Abstract
IMF Country Report No. 22/317
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IMF Country Report No. 22/317
GUYANA
2022 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR GUYANA
September 2022
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. In the context of the 2022 Article IV consultation with Guyana, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its August 31, 2022 consideration of the staff report that concluded the Article IV consultation with Guyana.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on August 31, 2022, following discussions that ended on June 1, 2022, with the officials of Guyana on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on July 20, 2022.
An Informational Annex prepared by the IMF staff.
A Debt Sustainability Analysis prepared by the staff of the IMF with the World Bank.
A Statement by the Executive Director for Guyana.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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© 2022 International Monetary Fund
Press Release
IMF Executive Board Concludes 2022 Article IV Consultation with Guyana
FOR IMMEDIATE RELEASE
Washington, DC – September 27, 2022: The Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Guyana.
Following the pandemic-induced recession in 2020, and protracted political transition, non-oil economic growth recovered in 2021, 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. Oil production has the potential to transform profoundly Guyana’s economy (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, one of the highest levels per capita in the world. This could help Guyana build up substantial fiscal and external buffers to absorb shocks while addressing infrastructure gaps and human development needs. Main downside risks to the outlook include volatility in global oil prices, a slowing global economy, or rapid increases in investment which could lead to macroeconomic imbalances, while upside risks include higher global oil prices and additional gas and oil discoveries.
Executive Board Assessment2
Executive Directors agreed with the thrust of the staff appraisal. They welcomed the broad-based economic recovery in 2021, following a protracted political transition and the pandemic-induced recession in 2020, and the unprecedented high real GDP growth, supported by a steep rise in oil production and accommodative policies. Directors highlighted that the increasing oil production could help transform the economy, address development needs, and build substantial buffers to absorb shocks. Nevertheless, considering the potential challenges related to volatility in global oil prices and effective management of natural resources, they highlighted 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, as well as address structural weaknesses and climate challenges.
Directors welcomed the significant decline in public debt and favorable debt dynamics going forward, the authorities’ commitment to maintain debt sustainability and stressed the importance of anchoring fiscal policy in a medium-term framework. They welcomed the restraint in using oil revenues before the passage of the recent amendments of the Natural Resource Fund Act and encouraged continued prudent management of oil revenues. Directors called for moderately ramping up public investment by constraining the annual non-oil overall fiscal balance to not exceed the expected oil transfers. They also encouraged the authorities to continue improving the targeting of social spending.
Directors agreed with the authorities that exchange rate stability serves Guyana’s current needs best and emphasized the importance of taking measures to further develop and deepen financial and foreign exchange markets, as the oil production increases. They saw merit in revising the monetary policy framework over the medium to long-term to ensure it is well suited for the economy’s needs, and that it allows more flexibility in the exchange rate to absorb shocks and help maintain competitiveness.
Directors commended the authorities’ efforts to maintain financial stability and promote financial inclusion. They welcomed the progress in implementing the 2016 FSAP recommendations and the commitment to fully implement the recently strengthened AML/CFT framework, while encouraging further efforts in this area, in particular to strengthen the regulation of digital payments.
Directors called for the continuation of broad-based reforms to address structural weaknesses and diversify the economy, emphasizing the significant human development and infrastructure needs. They commended the authorities’ progress in strengthening Guyana’s anti-corruption framework and fiscal transparency and encouraged continued progress on implementation of the recommendations provided by the Extractive Industries Transparency Initiative (EITI). Directors commended the authorities’ efforts to build resilience to climate change as envisioned under their Low Carbon Development Strategy.
Guyana: Selected Social and Economic Indicators
Since 2015–16, public debt to GDP ratios have been adjusted to reflect unsettled government balances at the central bank.
The changes in public sector (net) are from a small base, making the series volatile.
The external current account for 2018 onwards includes high value imports of oil goods and services.
From 2022 through 2027 reserves include transfers of oil revenues consistent with staff’s fiscal policy advice on the use of oil revenues.
Gross reserves in months of projected imports of goods and services. From 2017, these are affected by high value imports of oil goods and services.
