Other sectors falling flat, but oil will see Guyana grow by 57% this year – Central Bank

The Central Bank of Guyana has now projected that Guyana’s economy will grow by 57 percent this year, mostly owing to the oil sector as other sectors take a nosedive.

The new target was reduced from the 87 percent projected at the start of the year as a result of the COVID-19 pandemic.

“With oil, after COVID, we would have projected a 57 percent growth in GDP which would have been a significant decline from where we were projecting to be prior to COVID,” Governor of the Bank of Guyana, Dr. Gobind Ganga said on Thursday night.

He was at the time speaking on the Central Bank of Barbados’ Caribbean Economic Forum with Central Bank Governors from Jamaica, Barbados and the Eastern Caribbean.

Guyana, which has seen a growth rate of between two to eight percent in recent years, was expecting a windfall from its oil revenues having started production offshore in December 2019.

With the COVID-19 pandemic and despite that sector seeing a sharp decline in prices, it may be the only industry responsible for a positive growth rate this year.

“Non-oil growth will be negative 5-7 percent.

“It could even be more if this is prolonged because major sectors would have been hit such as the services sector, transport, communication, education, administration, likewise wholesale and retail.

Light manufacturing would have also been affected, so would have been agriculture sub-sectors,” Dr. Ganga said.

The sectors he pointed to were all impacted as the country is in its third month of a dusk to dawn curfew and other COVID-19 guidelines which prohibit many businesses from operating.

For its first 1 million barrels of oil, Guyana in February received US$54.9M.  For its second lift in May, it received just US$35M as the commodity price fell.

The total holdings of the Natural Resources Fund (NRF) as at June 11, 2020, is US$94.9M

“It doesn’t necessarily mean everything has gone, we are still looking forward to some stability,” the Central Bank Governor noted Thursday.

According to Dr. Ganga, inflation rate is below 1 per cent and the exchange rate remains relatively stable.

With fiscal monetary policies which include removal of VAT on utility, removed VAT on domestic air travel, paying pension earlier, remove excise duties on sanitise products, deferral of tax payments, he noted that Central Bank has done its part in trying to provide more disposable income to citizens.