The IMF’s recent report highlights Guyana’s exceptional economic growth fueled by oil production and infrastructure investment, projecting robust growth rates and a decline in fiscal deficit. It emphasizes the importance of prudent economic management while addressing inflation and promoting inclusive growth and governance reforms.
The International Monetary Fund (IMF) has recently published its Staff Concluding Statement from the 2025 Article IV Mission, praising Guyana for its exceptional economic growth. This growth is largely fueled by significant oil production increases, strong non-oil outputs, and aggressive public infrastructure investment. Notably, Guyana holds the highest global real GDP growth rate, averaging 47 percent from 2022 to 2024.
The IMF forecasts real GDP growth to sustain approximately 10¼ percent in 2025, with the non-oil sector predicted to grow even more robustly at 13 percent. Although inflation is expected to increase slightly, reaching around four percent by the end of 2025, it remains relatively manageable compared to previous figures. The fiscal deficit is projected to decrease from 7.3 percent of GDP in 2024 to below 5 percent in 2025 due to improved oil revenue.
Furthermore, the large current account surplus of 24½ percent of GDP in 2024 is expected to moderate to about nine percent in 2025, driven by increased construction imports for the fourth oil Floating Production Storage and Offloading (FPSO) vessel. The economic outlook remains optimistic, with an anticipated average growth rate of 14 percent over the next five years, greatly supported by both the oil sector and the expanding non-oil economy.
The IMF acknowledged the Guyanese authorities for their commitment to maintaining macroeconomic stability and sustainability. While there are currently no significant overheating signs, the IMF emphasized the need for continuous monitoring and prudent policy implementation. Effective social transfer policies have increased disposable income and alleviated poverty, leading to recommendations for enhanced targeted transfers to further support sustainable development goals.
Fiscal policies have been deemed appropriate, focusing on closing the fiscal deficit gradually. The adjustment of the withdrawal ceiling from the Natural Resource Fund (NRF) in early 2024 permitted a notable increase in capital expenditure, exceeding 12½ percent of GDP. The IMF advocates for further efforts to reduce the fiscal deficit by 2031, ensuring long-term fiscal health and equity across generations.
On monetary policy, the IMF supports the current restrictive stance, which has been effective in limiting inflation. It is recommended to align money growth with non-oil GDP growth and manage banking liquidity carefully. Moreover, the IMF suggests advancing financial markets and enhancing the interest rate transmission mechanism to bolster the effectiveness of monetary policy.
The report advised strengthening Guyana’s macroprudential framework to ensure financial stability, with enhanced supervision and data collection being pivotal for the Bank of Guyana. Additionally, the IMF commended ongoing upgrades to governance in the NRF and public sector modernization, recognizing achievements in transparency and accountability regarding petroleum revenues and e-procurement system implementations.
Guyana’s efforts in improving its Anti-Money Laundering, Combating the Financing of Terrorism frameworks, and compliance with the Extractive Industries Transparency Initiative were acknowledged. The nation’s commitment to climate change initiatives, particularly through the Low Carbon Development Strategy 2030 and the Gas-to-Energy project, is expected to provide reliable electricity while promoting cleaner energy transitions.
Finally, the IMF applauded initiatives aimed at fostering inclusive growth and enhancing labor skills to address shortages and mismatches within the labor market. The commitment to boosting female participation in the workforce is particularly commendable. The IMF continues to support Guyana’s modernization of statistical systems, essential for crafting effective governmental policies based on accurate data outputs from updated national accounts and labor surveys.
In summary, the IMF’s report underscores Guyana’s remarkable economic performance, driven by significant oil production and investments in infrastructure, with a positive outlook for sustained growth. Key areas of focus include the need for prudent fiscal policies, inflation management, and social transfers aimed at economic inclusivity. Additionally, ongoing enhancements in transparency and governance, as well as commitment to climate strategies, further reinforce Guyana’s path towards sustainable development.
Original Source: newsroom.gy
