This DSA uses the template for low income countries and is based on Guyana’s Policy Performance Rating for 2016-17, which is grounded in the Country Policy and Institutional Assessment Rating (CPIA).
Debt relief under the Heavily Indebted Poor Country (HIPC) Initiative was granted by all multilateral creditors except one, by Paris Club bilateral creditors, and four non-Paris Club creditors (China, India, Venezuela, and Cuba). Debt owed to Brazil and North Korea was paid off without relief.
These creditors include Argentina, Kuwait, Libya, United Arab Emirates, and Serbia, as well as a loan from an Indian commercial entity (Tata).
The balance on the PetroCaribe account was about US$ 0.5 million as of end-2016.
Remittances are presented as a base case if they are both greater than 10 percent of GDP and greater than 20 percent of exports of goods and services, with both ratios measured on a three-year average basis.
The authorities’ data and projections on the national accounts and balance of payments currently do not reflect the foreign companies’ investments in developing Guyana’s offshore oil resources during the preparatory phase. This causes GDP, imports and FDI to be underestimated. For consistency and because of the lack of reliable information, this investment is not covered in staff’s projections.
This GDP increase is consistent with values observed in other small states with large oil and gas discoveries (e.g. Mozambique, Equatorial Guinea). After the initial jump, growth is projected to converge to its steady state value.
Running primary deficits at this level could be motivated with expectations of large future oil revenues.
Representatives from the oil industry indicated that the geological risks associated with the oil production are small. A scenario where oil revenues are significantly lower than in the baseline would hinge on a large adverse shock to oil prices. For simplicity, we modeled the scenario as one where oil revenues fail to materialize altogether.