Guyana: Selected Social and Economic Indicators
| I. Social Indicators | |||
| Population, 2021 (thousands) | 789 | Population not using an improved | |
| Life expectancy at birth (years), 2019 | 70 | water source (%), 2015 | 4.9 |
| Under-five mortality rate (per 1,000 live births), 2020 | 28 | Gini index, 1998 | 45 |
| Population living below the poverty line (%), 2000–06 | 35 | HDI rank, 2019 | 122 |
| II. Economic Indicators | |||
| Prel. | Proj. | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | ||
| (Annual percent change) | ||||||||
| Production and Prices | ||||||||
| Real GDP | 23.9 | 57.8 | 25.2 | 21.2 | 28.2 | 25.5 | 3.3 | |
| Real Non-Oil GDP | 4.6 | 7.2 | 5.0 | 5.1 | 5.2 | 5.2 | 5.2 | |
| Real Oil GDP | 56.9 | 116.1 | 36.8 | 28.3 | 36.5 | 31.1 | 2.9 | |
| Real GDP per capita | 23.4 | 57.3 | 24.8 | 20.9 | 27.9 | 25.1 | 3.0 | |
| Consumer prices (average) | 3.3 | 7.6 | 7.6 | 5.0 | 3.8 | 3.5 | 3.5 | |
| Consumer prices (end of period) | 5.7 | 9.4 | 6.0 | 4.1 | 3.5 | 3.5 | 3.5 | |
| Terms of trade | 13.0 | 20.9 | (5.5) | 0.7 | (0.3) | 0.3 | 1.3 | |
| (Percent of non-oil GDP) | ||||||||
| Central Government | ||||||||
| Revenue | 24.3 | 34.3 | 36.3 | 37.4 | 37.9 | 37.9 | 37.6 | |
| Grants | 0.5 | 0.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Expenditure | 35.3 | 36.8 | 37.5 | 37.9 | 37.9 | 37.9 | 37.6 | |
| Current | 25.8 | 24.7 | 25.2 | 25.4 | 25.4 | 25.4 | 25.1 | |
| Capital | 9.5 | 12.1 | 12.3 | 12.5 | 12.5 | 12.5 | 12.5 | |
| Overall balance (after grants) | -10.5 | -1.7 | -1.2 | -0.5 | 0.0 | 0.0 | 0.0 | |
| (Percent of GDP) | ||||||||
| Total public sector gross debt 1/ | 42.9 | 22.8 | 20.9 | 18.8 | 16.2 | 13.7 | 13.5 | |
| External | 17.8 | 10.1 | 10.6 | 10.5 | 9.7 | 8.0 | 7.8 | |
| Domestic | 25.1 | 12.7 | 10.2 | 8.3 | 6.5 | 5.7 | 5.8 | |
| (Annual percent change) | ||||||||
| Money and Credit | ||||||||
| Broad money | 12.2 | 11.5 | 12.3 | 9.9 | 9.0 | 8.9 | 9.0 | |
| Domestic credit of the banking system | 18.1 | 3.4 | -4.2 | -2.3 | -4.2 | 3.5 | 7.3 | |
| Public sector (net) 2/ | 32.0 | -0.7 | -16.2 | -13.9 | -22.1 | -2.8 | 10.1 | |
| Private sector | 7.1 | 7.4 | 6.7 | 6.1 | 6.3 | 6.2 | 6.2 | |
| External Sector | ||||||||
| Current account balance 3/ | 1,971.7 | 6,457.0 | 5,107.4 | 5,380.8 | 3,951.2 | 7,229.5 | 7,555.3 | |
| (Percent of GDP) | -25.5 | 43.5 | 30.4 | 28.3 | 17.2 | 26.1 | 26.6 | |
| Gross official reserves 4/ | 810.8 | 837.1 | 1,223.8 | 1,692.1 | 2,242.4 | 2,576.2 | 2,877.3 | |
| Months of imports of goods and services 5/ | 1.9 | 1.3 | 2.7 | 2.7 | 4.7 | 6.2 | 6.6 | |
| Crude oil production (million barrels) | 42.4 | 93.4 | 124.5 | 155.5 | 207.0 | 264.6 | 264.6 | |
| Oil price (barrel) | 69.4 | 99.9 | 83.5 | 77.8 | 74.1 | 71.8 | 70.3 | |
| Memorandum Items: | ||||||||
| Nominal GDP (G$ billion) | 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) | 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$ | 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 | 1.6 | 1.6 | 1.7 | 1.7 | 1.7 | |
| Guyana dollar/U.S. dollar (period average) | 208.5 | … | … | … | … | … | … | |
Since 2015–16, public debt to GDP ratios have been adjusted to reflect unsettled government balances at the central bank.
The changes in public sector (net) are from a small base, making the series volatile.
The external current account for 2018 onwards includes high value imports of oil goods and services.
From 2022 through 2027 reserves include transfers of oil revenues consistent with staff’s fiscal policy advice on the use of oil revenues.
Gross reserves in months of projected imports of goods and services. From 2017, these are affected by high value imports of oil goods and services.
