Latest update April 11th, 2025 9:20 AM
Investor interest remains strong in Guyana—IMF
– warns of too much lending
Guyana’s economy is expected to grow 3.7 per cent this year, the International Monetary Fund (IMF) has projected.
According to a statement from the fund yesterday, the 3.7 percent is roughly in line with what was envisaged in the 2012 budget…4.1 percent but lower than the 5.4 per cent last year.
Guyana’s economy is set to grow 3.7% this year.
“This expected outturn builds on strength in the gold, agriculture (rice) and services (construction and transportation) sectors, which should offset any expected falloff in sugar production. Inflation is projected to pick up to about 4.6 percent by year-end, from 3.3 percent in
2011, reflecting higher energy and food prices,” IMF said in a statement on its recently concluded assessments on Guyana’s economy.
The meetings between IMF, Central Bank and government ended early November.
IMF routinely carries out what it calls Article IV consultations with its member states. Guyana is a member of the fund.
IMF noted that following general elections in November 2011, the political situation in Guyana, though largely stable, became more complicated, but investor interest has remained strong and confidence generally positive.
“In 2011, output expanded by 5.4 percent, buoyed by increased activity in the gold, agriculture and services sectors. Twelve-month inflation was 3.3 percent in 2011, reflecting pressures from higher food prices later in the year.”
Meanwhile, prudential indicators through end-March 2012, continue to improve, with rising capital asset ratios and falling non performing loans (NPLs).
“Banking system liquidity remains ample. Steady progress has been made in meeting the Millennium Development Goals (MDGs). The macroeconomic outlook for 2012 and the medium term remain generally positive.”
The increase in imports would cause gross reserves to fall to just under four months of imports.
According to IMF’s Executive Directors, the Guyana government should be commended for its policies that have supported macroeconomic resilience and sustained growth.
“Nonetheless, Directors noted that policy challenges remain for the near and the medium term, and encouraged the authorities to persevere with fiscal consolidation and structural reforms to strengthen debt sustainability and make growth more inclusive.”
The IMF lauded Guyana’s “continued commitment to fiscal prudence. They concurred that sustained budgetary adjustment is needed to avoid policy pro-cyclicality and rebuild buffers. While a number of Directors recommended a more ambitious fiscal effort for the period ahead, a few other Directors stressed the importance of better balancing medium-term fiscal objectives with the need to support growth in the near term.”
Guyana’s banks, IMF said, remain liquid and prudential indicators have been strengthening. “Against this backdrop, Directors encouraged the authorities to act preemptively should rapid credit growth undermine asset quality and inflation risks mount.”
IMF said it supported ongoing efforts to modernize the traditional sectors, notably sugarcane cultivation, and improve the business climate.
“They also recommended putting in place an effective and transparent fiscal framework for the extractive industries, including the establishment of a sovereign wealth fund and adherence to the Extractive Industries Transparency Initiative.”
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country’s economic developments and policies.
On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country’s authorities.
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