–IMF acknowledges, traces path to progress

GUYANA’S economic transformation was built on decades of reform and institution-building that began long before oil, the International Monetary Fund (IMF) said in its 2026 Article IV report, concluded by the Executive Board this week.

The Fund again recognised Guyana as the only one of the 37 countries in the Heavily Indebted Poor Countries (HIPC) Initiative to reach high-income status, a point it first made in its 2025 review.

This year’s report highlighted that Guyana’s public debt, around 29 per cent of GDP at the end of 2025, is now among the lowest in the Western Hemisphere. A joint IMF and World Bank analysis rates the risk of both external and overall debt distress as low.

Using World Bank classifications, the report noted that Guyana reached lower-middle-income status in 2014 and upper-middle-income status in 2016, both before production began in 2019. It reached high-income status in 2023, less than four years after first oil.

The IMF dated the reform drive to 1988 and especially to the restoration of democracy in 1992. It described market-oriented reforms covering liberalisation, privatisation, exchange rate unification, and the fiscal, financial, public-enterprise and social sectors.

Growth averaged about 5½ per cent a year in 1992-99, compared with an average contraction of three per cent a year in 1980-88.

Inflation fell from over 100 per cent in 1991 to single digits by 1995, and the public sector deficit shrank from close to 20 per cent of GDP in the early 1990s to below 1 per cent after grants by 1999.

President Dr. Irfaan Ali, on Monday, set out how far the country had fallen before that recovery. Guyana did not enter independence in 1966 with an extreme debt burden, he said, but policies in the 1970s, including nationalisation and the expansion of state-owned enterprises, enlarged the public sector’s role in the economy.

Weak productivity, loss-making public enterprises, persistent government and external deficits, and dependence on a narrow range of commodity exports led to falling production and a foreign-exchange crisis.

The country lacked the revenue, export earnings and foreign currency to service its debt or pay for essential imports, he said, and its creditworthiness collapsed. He said the debt burden left Guyana unable to invest in education, health, housing, water and pensioners, and contributed to mass migration and the breakdown of the social fabric.

When the People’s Progressive Party/Civic (PPP/C) took office in 1992, President Ali said, debt levels were still exceptionally high. He credited successive PPP/C governments with making “enormous strides towards reducing our debt,” helped by debt rescheduling and international relief.

The IMF’s annex lists three Paris Club rescheduling operations between 1991 and 1995, and a stock-of-debt operation on Naples terms in 1996.

In 1997, Guyana was the first country to qualify under the HIPC criteria for highly open economies with a heavy fiscal burden of external debt.

President Ali said that after the country reached the original HIPC completion point in 1999, the resources freed up supported poverty-reduction programmes and investment in health and education. Guyana completed the enhanced HIPC process in 2003.

In 2006 and 2007, the IMF, the World Bank and the Inter-American Development Bank cancelled a further US$611 million under the Multilateral Debt Relief Initiative, according to the figures cited in the address.

President Ali described 1999 to 2011 as an important period for stabilisation, debt management and public investment, with spending on housing, roads, schools, health facilities, water and telecommunications. He also pointed to growth in gold, rice, construction, services and remittances, and to the confidence that political stability brought to the economy.

The IMF’s account of the following years is one of discipline after relief. Deficits averaged about 2¾ per cent of GDP over 2007-19, in line with the HIPC median, while revenues outperformed those of HIPC peers throughout the pre-oil period.

By 2019 the debt ratio had fallen below the HIPC median. The report credited institutions built before the oil windfall, including the Fiscal Management and Accountability Act and the Procurement Act (2003), the Audit Act (2004), the value-added tax regime (2007), and the Natural Resource Fund with its explicit withdrawal rules.