Guyana’s economy is heading into rocky waters

Dec 04, 2025 Features / Columnists, Peeping Tom

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(Kaieteur News) – Guyana’s economy has been on an extraordinary growth trajectory. This growth has been fuelled almost single-handedly by the country’s rapidly expanding oil sector. But beneath the headline numbers and record-breaking GDP growth lies a vulnerability that policymakers have been slow to confront.

Guyana is dangerously dependent on oil exports at a moment when global oil prices are slipping, and are expected to slip even further. The trajectory of global energy markets suggests that Guyana may be heading into rocky economic waters, and that its current development strategy may not be sustainable.

In April 2024, Brent crude peaked at US$93 per barrel, driven by geopolitical tensions and supply fears. That surge offered Guyana a temporary revenue windfall and reinforced the widespread illusion that high oil prices would remain the norm. But for more than a year since that peak, prices have steadily trended downward. Today, they hover far below that 2024 high and are forecast to average around US$60 per barrel by 2026. Some analysts warn that prices could dip even lower, possibly into the US$55 range, as global supply exceeds demand and major producers ramp up output.

This spells trouble for Guyana. Exxon’s operations in the Stabroek Block remain profitable even at lower prices, thanks to unusually favorable fiscal terms and low production costs. But Guyana’s share of the oil proceeds, which depends heavily on the market price is far more vulnerable. If Brent slips below the US$60 mark, the country’s projected revenues could shrink sharply, creating a fiscal crunch just as the government is scaling up its spending commitments.

This looming reality may explain why the President has, quite sensibly, been warning citizens not to raise their expectations. Those warnings, though understated, reflect the fact that Guyana may not, next year, earn as much as it hopes. With ambitious development plans, skyrocketing expenditures, and multi-year megaprojects underway, the government’s budget is increasingly tied to oil revenues that may soon fall short.

A prolonged decline in oil prices would have a cascading effect across the economy. The national budget, which has ballooned year after year, is built on assumptions of robust oil revenues. If those revenues fall, Guyana may be forced to borrow more heavily to sustain its development agenda. A country that once prided itself on financial prudence could suddenly find itself digging deeper into debt, eroding long-term fiscal stability.

This is why the current production strategy raises serious concern. With oil prices falling and oversupply threatening further declines, Guyana should have been scaling back production to preserve the value of its resource. Instead, the country is doing the opposite.  Government officials continue to boast about rising production levels, as if higher output can magically compensate for weaker prices. But pumping more oil in a declining market does not increase revenue it accelerates resource depletion while fetching lower returns.

This contradiction stems from Guyana’s lack of a clear, documented depletion policy. What passes for a “policy” seems to exist only in someone’s head. And that unwritten blueprint appears to prioritise pumping as much oil as possible, as fast as possible, regardless of market conditions.  Such a strategy might benefit Exxon Mobil and its partners, but it does not serve Guyana’s long-term national interest. When prices are sliding due to global overproduction, the logical response is certainly not to add more barrels to an already saturated market.

Even more troubling is the government’s persistent insistence on presenting massive annual Budgets, each larger than the last, as though revenue constraints do not apply. A Budget is not merely an exercise in ambition; it must be grounded in fiscal realism. Welcoming another oversized Budget at a time when oil revenues are forecast to decline is a recipe for future austerity, stalled projects, or a heavy reliance on borrowing.

If oil prices continue their downward slide, as most independent forecasts suggest, the country will face difficult choices. Should it cut spending? Delay capital projects? Increase borrowing? Or renegotiate fiscal terms to secure a fairer share from its offshore wealth? None of these paths are easy, but the worst choice would be to ignore the risks entirely. The oil boom has given Guyana a rare opportunity, but that opportunity is not infinite. The belief that prices will remain high forever has evaporated. Guyana now needs a strategy rooted in caution, diversification, and realism. If it fails to adapt, the country could find itself navigating far rougher economic seas in the years ahead. And with little to show for the wealth that once flowed so freely.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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• economy, Oil exports, oil sector, Peeping Tom, rocky waters

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