WITH a new energy industry bringing jobs and investment, it’s more important than ever that Guyana continues making progress towards modernising and bettering its business climate to generate sustainable growth across the economy.

The International Monetary Fund’s (IMF) much-discussed report, released earlier this month, on the state of Guyana’s economy may help to draw needed attention to this crucial element of development. Among other recommendations mostly covering resource management, the report also addressed concrete steps to make Guyana a better place to do business— steps that could help catalyse the formation of other industries here.
The IMF analysis found that reform measures to enhance economic diversification and boost inclusive growth “should focus on addressing skilled labour shortages and improving the domestic business environment to facilitate greater private sector involvement in the economy.”

Guyanese companies are already playing an active role in the energy industry with companies like Guyson’s and the Guyana Shore Base, but healthy reforms and smart investments could help Guyana make the most of a unique and massive opportunity.
The steps that the IMF laid out focused on structural reforms in governance and management practices, addressing a shortage of skilled labour, improving infrastructure, and reducing energy costs—all with the end goal of improving the overall ease of doing business here.

Smart reforms across these sectors could help achieve equitable growth by modernising traditional economic sectors and providing opportunities for new ones to grow and employ more people.

This column has already covered the importance of skill development through investments in education and training initiatives, so this time we’ll examine some of the other roadblocks for development that the report pointed out. We will also discuss the ways that the new oil wealth can be tapped to help ease those roadblocks.

“Improving the business environment,” the IMF says, mostly revolves around making foreign and domestic investors feel like Guyana is a safe place for their money by respecting the sanctity of contracts and property rights. Businesses need to see a stable and consistently implemented regulatory system in order to have peace of mind in making long term investment decisions.

The billions of US dollars in oil revenues that Guyana is expected to take in can go a long way to improve infrastructure development. As the IMF report highlighted, a lack of reliable infrastructure like bridges, a comprehensive road network, and modern storm defences has always been an issue in Guyana. Many international organisations have joined the IMF in calling for this to potentially be a priority item for spending oil revenues.

In terms of reducing energy costs, the IMF also pointed to the idea floated by some in government and industry to tap the small gas reserves that Exxon and its partners have found in the offshore Stabroek Block. These are likely too small to commercially export since exporting gas across oceans requires massive and expensive liquification terminals that are only economically practical at huge volumes. But that could be a boon for Guyana in the long run, since a simple pipeline could be built to bring enough gas to shore to lessen our national electrical grid’s dependency on imported fuel oil.

As the IMF noted, implementation of successful structural reforms “could add around 5 percentage points to non-oil real GDP by 2030.” That kind of additional growth could help make Guyana’s economy both more equitable and more prosperous.

By helping Guyanese businesses across all sectors become more competitive with their foreign counterparts, Guyana would be helping to insulate the economy from the inevitable rises and falls in oil prices over time by making the economy less beholden to a single commodity.

These kinds of changes could leverage oil wealth and political will to create a more healthy and diversified economy that provides opportunities for a broad swath of Guyanese.