RECENTLY, the International Monetary Fund (IMF), an independent financial agency of the United Nations that includes 190 countries, published their 2022 Article IV Consultation report on Guyana. These reports are done regularly by the organization, and offer a comprehensive insight into a country’s economy’s financial prospects. This kind of analysis is critical to understanding whether Guyana’s rapidly increasing oil production is leading to economic transformation, and whether or not the economy remains healthy and diverse across multiple sectors.

Guyana’s oil-and-gas sector has already contributed significantly to the economy through increased revenues, and oil sector gross domestic product (GDP) is expected to grow more than 100 per cent this year, with roughly 30 per cent average growth continuing for most of the decade, according to the report. But diversification in other non-oil sectors, and government investment in innovative policies will be a key element for driving sustainable growth.

In the report, the IMF highlighted the success of Guyana’s diversification efforts. According to the IMF, over the next five years, Guyana will continue to see significant growth in its non-oil economy, with non-oil sectors accounting for 32 per cent to 40 per cent of total GDP, from 2022 through 2027. The report added that non-oil GDP growth is expected to average five per cent per year, while inflation is set to ease, thanks to more stable projected international food and fuel prices. The IMF also noted that oil is providing a “substantial buffer” during a difficult global economic climate.

This year, the country’s sugar and rice industries started to recover after a series of floods hampered those industries. Sugar and rice cultivation, alone, are projected to grow by almost 12 per cent and 25 per cent respectively, according to the government’s projections. These investments will go a long way in encouraging investments in regional agriculture to reduce the regional food-import bill by 2025. This level of investment and development in Guyana is an important indicator of the government proactively working to avoid the resource curse and Dutch Disease early in its oil- producing history.

Finance Minister Dr. Ashni Singh recently pointed to plans by the administration to usher in diversification and transformation.
“Our government has laid out a masterplan for the rapid development and transformation of Guyana. More importantly, we have demonstrated the capacity and commitment to working assiduously to make this vision a reality, so that benefits can redound to citizens in the shortest possible time,” Dr. Singh said.

The government has prioritised legislation, like the Local Content Act 2021, that advances the country’s framework for managing the oil-and-gas sector, while prioritising Guyanese companies and workforce development. The IMF report noted that “capacity development needs are large, and they need to be prioritised carefully”, before it commended the government’s efforts on human capital development, including technical and vocational education.

The IMF specifically cited public investments in infrastructure as a key factor supporting development needs, and complimented the government for its 2022 budget, and taking strong steps to reduce deficits, using oil revenues. Another example is the G$74.4 billion allocation for education in the 2022 budget that represents a 22 per cent increase over 2021, and while significant, is just a fraction of the expected Natural Resource Fund deposits. Even in healthcare, the G$73.2 billion allocation for this year’s budget is a 36 per cent increase over 2021, with the potential for even greater investments in the years to come. The government is utilising oil revenues to bolster these other sectors as a coordinated initiative to avoid the resource curse.

President Irfaan Ali, in a Financial Times article in May discussing Guyana’s efforts to avoid the oil curse, shared his vision for a transformed Guyana.
He said: “We are investing in healthcare and education to fulfil the needs of Guyanese; we’re investing in healthcare and education as important foreign currency earners of the future.”
“Guyana can become a health and education hub for South America, for the Caribbean, and the huge diaspora that resides in North America,” Dr. Ali said.

Thanks to the oil revenues flowing into Guyana, economic growth is nearing 60 per cent for 2022. The exponential growth in both the oil and non-oil sectors is a product of both good fortunes in oil and deliberate effort by the government to develop the economy. It is also a testament to the effectiveness of early action on Guyana’s part to learn from other countries’ examples and undertake the right initiatives and investments to avoid the resource curse.