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World Bank urges Guyana to guard against volatile revenues and spending surges
(Kaieteur News) – The World Bank in a recent assessment of Latin America and the Caribbean (LAC) noted that Guyana’s rapidly expanding oil-driven economy must be carefully managed.
The bank flagged that while some Caribbean countries continue to struggle with high debt, oil-producing states like Guyana face a different but equally complex challenge-managing volatile revenues as government spending accelerates.
The report noted that countries benefiting from oil production like Guyana must avoid procyclicality where spending rises sharply during periods of high revenues but becomes difficult to sustain when prices fall. It noted that public debt trends remain uneven across the Caribbean and Central America. While several countries have reduced debt-to-GDP ratios through economic growth and fiscal consolidation, helping to stabilise public finances and bolster fiscal credibility, others continue to face significant sustainability challenges.
“Some highly indebted Caribbean economies continue to face challenges in achieving durable debt sustainability, while oil-producing countries such as Guyana confront the parallel task of managing revenue volatility and avoiding procyclicality as public finances expand rapidly,” it was stated.
The findings highlighted divergent economic trends across the region. The bank noted that among commodity exporters, Trinidad and Tobago and Suriname experienced sharp economic contractions during the pandemic due to falling international commodity prices, but has since seen a rebound alongside price recovery.
However, it highlighted Guyana for its exceptional performance, recording sustained and rapid Gross Domestic Product (GDP) growth since 2020, driven by the scaling up of offshore oil production.
“This expansion has been accompanied by rising fiscal revenues, improved external balances, and a declining public debt-to-GDP ratio, although the pace of growth also underscores the importance of strengthening public investment management, building institutional capacity, and ensuring that oil wealth translates into broad-based and inclusive development,” the bank noted.
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