It is believed that the effective use of Guyana’s newfound oil wealth will improve citizen’s living standards and the International Monetary Fund (IMF) believes sound fiscal and monetary policies are needed to support the country’s growth.
Already though, the Fund has acknowledged several positive policy interventions from the government.
The IMF, in a report issued on Tuesday at the conclusion of the body’s Article IV consultation with Guyana, highlighted that Guyana should experience a 57.8 per cent overall growth rate this year.
Of that amount, the oil economy would more than double (recording a 116.1 per cent growth rate) while the non-oil economy expects a 7.2 per cent increase.
And it was noted that fiscal policy in 2022 has been “appropriately supporting growth while considerably reducing the fiscal deficit”.
For context, fiscal policy refers to the use of government spending and tax policies to influence economic conditions.
In Guyana, the IMF noted that the 2022 National Budget reduced the country’s current spending by about one per cent of non-oil Gross Domestic Product (GDP) compared to 2021.
Beyond that, it acknowledged that important support for pandemic-related health expenditures and cash transfers to households to mitigate the impact of lockdowns continued.
Those measures, coupled with others implemented to cushion the impact of rising prices and those that saw heavier investments in the non-oil economy, were lauded.
Another important occurrence, the IMF noted, was the passage of the Natural Resource Fund (NRF) Act in December 2021 and the clear ceilings on withdrawals identified.
Anti-corruption and counter terrorism measures, the increased use of digital payments and Guyana’s revised Low Carbon Development Strategy (LCDS) were also viewed as positive developments- albeit with room for improvements.
Even as it hailed these policy interventions and more, however, the IMF also offered several suggestions for continued effective management of Guyana’s resources.
Fiscal policy, the report stated, should evolve over time and public enterprises such as the Guyana Power and Light (GPL) and the Guyana Sugar Corporation (GuySuCo) should be continuously reformed.
The IMF and local authorities also agreed that the value of the Guyanese dollar should not be increased just yet, as the country is still adjusting to its newfound oil wealth.
