The IMF has recognized Guyana’s rapid economic growth, forecasting a 10¼ percent GDP growth for 2025, driven by oil production and a strong non-oil sector. Despite inflation rising to four percent, the fiscal deficit is set to reduce. The IMF praised government policies for macroeconomic stability and inclusive growth, while also calling for continued monitoring and reform.
The International Monetary Fund (IMF) recently issued its Staff Concluding Statement for the 2025 Article IV Mission, praising Guyana for its remarkable economic growth spurred by increased oil production, a thriving non-oil sector, and extensive public infrastructure investments. Guyana has achieved the highest real GDP growth rate in the world, averaging 47 percent between 2022 and 2024, with expectations for continued growth in the upcoming years.
The IMF projects real GDP growth of around 10¼ percent for 2025, attributing a stronger expansion of 13 percent within the non-oil sector, encompassing construction and services. Despite this rapid economic growth, inflation is anticipated to rise to approximately four percent by the end of 2025, compared to close to three percent in 2024. The fiscal deficit, which was reported at 7.3 percent of GDP in 2024, is expected to decline to just below 5 percent in 2025, as rising oil revenues facilitate increased public expenditure.
Guyana’s current account surplus, noted at 24½ percent of GDP in 2024, is projected to diminish to about nine percent in 2025 due to incoming imports related to the construction of a new Floating Production Storage and Offloading (FPSO) vessel. The IMF maintains an optimistic medium-term outlook, forecasting an average annual growth of 14 percent over the next five years, significantly driven by both the oil sector and the expanding non-oil economy.
The IMF commended the Guyanese government for prioritizing macroeconomic stability, fiscal sustainability, and inclusive growth. While signs of overheating have not yet emerged, the IMF emphasized the importance of closely monitoring economic trends to sustain balanced growth. It also highlighted the effectiveness of social transfer policies in increasing disposable income and reducing poverty, recommending further targeted interventions to support sustainable development goals.
Fiscal policy has been evaluated as appropriate, focusing on gradually reducing the fiscal deficit over the medium term. The rising withdrawal ceiling from the Natural Resource Fund (NRF) permitted a significant boost in capital expenditure, which climbed to over 12½ percent of GDP. The IMF suggested reducing the fiscal deficit and non-oil primary deficit by 2031 to promote long-term sustainability and intergenerational equity.
On monetary policy, the IMF supports a tight stance that has effectively contained inflation, advising the management of banking liquidity along with broad money growth in step with non-oil GDP growth. Recommendations also included enhancing financial markets and improving the interest rate transmission mechanism to maximize monetary policy effectiveness.
Additionally, the IMF reiterated the importance of strengthening Guyana’s macroprudential framework and improving supervision within the banking sector, indicating this would help safeguard financial stability. The organization also praised the government’s efforts to enhance governance, transparency, and the accountability of the NRF and public sector operations, particularly in relation to petroleum revenues and e-procurement systems.
Guyana’s actions against climate change were recognized, particularly the commitment to the Low Carbon Development Strategy 2030 and the Gas-to-Energy project aimed at providing reliable electricity while enabling a transition to cleaner energy sources. The IMF noted efforts to foster inclusive growth and increase labor participation rates, especially among women, to address current labor shortages and skill mismatches.
In conclusion, the IMF extended its support for Guyana’s initiatives to modernize its statistical systems, which will be vital for effective governmental policymaking. The anticipated updates to national economic accounts and regular labor force surveys are expected to enrich data requirements that inform future policies.
In summary, the IMF has praised Guyana’s impressive economic growth and forecasts continued positive prospects, particularly driven by the oil sector and strong non-oil performance. Emphasis on fiscal sustainability, social transfers, and macroeconomic monitoring is essential for sustaining this growth. With ongoing efforts in governance, climate change initiatives, and labor market reform, Guyana is on a promising trajectory toward inclusive and sustainable development.
Original Source: newsroom.gy
