A release from the IMF says Guyana's "economic growth is projected to be 3.4 percent in 2018, driven by continued strength in the construction and rice sectors, and a recovery in gold mining. The current account deficit is projected to narrow to 6.1 and 4.3 percent of GDP in 2018 and 2019, respectively.
"The deficit will be financed largely by FDI inflows and donor-supported investment. The central government deficit is projected to widen to 5.4 and 5.1 percent of GDP in 2018 and 2019 due to the cost of restructuring the sugar sector and an increase in infrastructure-related capital expenditure. Public debt is projected to rise in the short-term, before declining with the onset of oil production."
The Executive Board in its assessment of the economy said "Guyana’s macroeconomic outlook remains favorable. While growth slowed down in 2017, it became more broad-based, and is expected to accelerate in the run-up to the start of oil production in 2020.
"The extractive industries and public investment will be key drivers of economic growth over the medium-term. Reducing the costs of doing business, strengthening private sector confidence, and advancing productivity-enhancing reforms are essential for sustaining growth in the short-term, and for reaping the full benefits of the oil windfall once it materializes.
The IMF pointed out that "Short-term financing needs should be carefully managed," and commended the government's prudence and restraint towards borrowing in anticipation of future oil revenue.
"They should rely as much as possible on Multilateral Development Banks, including their non-concessional financing operations. Developing the domestic capital markets would provide a more stable source of financing and help meet the needs of domestic long-term institutional investors. Private external borrowing should continue to be avoided, and central bank financing should not be used at all. Staff welcomed the authorities’ intention to close the overdraft balances at the central bank in the near-term. Saving the one-off gains from the tax amnesty would reduce financing needs, and also help preserve external buffers," the IMF said
the IMF statement noted that "The quality and efficiency of government expenditure should continue to be improved. It is important to address the shortcomings identified by the PIMA before public investment is significantly scaled-up with oil revenues. For similar reasons, it would be useful to review current expenditures to ensure they achieve the maximum welfare and inclusion benefits.
"The rules-based fiscal framework for managing oil wealth should be transparent and consistent with the resource fund deposit/withdrawal rules. It should provide the basis for determining the allocation of annual oil revenue for stabilization and domestic capital expenditure, as well as intergenerational savings. The consistency between the fund deposit/withdrawal rules and a fiscal rule could be reinforced by a fiscal responsibility legislation.
The IMF concluded that "Enhancing competitiveness and supporting inclusive growth should remain a high priority. Greater efforts are needed to lower the cost of doing business by addressing infrastructure-related bottlenecks, reducing energy costs, and cutting red tape. Increasing female labor force participation and bridging the gaps with the Hinterland can boost growth and help spread its benefits more widely."
- Countries: Guyana
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