Guyana: Selected Social and Economic Indicators
| I. Social Indicators | |||
| Population, 2021 (thousands) | 789 | Population not using an improved | |
| Life expectancy at birth (years), 2019 | 70 | water source (%), 2015 | 4.9 |
| Under-five mortality rate (per 1,000 live births), 2020 | 28 | Gini index, 1998 | 45 |
| Population living below the poverty line (%), 2000–06 | 35 | HDI rank, 2019 | 122 |
| II. Economic Indicators | |||
| Prel. | Proj. | |||||||
|---|---|---|---|---|---|---|---|---|
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 | 2027 | ||
| (Annual percent change) | ||||||||
| Production and Prices | ||||||||
| Real GDP | 23.9 | 57.8 | 25.2 | 21.2 | 28.2 | 25.5 | 3.3 | |
| Real Non-Oil GDP | 4.6 | 7.2 | 5.0 | 5.1 | 5.2 | 5.2 | 5.2 | |
| Real Oil GDP | 56.9 | 116.1 | 36.8 | 28.3 | 36.5 | 31.1 | 2.9 | |
| Real GDP per capita | 23.4 | 57.3 | 24.8 | 20.9 | 27.9 | 25.1 | 3.0 | |
| Consumer prices (average) | 3.3 | 7.6 | 7.6 | 5.0 | 3.8 | 3.5 | 3.5 | |
| Consumer prices (end of period) | 5.7 | 9.4 | 6.0 | 4.1 | 3.5 | 3.5 | 3.5 | |
| Terms of trade | 13.0 | 20.9 | (5.5) | 0.7 | (0.3) | 0.3 | 1.3 | |
| (Percent of non-oil GDP) | ||||||||
| Central Government | ||||||||
| Revenue | 24.3 | 34.3 | 36.3 | 37.4 | 37.9 | 37.9 | 37.6 | |
| Grants | 0.5 | 0.8 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Expenditure | 35.3 | 36.8 | 37.5 | 37.9 | 37.9 | 37.9 | 37.6 | |
| Current | 25.8 | 24.7 | 25.2 | 25.4 | 25.4 | 25.4 | 25.1 | |
| Capital | 9.5 | 12.1 | 12.3 | 12.5 | 12.5 | 12.5 | 12.5 | |
| Overall balance (after grants) | -10.5 | -1.7 | -1.2 | -0.5 | 0.0 | 0.0 | 0.0 | |
| (Percent of GDP) | ||||||||
| Total public sector gross debt 1/ | 42.9 | 22.8 | 20.9 | 18.8 | 16.2 | 13.7 | 13.5 | |
| External | 17.8 | 10.1 | 10.6 | 10.5 | 9.7 | 8.0 | 7.8 | |
| Domestic | 25.1 | 12.7 | 10.2 | 8.3 | 6.5 | 5.7 | 5.8 | |
| (Annual percent change) | ||||||||
| Money and Credit | ||||||||
| Broad money | 12.2 | 11.5 | 12.3 | 9.9 | 9.0 | 8.9 | 9.0 | |
| Domestic credit of the banking system | 18.1 | 3.4 | -4.2 | -2.3 | -4.2 | 3.5 | 7.3 | |
| Public sector (net) 2/ | 32.0 | -0.7 | -16.2 | -13.9 | -22.1 | -2.8 | 10.1 | |
| Private sector | 7.1 | 7.4 | 6.7 | 6.1 | 6.3 | 6.2 | 6.2 | |
| External Sector | ||||||||
| Current account balance 3/ | 1,971.7 | 6,457.0 | 5,107.4 | 5,380.8 | 3,951.2 | 7,229.5 | 7,555.3 | |
| (Percent of GDP) | -25.5 | 43.5 | 30.4 | 28.3 | 17.2 | 26.1 | 26.6 | |
| Gross official reserves 4/ | 810.8 | 837.1 | 1,223.8 | 1,692.1 | 2,242.4 | 2,576.2 | 2,877.3 | |
| Months of imports of goods and services 5/ | 1.9 | 1.3 | 2.7 | 2.7 | 4.7 | 6.2 | 6.6 | |
| Crude oil production (million barrels) | 42.4 | 93.4 | 124.5 | 155.5 | 207.0 | 264.6 | 264.6 | |
| Oil price (barrel) | 69.4 | 99.9 | 83.5 | 77.8 | 74.1 | 71.8 | 70.3 | |
| Memorandum Items: | ||||||||
| Nominal GDP (G$ billion) | 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) | 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$ | 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 | 1.6 | 1.6 | 1.7 | 1.7 | 1.7 | |
| Guyana dollar/U.S. dollar (period average) | 208.5 | … | … | … | … | … | … | |
Since 2015–16, public debt to GDP ratios have been adjusted to reflect unsettled government balances at the central bank.
