IMF applauds Guyana’s rapid economic growth; cites continued strong prospects

The International Monetary Fund (IMF) has released its Staff Concluding Statement for the 2025 Article IV Mission, highlighting Guyana’s impressive economic growth, driven by a combination of rapidly expanding oil production, robust non-oil output, and substantial public infrastructure investment.

According to the IMF, Guyana has experienced the highest real GDP growth rate globally, averaging 47 per cent between 2022 and 2024. This remarkable performance is underpinned by a strong non-oil sector, particularly in construction and services, which is expected to continue its upward trajectory. The IMF projects real GDP growth of approximately 10¼ per cent in 2025, with the non-oil economy expanding by an even stronger 13 percent.

Despite this rapid growth, inflation is anticipated to rise slightly to around four per cent by the end of 2025, up from close to three per cent in 2024. The fiscal deficit, which stood at 7.3 per cent of GDP in 2024, is expected to decrease to just below 5 per cent in 2025, as the surge in oil revenues offsets increased public spending.

The IMF also forecasts that Guyana’s large current account surplus, at 24½ per cent of GDP in 2024, will moderate to about nine per cent in 2025, due to imports related to the construction of the fourth oil Floating Production Storage and Offloading (FPSO) vessel.

The IMF’s medium-term outlook remains positive, with the economy expected to grow by an average of 14 percent annually over the next five years, largely driven by the oil sector and a growing non-oil economy. Non-oil GDP is projected to expand at a solid rate of about 6¾ per cent per year. While the risks to this outlook are generally balanced, the IMF notes that overheating pressures, if not managed, could lead to inflationary pressures and real exchange rate appreciation, potentially hampering a sustainable economic expansion.

The IMF commended Guyana’s authorities for their commitment to macroeconomic stability, fiscal sustainability, and inclusive growth. The report noted that while signs of overheating are not yet apparent, it remains critical for the government to closely monitor macroeconomic trends and continue implementing policies to avoid any imbalances. The IMF also recognised the positive impact of social transfer policies, which have increased disposable income and reduced poverty, and recommended further targeted transfers to support Guyana’s sustainable development goals.

Fiscal policy was deemed appropriate, with an emphasis on gradually closing the fiscal deficit over the medium term. The increase in the withdrawal ceiling from the Natural Resource Fund (NRF) in early 2024 allowed for significant expansion of capital expenditure, reaching over 12½ percent of GDP. The IMF recommends that the fiscal deficit be reduced by 2031, with the non-oil primary deficit following suit to ensure long-term fiscal sustainability and intergenerational equity. To further enhance fiscal discipline, the IMF called for the implementation of a comprehensive medium-term fiscal framework, alongside regular expenditure reviews.

On monetary policy, the IMF endorsed the current tight stance, which has helped contain inflation. It recommended continuing efforts to maintain broad money growth in line with non-oil GDP growth, and to manage banking system liquidity carefully. The IMF also suggested deepening financial markets and enhancing the interest rate transmission mechanism to further bolster monetary policy effectiveness.

Additionally, the IMF called for strengthening Guyana’s macroprudential framework to safeguard financial stability. Enhanced real-time supervisory frameworks, improved data collection, and better banking supervision are key priorities for the Bank of Guyana, the IMF noted.

The IMF also praised Guyana’s ongoing efforts to improve governance in the NRF and modernise public sector operations. The country’s progress in enhancing transparency and accountability was recognised, particularly in relation to the publication of petroleum revenues and the introduction of e-procurement systems.

Further, Guyana’s strides in strengthening its Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) and anti-corruption frameworks were acknowledged. The IMF welcomed the country’s progress in implementing the Extractive Industries Transparency Initiative (EITI) standards and addressing regulatory compliance in the non-oil mining sector.

Guyana’s commitment to addressing climate change was also highlighted, with the authorities continuing to prioritise actions as part of the Low Carbon Development Strategy 2030. The Gas-to-Energy project, in particular, is expected to secure reliable electricity provision while supporting a transition towards cleaner energy.

Finally, the IMF recognised efforts to foster inclusive growth and enhance labour skills. By addressing labour shortages and skill mismatches, Guyana aims to support its ongoing economic expansion, with a particular focus on increasing women’s participation in the labour market. The IMF commended the authorities for reforms that boost productivity, trade connectivity, and export diversification.

In conclusion, the IMF offered continued support for Guyana’s efforts to modernise its statistical systems, which will play a crucial role in shaping effective government policies. The planned updates to national accounts and the household budget survey, along with regular labour force surveys, are expected to provide valuable data to guide future policy decisions.

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