Guyana leads in economic growth amid expanding oil, infrastructure boom

– IMF report

Guyana is charting a new path of economic transformation, with record-breaking gross domestic product (GDP) growth driven by oil production, rising non-oil output, and public investment initiatives.

According to an International Monetary Fund report published on Wednesday, Guyana recorded the world’s highest real GDP growth rate, averaging 47 per cent per year since 2022.

The report said real oil GDP increased by nearly 58 per cent in 2024, while real non-oil GDP expanded by over 13 per cent, reflecting solid, broad-based performance in various sectors.

The overall fiscal deficit widened from 5.1 per cent of GDP (11.7 per cent of non-oil GDP) in 2022 to 7.3 per cent of GDP (21 per cent of non-oil GDP) in 2024. This reflects a large increase in capital expenditures.

Driven by increased oil exports, Guyana’s current account surplus more than doubled in 2024, reaching approximately 24½ per cent of GDP.

By the end of 2024, gross international reserves surpassed US$1 billion, while the Natural Resource Fund (NRF) accumulated over US$1.1 billion, reaching a total of US$3.1 billion, which is over 12½ per cent of GDP.

“The economic outlook remains highly favourable. The economy is expected to grow on average 14 per cent per year over the next five years, driven by robust oil production and strong non-oil GDP growth,” the IMF report stated.

It stated that positive spillovers from the oil sector, along with enhancements in infrastructure, productivity, and resilience, are anticipated to elevate the real non-oil GDP growth to an average of 6¾ per cent over the medium term, which is three percentage points higher than the pre-oil decade average.

While inflation is projected to rise to approximately four per cent in 2025, the report indicated that the overall fiscal deficit and the current account surplus are anticipated to narrow this year.

“Over the medium term, the continued expansion of oil production will further strengthen the external position, with substantial savings accumulation in the NRF,” the IMF added.

Below is the Executive Board Assessment:

Executive Directors agreed with the thrust of the staff appraisal. They welcomed Guyana’s remarkable economic progress to attain high-income status, supported by rapidly expanding oil production and robust non-oil growth. They noted that Guyana’s economic outlook remains highly favorable with balanced risks, strong fundamentals, and a strong external position supported by substantial accumulation of oil revenue in the Natural Resource Fund. They commended the authorities’ commitment to balancing development needs with prudent policies to entrench macroeconomic and fiscal stability.

Directors concurred that the current fiscal stance is appropriate given development needs. They welcomed the authorities’ commitment to eliminate the overall fiscal deficit over the medium term and further narrow the non-oil primary deficit to levels consistent with ensuring intergenerational equity and preserving fiscal and macroeconomic sustainability. They highlighted the need for a comprehensive medium-term fiscal framework with an explicit anchor and an operational target, along with regular assessments of expenditure related to reaching development objectives. They positively noted the authorities’ continued efforts to strengthen public financial management as well as the low risk of debt distress given low public debt.

Directors considered the monetary policy stance as appropriately tight to help contain inflation, while noting the need for further tightening if inflation risks escalate. They saw merit in enhancing the monetary policy toolkit and deepening financial markets to help strengthen the effectiveness of monetary policy transmission. They emphasized the need for maintaining consistent policies to support the stabilized exchange rate arrangement, which remains appropriate, and saw merit in assessing whether transitioning to a more flexible exchange rate regime over the medium term could be beneficial as Guyana’s economy continues to transform.

Directors welcomed the authorities’ commitment to maintain financial stability and continue enhancing financial supervision, including monitoring sectoral lending exposures and related-party lending. They supported the authorities’ efforts to further strengthen risk monitoring, strengthen the macroprudential framework, broaden regulatory coverage, and enhance statistics on balance sheets and real estate prices.

Directors welcomed the authorities’ efforts to foster inclusive growth and economic diversification, improve the business environment, strengthen climate and energy resilience, and enhance labour market skills. They commended progress in strengthening governance, anti-corruption, official statistics, AML/CFT frameworks, fiscal transparency, and transparency in extractive industries, and supported the continued efforts to strengthen them in line with international standards.

It is expected that the next Article IV consultation with Guyana will be held on the standard 12-month cycle.