The changes in public sector (net) are from a small base, making the series volatile.
The external current account for 2018 onwards includes high value imports of oil goods and services.
From 2022 through 2027 reserves include transfers of oil revenues consistent with staff’s fiscal policy advice on the use of oil revenues.
Gross reserves in months of projected imports of goods and services. From 2017, these are affected by high value imports of oil goods and services.
Title page
GUYANA
STAFF REPORT FOR THE 2022 ARTICLE IV CONSULTATION
July 20, 2022
KEY ISSUES
Context. Following the pandemic-induced recession in 2020, economic growth recovered in 2021, with non-oil GDP growth reaching 4.6 percent, 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 increased and will ramp up substantially over the medium term.
Outlook and Risks. Guyana’s medium-term outlook is very favorable, with increasing oil production having the potential to transform Guyana’s economy and expand its buffers to absorb shocks. Downside risks to the outlook, stemming mostly from the global developments, include highly volatile commodity prices, exacerbated by the war in Ukraine, and a slowing global economy. Rapid increases in government spending could generate adverse macroeconomic effects over the medium term. On the upside, additional oil field discoveries and higher oil prices could further boost growth.
Focus. Discussions focused on actions to strengthen medium-term policy frameworks to ensure effective use of the nation’s oil resources, including a fiscal policy anchor, deepening financial markets, and reforms to strengthen governance, labor market and climate change policy frameworks.
Key Policy Recommendations:
Implement a feasible and moderate increase in capital spending to address social development needs and infrastructure gaps and avoid macroeconomic imbalances.
Set budgets within a fiscal framework that, over the medium term, maintains a zero overall fiscal balance to anchor fiscal policy in a sustainable way.
Develop and deepen the markets needed to support a move towards greater exchange rate flexibility over the medium to long term.
Further strengthen governance, anti-corruption and AML frameworks, particularly on following up on implementing the Extractive Industries Transparency Initiative recommendations.
structural reforms to support inclusive growth—including through labor market reforms—and strengthen the climate change policy framework.
Approved By
James Morsink (WHD) and Geremia Palomba (SPR)
Discussions took place remotely from Washington, DC during May 18–June 1, 2022. The staff team comprised Alina Carare (Incoming Mission head), Meredith A. McIntyre (Outgoing Mission Head); Rina Bhattacharya; Manuk Ghazanchyan and Moya Chin (All WHD). Alternative Executive Director Frank Fuentes and Reshma Mahabir, Senior Advisor to the Executive Director, joined most meetings. The mission met with Finance Minister Dr. Ashni Singh, Minister of Parliamentary Affairs Gail Teixeira, Central Bank Governor Gobind Ganga, other senior officials, representatives from the private sector, opposition party, labor unions and other stakeholders, including Guyana’s development partners. Assistance of the report was provided by Minnie Park, Grey Ramos, and Bennett Sutton.
Contents
BACKGROUND
RECENT DEVELOPMENTS
OUTLOOK AND RISKS
POLICY DISCUSSIONS
A. Fiscal Policy
B. Monetary and Exchange Rate Policy
C. Financial Sector Policy
D. Structural and Governance Reforms to Support Inclusive Growth
E. Other Issues
STAFF APPRAISAL
FIGURES
1. Comparative Regional Developments
2. Real Sector Indicators
3. External Sector Developments
4. Fiscal Sector Developments
5. Financial Soundness Indicators
6. Monetary Developments
TABLES
1. Selected Social and Economic Indicators
2. Balance of Payments
3a. Public Sector Operations (Percent of GDP)
3b. Public Sector Operation (Billions of Guyanese Dollars)
3c. Public Sector Operations (Percent of Non-Oil GDP)
4. Summary Account of the Bank of Guyana and Monetary Survey
5. Indicators of External and Financial Vulnerability
6. Medium-Term Macroeconomic Framework
7. Financial Soundness Indicators
8. Risk Assessment Matrix
ANNEXES
I. External Sector Assessment
II. The Amended NRF Transfer Rule
III. Cross-Country Experiences and Lessons in Management of Oil Resources
IV. Macroeconomic Impact of Scaling Up Public Investment
V. Financial Market Development, Monetary Policy Transmission, and Exchange Rate Flexibility
VI. Implementation of 2016 FSAP Recommendations
VII. Key Features of Guyana’s Labor Market and Policy Challenges
VIII. Progress with Implementation of EITI Recommendations
IX. Progress on 2019 Article IV Policy Recommendations
X. Strategically Managing Climate Change Risks
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm.
