Published:Wednesday 12:06 AM
The International Monetary Fund said Tuesday that economic growth is projected to be 57.8 per cent this year for Guyana as the country continues to shake off the effects of the coronavirus pandemic-induced recession in 2020, amid protracted political transition and subdued performance of the non-oil sector.
The IMF executive board, which has concluded its annual bilateral discussions with Guyana, said the country started the recovery process 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, with oil GDP forecast to grow over 100 per cent in 2022, and by about 30 per cent on average per year during 2023-2026.
“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,” the IMF said, noting that the 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.
The IMF executive welcomed the broad-based economic recovery in 2021, and the unprecedented high real GDP growth, supported by a steep rise in oil production that 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 build-up of macroeconomic vulnerabilities, ensure inclusive growth and intergenerational equity, as well as address structural weaknesses and climate challenges,” the agency said.
The IMF also welcomed the significant decline in public debt and favourable debt dynamics going forward, with the authorities’ commitment to maintain debt sustainability and stressed the importance of anchoring fiscal policy in a medium-term framework.
It emphasised the importance of taking measures to further develop and deepen financial and foreign exchange markets, as oil production increases.