Government eyes infrastructure investment amid multi-billion-dollar capex drive, Finance minister tells LatinFinance

GUYANA is pressing ahead with bold plans to channel billions of dollars in investment into non-oil sectors, including infrastructure, in a bid to boost the economy’s long-term competitiveness and to limit dependence on fossil fuels following the discovery of vast oil reserves off its coast, the country’s Finance Minister said.
“We are going to pump as much oil as we can, but we want to ensure that our non-oil sectors are competitive, sustainable and diverse,” Guyana’s Finance Minister, Ashni Singh, told LatinFinance in an interview. “Our focus is the economic diversification of Guyana.”

The government has identified transportation infrastructure, energy, agriculture and tourism as drivers of its plan to dramatically remake the country over the next five years, transforming it into a hub for the north of South America. Singh said Guyana plans capital expenditure of roughly $1.5 billion annually in the coming years to make this happen.
He said its infrastructure agenda will be financed via domestic capital mobilisation but also with the support of multilateral and commercial financing. Guyana’s sovereign wealth fund, created following the discovery of oil, currently has in excess of $1.8 billion in reserves.

“Improvement of transportation infrastructure will open economic spaces. It will increase trade and economic integration, laying the foundation for non-oil sectors to expand,” Singh said on the sidelines of the World Bank/IMF annual meetings in Marrakech, Morocco.
Guyana’s oil production is targeted at 1.2 million barrels a day by 2027, turning it into the world’s fourth largest offshore oil producer, following the discovery of massive oil reserves off the country’s coast by ExxonMobil.

BRAZIL LINKS

“While oil is great news, we are mindful of the challenges posed by high growth from natural resources and know they are finite. So, it is paramount that we use this period to transform our economy and the non-oil sector,” he said.

Guyana has begun construction of an all-weather highway to Brazil and is improving road links to Suriname. The highway to Brazil will allow Brazilian agri-businesses in the north of that country to reach Guyana’s ports in less than 12 hours, instead of up to six days to get to their own coast. A companion plan is in energy, which is focused on replacing inefficient and costly fuel oil-based generation to improve manufacturing capacity and quality of life for the country’s 750,000 people.
Guyana will double installed capacity and replace existing plants in the next three years with 300MW of gas-powered plants and 100MW in solar power. It will also add mini grids in small towns and provide individual solar panels to 30,000 households.

In agriculture, Singh said the country’s aim is to be the “bread basket” of the Caribbean, exporting food to neighbours. It is opening up 50,000 acres of new farmland that will be used for traditional crops, such as rice and sugarcane, but the government also wants to replicate the success of neighbouring Brazil with soybeans, corn and, potentially, tropical varieties of wheat.

HOTEL BOOM

The attention from oil has increased overall interest in the country, including as a tourism destination. Today, eight internationally-branded hotels are under construction in Georgetown, the capital, which will add around 3,000 hotel rooms. European, Latin American and U.S. airlines have entered the market of increased flight frequencies in the past two years.
The non-oil economy grew by 8.3per cent in the first half of 2023 from a year earlier, compared to 36.4per cent for the overall economy. Overall, Guyana’s economy expanded by more than 62per cent last year and is forecast to finish 2023 with 38per cent growth. The government is anticipating sustained annual growth above 20per cent for the remainder of the decade.
The IMF, in its latest regional economic outlook, pegged Guyana’s growth next year at 26.2 per cent, compared to the average for Latin America and Caribbean of 2.3 per cent. Business Monitor International, a division of Fitch, said in a September report that cumulative growth over the next five years would be 115 per cent. (Credit: LatinFinance)