The IMF’s 2025 Article IV Mission report highlights Guyana’s exceptional GDP growth, driven by oil production and public infrastructure investment. Projections indicate a GDP growth of 10.25% in 2025, with an expected uptick in inflation and a decline in the fiscal deficit. The medium-term outlook remains positive, necessitating monitoring of macroeconomic trends, fiscal discipline, and continued governance reforms.
The International Monetary Fund (IMF) has released a Staff Concluding Statement regarding Guyana’s economic performance during the 2025 Article IV Mission. The report highlights the country’s remarkable economic growth, which is driven by escalating oil production, a strong non-oil sector, and considerable public infrastructure investment.
Guyana boasts the highest real GDP growth rate globally, averaging 47 percent from 2022 to 2024. The IMF indicates this growth is supported by a vigorous non-oil sector, particularly in construction and services, with a projected real GDP growth rate of approximately 10.25 percent in 2025, and a non-oil economy expansion of around 13 percent.
Despite the rapid economic growth, inflation is expected to increase slightly to four percent by the end of 2025, an increase from nearly three percent in 2024. The fiscal deficit is projected to decrease from 7.3 percent of GDP in 2024 to below five percent in 2025, bolstered by rising oil revenues that offset public spending.
The IMF anticipates that Guyana’s substantial current account surplus, at 24.5 percent of GDP in 2024, will decline to about nine percent in 2025 due to imports associated with the construction of the fourth oil Floating Production Storage and Offloading (FPSO) vessel.
The medium-term economic outlook remains optimistic, with average annual growth expected at 14 percent over the next five years, largely attributable to the oil sector and an expanding non-oil economy, projected to grow about 6.75 percent per year. Meanwhile, potential overheating risks necessitate careful management to avert inflationary pressures and real exchange rate appreciation, which could hinder sustainable growth.
The IMF praised Guyana’s authorities for their commitment to macroeconomic stability and fiscal sustainability. While no signs of overheating have been detected, continuous monitoring of macroeconomic trends is essential to maintain balance. The positive effects of social transfer policies on income and poverty reduction were also acknowledged, alongside recommendations for targeted transfers to support sustainable development goals.
The IMF deemed the fiscal policy appropriate, advocating for a gradual reduction of the fiscal deficit in the medium term. The increased withdrawal limit from the Natural Resource Fund (NRF) in early 2024 allowed for substantial capital expenditure. Aiming for fiscal sustainability, the IMF encouraged reducing the fiscal deficit and suggested creating a robust medium-term fiscal framework.
In terms of monetary policy, the IMF supports a tight stance to control inflation and recommends aligning money supply growth with non-oil GDP growth, while managing banking system liquidity. Moreover, enhancing financial markets and improving the interest rate transmission mechanism are advised for more effective monetary policy.
An emphasis on strengthening Guyana’s macroprudential framework to ensure financial stability was also made. Key priorities mentioned include real-time supervisory frameworks, improved data collection, and enhanced banking supervision by the Bank of Guyana.
The IMF commended Guyana’s progress in governance within the NRF and modernization of public sector operations, particularly in transparency regarding petroleum revenues and the implementation of e-procurement systems. Additionally, strides in Anti-Money Laundering (AML), Combating the Financing of Terrorism (CFT), and the Extractive Industries Transparency Initiative (EITI) were recognized.
Furthermore, the authorities’ commitment to addressing climate change through the Low Carbon Development Strategy 2030 underscores their focus on initiatives like the Gas-to-Energy project, which aims to provide reliable electricity while advancing cleaner energy.
Efforts to promote inclusive growth and enhance labor skills, particularly to remedy labor shortages and skill mismatches while increasing women’s participation in the workforce, were applauded by the IMF. Policies to enhance productivity, trade connectivity, and export diversification further support this goal.
In conclusion, the IMF reaffirmed its support for Guyana’s efforts to modernize statistical systems, which are essential for informed policymaking. The updates planned for national accounts and household budget surveys, alongside regular labor force surveys, will deliver critical data to shape future government policies.
The IMF’s report underscores Guyana’s exceptional economic performance, fueled by significant oil production and infrastructure spending. While the future outlook remains positive, careful monitoring of fiscal policies and inflationary risks is imperative. Continued commitment to transparency, governance reforms, and sustainable practices will play vital roles in supporting the country’s economic trajectory moving forward.
Original Source: newsroom.gy
