The IMF’s recent report highlights Guyana’s exceptional economic growth, primarily driven by oil production and supportive fiscal policies. Real GDP growth averaged 47% from 2022 to 2024, with a positive forecast of 10¼% for 2025. Although inflation and fiscal deficits are projected to rise slightly, the medium-term outlook remains optimistic, underscored by ongoing governance improvements, climate action, and labor market adjustments.
The International Monetary Fund (IMF) recently issued its Staff Concluding Statement following the 2025 Article IV Mission, praising Guyana for its extraordinary economic growth. This acceleration is primarily fueled by significant oil production increases, a thriving non-oil sector, and considerable investments in public infrastructure.
Guyana has achieved the highest global real GDP growth rate, averaging 47 percent from 2022 to 2024. This growth is supported by a robust non-oil sector—especially in construction and services—which is projected to continue its upward trend. The IMF anticipates a real GDP growth of approximately 10¼ percent in 2025, with the non-oil economy increasing by an even higher rate of 13 percent.
Despite this impressive growth, inflation is expected to rise modestly to approximately four percent by the end of 2025, up from nearly three percent in 2024. Furthermore, the fiscal deficit, previously at 7.3 percent of GDP in 2024, is projected to decrease to just under five percent in 2025, as rising oil revenues counterbalance increased public expenditure.
Additionally, the IMF estimates that Guyana’s large current account surplus, which stands at 24½ percent of GDP in 2024, will ease to around nine percent in 2025. This moderation is attributed to the imports linked to the construction of the fourth oil Floating Production Storage and Offloading (FPSO) vessel.
The medium-term outlook remains optimistic, with an anticipated annual average growth rate of 14 percent over the next five years, largely driven by both the oil and non-oil sectors. The non-oil GDP is projected to grow at a steady rate of about 6¾ percent per year, although the IMF cautions about overheating risks that could provoke inflation and currency appreciation.
The IMF commended the Guyanese Government for its focus on macroeconomic stability, fiscal sustainability, and promoting inclusive growth. Although signs of overheating are not yet evident, the continuous monitoring of macroeconomic indicators is crucial to maintain balance. The report also highlighted the positive effects of social transfer programs, which have enhanced disposable income and alleviated poverty.
The fiscal policy was regarded as suitable, emphasizing the importance of gradually reducing the fiscal deficit over the medium term. The increase in the withdrawal limit from the Natural Resource Fund (NRF) has enabled a substantial rise in capital expenditures, exceeding 12½ percent of GDP. To assure long-term fiscal sustainability, the IMF recommends achieving a reduced fiscal deficit by 2031.
On monetary policy, the IMF supports the current stringent approach, which has successfully kept inflation in check. Continuation of efforts to ensure broad money growth aligns with non-oil GDP growth is advised, as well as careful management of banking system liquidity. Further improvement of financial markets and better interest rate transmission are crucial to heightening monetary policy effectiveness.
To bolster financial stability, the IMF encourages strenthening Guyana’s macroprudential framework. Key focus areas for the Bank of Guyana include improving real-time supervisory systems and enhancing data collection initiatives.
The IMF recognized Guyana’s progress in governance within the NRF and the modernization of public sector operations, particularly the transparency related to petroleum revenues and the adoption of e-procurement systems. Improvements in anti-money laundering and combating financing of terrorism regulations were also noted, along with compliance advancements in the non-oil mining sector.
Moreover, Guyana’s commitment to climate change action was acknowledged, particularly through the Low Carbon Development Strategy 2030 and the Gas-to-Energy project, which aims to provide sustainable electricity while facilitating a transition to cleaner energy.
Lastly, the efforts to promote inclusive growth and labor skill enhancement were praised, with a focus on remedying labor shortages and skill mismatches, while increasing female labor force participation. The ongoing reforms aim to boost productivity, trade connectivity, and export diversification.
In conclusion, the IMF expressed its continued support for Guyana’s initiatives to modernize statistical systems, essential for formulating effective policies. Scheduled updates to national accounts and the household budget survey alongside regular labor force surveys are expected to yield valuable insights for future policy-making.
The IMF’s report underscores Guyana’s remarkable economic growth and optimistic outlook, driven by both the oil and non-oil sectors. The government’s proactive fiscal and monetary policies have positioned the country for continued sustainable development. However, monitoring and addressing potential overheating risks remains vital. Guyana’s commitment to transparency, climate action, and labor market improvements illustrates a holistic approach to fostering inclusive economic growth moving forward.
Original Source: newsroom.gy
