IMF Executive Board Concludes 2023 Article IV Consultation with Guyana
IMF News, December 4, 2023
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- Published: December 4, 2023
Summary and Executive Board Assessment
- The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Guyana and considered and endorsed the staff appraisal without a meeting.
- The Guyanese economy has tripled in size since the start of oil extraction (end-2019).
- Oil production supported the highest real GDP growth in the world in 2022: 62.3 percent.
- Fundamentals remain strong with no signs of inflationary pressures or overheating "as of yet."
- The Executive Board assessment finds Guyana’s external position at end-2022 is assessed to be moderately stronger than the level implied by fundamentals and desired policies.
- Guyana’s debt-sustainability analysis (DSA) indicates that the risk of (overall and external) debt distress remains moderate, with debt dynamics improving significantly with incoming oil revenues.
Economic Outlook and Projections
- Real GDP growth:
- 2022: 62.3
- 2023 (projected): 38.4
- 2024-28 (average projection): 20 percent per year
- Annual projections (selected): 2024: 26.6; 2025: 18.8; 2026: 21.2; 2027: 13.5
- Real Non-Oil GDP growth (annual percent change):
- 2021: 4.6; 2022: 11.5; 2023: 9.1; 2024: 6.6; 2025: 5.5
- Real Oil GDP growth (annual percent change):
- 2021: 46.8; 2022: 124.8; 2023: 56.4; 2024: 35.1; 2025: 23.2; 2026: 25.7; 2027: 25.0; 2028: 15.1
- Consumer prices (average and end of period):
- Consumer prices (average): 2021: 3.3; 2022: 6.5; 2023 (projected): 4.7
- Consumer prices (end of period): 2021: 5.7; 2022: 7.2; 2023 (projected): 3.8
- Gross official reserves (selected projections, US$ million):
- 2021: 810.8; 2022: 932.4; 2023: 1,064.6; 2024: 1,305.7; 2025: 1,677.7; 2026: 2,078.6; 2027: 2,552.8; 2028: 3,057.6
- Crude oil production (million barrels):
- 2021: 42.7; 2022: 101.4; 2023: 138.7; 2024: 182.5; 2025: 219.0; 2026: 268.3; 2027: 335.8; 2028: 386.9
- Oil price (barrel, US$):
- 2021: 70.8; 2022: 99.0; 2023: 82.4; 2024: 81.2; 2025: 77.4; 2026: 74.3; 2027: 71.6; 2028: 69.3
- Nominal GDP (G$ billion):
- 2021: 1,597.4; 2022: 3,029.4; 2023: 3,404.6; 2024: 4,236.5; 2025: 4,905.4; 2026: 5,815.6; 2027: 6,014.5; 2028: 6,235.8
- Per capita GDP, US$:
- 2021: 9,707.0; 2022: 18,353.1; 2023: 20,564.6; 2024: 25,513.0; 2025: 29,452.9; 2026: 34,813.6; 2027: 35,896.4; 2028: 37,106.3
Fiscal and Public Debt Indicators
- Central Government (Percent of non-oil GDP, selected)
- Revenue: 2021: 24.5; 2022: 33.8; 2023: 41.1; 2024: 40.4; 2025: 40.1; 2026: 38.6; 2027: 37.4; 2028: 36.8
- Expenditure: 2021: 35.5; 2022: 46.7; 2023: 57.2; 2024: 53.5; 2025: 48.4; 2026: 44.6; 2027: 40.2
- Current expenditure: 2021: 26.0; 2022: 26.4; 2023: 25.2; 2024: 25.6; 2025: 26.1; 2026: 26.5; 2027: (not fully listed)
- Capital expenditure: 2021: 9.6; 2022: 20.3; 2023: 32.1; 2024: 27.9; 2025: 22.3; 2026: 18.0; 2027: 13.7; 2028: 10.3
- Overall balance (after grants): 2021: -10.5; 2022: -12.2; 2023: -15.5; 2024: -13.1; 2025: -8.3; 2026: -6.0; 2027: -2.8
- Non-oil Primary Balance (after grants): 2021: -9.8; 2022: -21.5; 2023: -28.8; 2024: -27.6; 2025: -22.5; 2026: -19.0; 2027: -15.0; 2028: -11.2
- Total public sector gross debt (percent of GDP):
- 2021: 43.2; 2022: 29.9; 2023: 29.0; 2024: 28.2
- External: 2021: 11.0; 2022: 9.7; 2023: 9.3; 2024: 7.8; 2025: 7.6; 2026: 7.1
- Domestic (selected years): 15.7; 18.9; 19.3; 18.2; 19.0
- Staff project moderating fiscal impulses to achieve a zero overall fiscal balance by 2028.
