IMF supports Guyana’s disciplined use of oil wealth to improve business climate, fix labour woes

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The International Monetary Fund (IMF) has praised Guyanese authorities for their disciplined use of the nation’s oil revenues to not only improve the business climate but also address labour woes.

The authorities’ commitment to fiscal discipline is welcome and allows for a balanced growth path, the IMF wrote in its Concluding Statement following its Article IV Mission in Guyana between August and September 2023. 

With the introduction of a strengthened Natural Resource Fund (NRF) Law in 2021 which allows for methodical withdrawals of oil revenues via a budgetary process, the IMF said such fiscal discipline is welcomed, adding that it lends to a balanced growth path.

IMF Staff also documented their strong support for the authorities’ use of the said withdrawals to improve the business climate and address labour shortages. “The authorities are preparing and implementing a range of reforms designed to increase the digitalisation of the economy and to boost labour and total factor productivity (such as single window processing of permits, digital ID and digital banking records),” the statement from the financial institution said.

The IMF also lauded authorities for making sustained efforts to address labour shortages by channeling strategic resources to facilities for vocational training, online training, and incentives to set up businesses outside the capital.

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IMF staff gave recognition to the government’s implementation of plans for a diversified energy mix that includes solar power and the imminent Gas-to-Energy project. Such initiatives are not only purposed to improve the reliability of the country’s electricity sector but could also increase Guyana’s attractiveness as an investment destination.

Over the medium term, the IMF said the foregoing efforts by the government will help to underpin real GDP growth which it predicts to be on average of 20% from 2024 to 2028. It forecasts that this will occur without creating macroeconomic imbalances. 

Furthermore, it said, “Public investment is expected to be financed primarily by oil revenues in the medium term. Public sector debt is also projected to decline gradually as a share of GDP over the medium term (after declining to 26 percent at end-2022, from 43.2 percent of GDP in 2021).”

The financial institution also noted that the real exchange rate is expected to appreciate, and inflation to increase, as the economy closes its development gap.

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