
- 2026: 31.1
- 2027: 2.9
- Real GDP per capita (annual percent change):
- 2021: 23.4
- 2022: 57.3
- 2023: 24.8
- 2024: 20.9
- 2025: 27.9
- 2026: 25.1
- 2027: 3.0
- Consumer prices (average):
- 2021: 7.6
- 2022: 3.8
- 2023: 3.5
- Consumer prices (end of period):
- 2021: 5.7
- 2022: 9.4
- 2023: 6.0
- 2024: 4.1
- Central Government (percent of non-oil GDP):
- Revenue 2021–2026: 24.3; 34.3; 36.3; 37.4; 37.9; 37.6
- Expenditure 2021–2026 (total): 35.3; 37.5
- Current 2021–2026: 25.8; 24.7; 25.4
- Capital 2021–2026: 9.5; 12.1; 12.3; 12.5
- Overall balance (after grants) 2021–2025: -10.5; -1.7; -1.2; -0.5
- Total public sector gross debt (percent of GDP):
- 2021: 42.9
- 2022: 22.8
- 2023: 18.8
- 2024: 16.2
- 2025: 13.7
- 2026: 13.5
- External debt (percent of GDP):
- 2021: 17.8
- 2022: 10.1
- 2023: 10.6
- 2024: 10.5
- 2025: 9.7
- 2026: 8.0
- 2027: 7.8
- Domestic debt (percent of GDP):
- 2021: 12.7
- 2022: 10.2
- 2023: 8.3
- 2024: 6.5
- 2025: 5.8
- Broad money (annual percent change): 12.2; 11.5; 9.9; 9.0; 8.9
- Domestic credit of the banking system (annual percent change):
- 2021: 18.1
- 2022: 3.4
- 2023: -4.2
- 2024: -2.3
- 2025: 7.3
- Public sector (net) change (note: series volatile): 32.0; -0.7; -16.2; -13.9; -22.1; -2.8
- Private sector credit growth: 7.1; 7.4; 6.7; 6.1; 6.3; 6.2
- Current account balance (US$ millions):
- 2021: -1,971.7
- 2022: 6,457.0
- 2023: 5,107.4
- 2024: 5,380.8
- 2025: 3,951.2
- 2026: 7,229.5
- 2027: 7,555.3
- Gross official reserves (US$ millions):
- 2021: 810.8
- 2022: 837.1
- 2023: 1,223.8
- 2024: 1,692.1
- 2025: 2,242.4
- 2026: 2,576.2
- 2027: 2,877.3
- Months of imports of goods and services (selected):
- 2021: 1.9
- 2022: 2.7
- 2023: 4.7
- 2024: 6.6
- Crude oil production (million barrels):
- 2021: 42.4
- 2022: 93.4
- 2023: 124.5
- 2024: 155.5
- 2025: 207.0
- 2026: 264.6
- Oil price (barrel) projections:
- 2021: 69.4
- 2022: 99.9
- 2023: 83.5
- 2024: 77.8
- 2025: 74.1
- 2026: 71.8
- 2027: 70.3
- Memorandum items:
- Nominal GDP (G$ billion) 2021–2027: 1,609.1; 3,094.0; 3,503.5; 3,961.3; 4,780.1; 5,776.2; 5,925.9
- Nominal GDP, non-oil (G$ billion) 2021–2027: 1,098.3; 1,264.0; 1,388.1; 1,509.1; 1,633.4; 1,767.6; 1,913.2
- Per capita GDP, US$ 2021–2027: 9,777.6; 18,744.6; 21,162.3; 23,855.8; 28,700.7; 34,578.0; 35,367.6
- Holdings of SDRs, in millions of U.S. dollars: 1.7; 1.6
- Guyana dollar/U.S. dollar (period average): 208.5; …
Policy recommendations and priorities
- Maintain prudent fiscal policies and anchor fiscal policy in a medium-term framework to preserve debt sustainability and build buffers.
- Exercise restraint in the use of oil revenues until appropriate legal and institutional frameworks are in place; continue prudent management of oil revenues.
- Moderately ramp up public investment while constraining the annual non-oil overall fiscal balance to not exceed expected oil transfers.
- Improve targeting of social spending to enhance inclusiveness.
- Further develop and deepen financial and foreign exchange markets to prepare for larger oil inflows.
- Revise the monetary policy framework over the medium to long-term to allow more exchange rate flexibility to absorb shocks and maintain competitiveness.
- Continue implementing FSAP recommendations, fully implement the strengthened AML/CFT framework, and strengthen regulation of digital payments.
- Pursue broad-based structural reforms to diversify the economy, address human development and infrastructure needs, strengthen anti-corruption and fiscal transparency, and implement EITI recommendations.
- Build resilience to climate change in line with the Low Carbon Development Strategy.
International Monetary Fund.