- Substantial savings are expected to accumulate in the Natural Resource Fund (NRF) in the medium-term; annual transfers from the NRF to the budget (according to the NRF Act) will finance most of the increase in public capital spending.
External Sector and Reserves
- Current account balance (US$ million, selected projections):
- 2021: -1,981.6; 2022: 3,450.9; 2023: 2,945.2; 2024: 4,070.2; 2025: 4,247.2; 2026: 7,051.1; 2027: 11,122.3; 2028: 14,259.3
- Gross official reserves (US$ million and percent of GDP):
- See Gross official reserves figures under Economic Outlook and Projections.
- Months of imports of goods and services:
- 2021: 1.3; 2022: 1.1; 2023: 1.0; 2024: 1.4; 2025: 2.2; 2026: 3.6
- Months of non-oil imports of goods and services (selected):
- 2026: 2.8; 2027: 3.1; 2028: 3.7; (also noted 8.4 in a different row)
- The external current account from 2018 onwards includes high value imports of oil goods and services.
Risks and Main Challenges
- Upside risks:
- Further oil discoveries could continue to improve long-term economic prospects.
- A construction boom could support higher short-term growth than projected.
- Downside risks:
- Overheating, leading to inflationary pressures and appreciation of the real exchange rate beyond the level implied by a balanced expansion of the economy.
- Highly volatile commodity prices.
- Adverse climate shocks.
- Governance concerns that could negatively impact the economy.
- Key challenges:
- Managing large resource revenue inflows to ensure macroeconomic stability and sustainability.
- Investing steadily in people, physical infrastructure, and institutions.
Policy Recommendations and Institutional Priorities
- Macroeconomic policy stance:
- Maintain macroeconomic stability through an appropriate policy mix given medium-term risks of inflationary pressures and real exchange rate appreciation.
- Staff assess the 2023 policy mix to be appropriate: fiscal policy increasing public investment to address large development needs, and broad money growing in line with non-oil GDP.
- Recommend periodic expenditure reviews to ensure macroeconomic stability and preserve competitiveness by setting the pace of public investment to account for absorption and institutional capacity constraints.
- Fiscal framework:
- Adopt over the medium-term a comprehensive medium-term fiscal framework (MTFF).
- As a fiscal anchor, set a path for the non-oil primary balance (as a percent of non-oil GDP) consistent with ceilings on withdrawals from the NRF to ensure inter-generational equity.
- MTFF should include modernizing public financial management, a clear medium-term fiscal anchor, a transition path, and an operational target.
- Monetary and financial sector policy:
- Continue close monitoring of macroeconomic and financial indicators, tighten monetary policy stance, and use macroprudential tools as needed.
- In the medium term, review the exchange rate framework to ensure it best serves the economy.
- Support completion of the 2016 FSAP recommendations; staff welcome BoG’s asset quality reviews, stress test progress, and strategies to promote financial inclusion.
- Recommend closely monitoring sectoral lending exposures, related party lending, banks’ ownership structure and increasing competition in the banking sector.
- Governance, transparency, and extractive industries:
- Commend progress in strengthening AML/CFT, governance, anti-corruption frameworks and support further advances in their effective implementation.
- Commend progress in strengthening the management of oil wealth and fiscal transparency; recommend addressing remaining gaps.
- Specifically recommend implementing the recommendations of the 2019 Extractive Industries Transparency Initiative (EITI) reports, including moving towards electronic disclosure and adequate follow-up.
- Climate and nature conservation:
- Staff welcome authorities’ climate efforts implemented through LCDS 2030, which maintains forest coverage and preserves sequestration rates, and aims to enhance nature conservation, including biodiversity conservation, watershed management, and the ocean economy, and receive payments for these efforts.
Selected Social Indicators (levels)
- Population, 2021 (thousands): 805
- Population not using an improved water source (%), 2020: 3.2
- Under-five mortality rate (per 1,000 live births), 2021: 28
- Access to electricity (%), 2020: 93
- Population living below the poverty line (%), 2000-06: 35
- Gini index, 2019: 47
- HDI rank, 2021: 108
IMF Communications Department. Press Release No. 23/417. December 4, 2023.
