THE most recent findings by the International Monetary Fund (IMF) has effectively given the Guyana Government a ‘thumps up’ for its handling of the economy, especially in the context of the emerging oil-and-gas economy. And this, despite the adverse impact of the COVID-19 pandemic and the continuing negative impact on fuel prices and steep increases in the prices of other basic food items resulting from the war in Ukraine following the Russian invasion in February this year.
All of this is good news coming from an international financial institution that is generally known to provide sound and unbiased commentary on the economic and financial health of countries with which it does business. And even though Guyana has over the years weaned itself off IMF assistance programmes, the current level of interest in Guyana by the IMF and other financial institutions such as the Inter-American Development Bank, the World Bank and the Caribbean Development Bank continue to remain high, due in part to developments in oil and gas, but also to the country’s growing image as an investor-friendly nation and a rules-based and law-governed society.
According to the IMF preliminary findings, Guyana’s medium-term prospects are more favourable than ever before, with increasing oil production having the potential to transform Guyana’s economy, which could put the economy in a good position ‘to build up substantial fiscal and external buffers to absorb shocks, while at the same time addressing infrastructural gaps and human development needs.
The IMF’s preliminary findings can be seen as an endorsement of the country’s economic and fiscal policies of the PPP/C administration. More importantly, it is testimony of good governance, one that is responsive to the needs of the various segments of the population, which at the same time ensuring that the economic fundamentals of the economy are consolidated and strengthened. In fact, the stewardship of the economy came in for praise by the IMF, especially in terms of public investment and policies to sustain long-term growth and in ‘maintaining one of the region’s lowest levels of debt and progress in strengthening both the anti-corruption framework and fiscal transparency.’
From a governance perspective, the report lauded the PPP/C administration for amendments made to the Natural Resources Fund (NRF), which provides for a greater level of accountability and improved management of the country’s oil wealth.
The current engagements between the IMF team and local stakeholders were part of what is known as Article Four consultations which provided a mechanism for the IMF team to access economic and financial developments and have discussions on the country’s economic and financial policies with government and central bank officials.
As is to be expected, there may not be a complete convergence of thinking on policy issues, especially given the urgency to accelerate the pace and momentum of the country’s development. And while the IMF is supportive of public sector investments in key and transformational projects, it did sound a cautionary note in terms of ramping up investment which it felt could potentially add inflationary pressures within the local economy.
Guyana is today in a much better position to meet its financial obligations and to service its external debts because of greater and more sustainable revenue flows, thanks to oil and gas, but also to improved performance in the non-oil and gas sectors of the economy. The days when Guyana was unable to honour its debt obligations and when the country was declared ‘uncredit worthy’ by the IMF are long over. Guyana is today on a new path to development, one that is much more endowed in terms of resources and based on a development model within the overarching framework of a sustainable low-carbon development trajectory.
The PPP/C administration, as noted by the IMF, must be commended for the implementation of several policy initiatives and interventions to build a strong and resilient economy, which has now caught the attention of the international community and its several multilateral institutions.
