IMF endorses Guyana’s economic strategy, dismisses Dutch Disease fears, debt management concerns

• VP Jagdeo 

In its latest staff report, the International Monetary Fund (IMF) has again lauded Guyana’s economic strategy, highlighting that the country is sustainably managing its borrowing. On Wednesday, the IMF’s  2025 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR GUYANA was published, highlighting the nation’s economic progress.

Vice President and General Secretary of the People’s Progressive Party (PPP), Dr Bharrat Jagdeo, on Thursday referenced the report as clear evidence that the government’s borrowing is not only sustainable, but among the lowest globally in terms of debt-to-GDP ratio.

He was at the time engaging members of the media at a press conference held at Freedom House, Georgetown.

Highlighting that the report said that the public gross debt has fallen considerably since 2020, Dr Jagdeo stated that, “it responds to [what] we have been hearing from the people who have been saying [that] the debt [levels are] unsustainable.”

Dr Jagdeo noted that Guyana is using just a small portion of its revenue to service debt, a major improvement from past practices under previous administrations.

A significant concern for nations experiencing oil windfalls is the onset of Dutch disease. This is a condition where other sectors, particularly agriculture and manufacturing, suffer due to an overvalued currency driven by resource exports. Encouragingly, the IMF concluded that: “Guyana does not yet show clear symptoms of Dutch disease.”

“That is a very, very positive thing for [Guyana] because you’ve had speculations by some of these wild forces in Guyana, that we are already in the middle of the Dutch disease,” the vice president added.

The IMF’s findings, therefore, reflect positively on the government’s current economic strategy.

While Guyana does not show any signs of the Dutch disease, it pointed out that the risk remains high. And so, the IMF recommended that Guyana continue implementing several key policies, including:

• Develop and implement a medium-term fiscal framework to smooth public spending.
• Support economic diversification, particularly export strategies and manufacturing growth.
• Enhance productivity in non-oil sectors, through structural reforms, improved business environments, resilient infrastructure, affordable energy, human capital investment, and stronger governance.

And according to the vice president, these are already core elements of the government’s strategy.

“We’ve already made it clear that this is precisely what we are doing. First of all, we have developed a medium- and long-term framework that shows our fiscal deficit coming down significantly,” he said.

In response to an editorial, former Minister of Finance Winston Jordan, Dr Jagdeo clarified that the current fiscal deficit is driven by large-scale capital projects. This includes highways, power plants, bridges, schools, hospitals, and road networks.

And, “When we have built out the schools and the hospitals and the road network … we don’t need capital expenditure on these issues [and] it will cause a massive reduction,” he said.

Another highlight from the IMF report is that Guyana’s real non-oil GDP grew by 13 per cent, which reflects robust performance across multiple sectors.   This level of growth is remarkable by global standards since many countries would consider 5 per cent to be high, Dr Jagdeo noted.

“Our non-oil sector is growing at 13 per cent and the oil sector is growing even more, but that is deliberate because it reflects a policy for keeping the economy diversified, which is one way of fighting off the Dutch disease.”

Dr Jagdeo also responded to scepticism about job creation, saying the IMF’s use of outdated 2021 figures, which were during the height of the COVID-19 pandemic, do not reflect the progress made since then.  In reality, over 60,000 jobs have been created since 2020, with many regions now facing labour shortages.