Sep 28, 2022 News
Kaieteur News – The International Monetary Fund (IMF) predicts that with rapid pace of oil production in the Stabroek Block, Guyana is expected to grow by 57.8 percent in 2022. In light of the extent to which oil accounts for this, the financial institution urged that there be greater efforts towards addressing institutional weaknesses and the diversification of the economy.
The IMF made the foregoing remarks as part of its concluding statements for its 2022 Article IV Consultation with Guyana.
During an Article IV consultation, an IMF team of economists visits a country to assess economic and financial developments. They discuss the country’s economic and financial policies with Government and central bank officials. Their officials also meet with parliamentarians and representatives of business, labour unions, and civil society.
The team reports its findings to IMF management and then presents them for discussion to the Executive Board, which represents all of the IMF’s member countries. A summary of the Board’s views is subsequently transmitted to the country’s government. In this way, the views of the global community and the lessons of international experience are brought to bear on national policies.
In its concluding statement, IMF Directors noted that oil production has increased significantly. In fact, they said the Gross Domestic Product (GDP) for oil is expected to grow over 100 percent in 2022 (with just two ships in operation), and by about 30 percent on average per year during 2023-26.
Furthermore, the IMF team said oil production has the potential to transform profoundly Guyana’s economy since overall real GDP growth rate is projected to be 57.8 percent in 2022. It was also noted that Guyana’s commercially recoverable petroleum reserves is expected to reach over 11 billion barrels, one of the highest levels per capita in the world. The officials said the magnitude of the oil wealth could help Guyana build up substantial fiscal and external buffers to absorb shocks while addressing infrastructure gaps and human development needs.
Nevertheless, considering the potential challenges related to volatility in global oil prices and effective management of natural resources, they highlighted the need for continued prudent policies and structural reforms to avoid buildup of macroeconomic vulnerabilities. They said such an approach would ensure inclusive growth and intergenerational equity, as well as address structural weaknesses and climate challenges.
Furthermore, the Directors said they welcomed the significant decline in public debt and the authorities’ commitment to maintain debt sustainability. They also praised the government’s restraint in using oil revenues before the passage of the recent amendments of the Natural Resource Fund Act and encouraged continued prudent management of oil revenues. The Directors, however, called for moderately ramping up public investment. They also encouraged the authorities to continue improving the targeting of social spending.
Importantly, the IMF Directors praised Government for its commitment to fully implementing the recently strengthened Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) framework, while encouraging further efforts in this area, in particular to strengthen the regulation of digital payments.
The IMF officials, in conclusion, commended the authorities’ progress in strengthening Guyana’s anti-corruption framework and fiscal transparency and encouraged continued progress on implementation of the recommendations provided by the Extractive Industries Transparency Initiative (EITI).
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