IMF国际货币组织全球-Guyana_2019-Article-IV-Consultation_91页_2mb

GUYANA: 2019 ARTICLE IV CONSULTATION SUMMARY

Core Content

The 2019 Article IV consultation with Guyana, conducted by the IMF, focused on assessing the country's economic performance, medium-term outlook, and policy frameworks. The consultation concluded on August 30, 2019, following discussions with Guyana's officials from June 14, 2019.

Guyana experienced broad-based economic expansion in 2018, with real GDP growth reaching 4.1% compared to 2.1% in 2017. The construction and services sectors were key drivers of growth. Inflation remained low at 1.6% in 2018, while the external current account deficit increased to 17.5% of GDP due to higher oil-related imports, financed by foreign direct investment (FDI). Public finances improved, with the central government deficit at 3.5% of GDP, below the budgeted 5.4%.

Main Views

Economic Growth and Outlook

• Growth Prospects: The economy is projected to grow at 4.4% in 2019, with continued expansion across all major sectors.
• Oil Production: Oil production is expected to begin in early 2020, with an initial average of 102,000 barrels/day (bpd), rising to 424,000 bpd by 2025.
• Impact of Oil: The oil sector is projected to grow rapidly, contributing around 40% of GDP by 2024 and supporting an average of 6.5% of non-oil GDP in additional fiscal spending.
• Debt and Current Account: Public debt and the current account deficit are expected to decline significantly after oil production begins, with public debt projected to fall to 15.8% of GDP by 2024.

Fiscal Policy

• Natural Resource Fund (NRF): The NRF Act 2019 provides a framework for managing oil wealth, including a budget transfer rule to guide fiscal transfers.
• Fiscal Framework: The fiscal framework should be strengthened to ensure discipline and prevent deficits, especially as oil revenues increase.
• Absorptive Capacity: The authorities must monitor the economy's ability to absorb increased spending and ensure efficiency in public investment.

Monetary Policy and Exchange Rate

• Monetary Stance: The monetary policy should gradually revert to a neutral stance to avoid inflationary pressures as public spending increases.
• Exchange Rate Flexibility: Developing a more flexible exchange rate regime in the medium term will help manage oil price shocks and maintain price stability.

Financial Sector

• Nonperforming Loans (NPLs): The NPL ratio decreased slightly to 11.9% in 2018, but remains high.
• Capital Adequacy: Average capital to risk-adjusted assets increased to 29.6%.
• FDI and Reserves: The financial account improved due to higher FDI inflows, and gross reserves declined to 2.1 months of imports.

Key Policy Recommendations

• Fiscal Responsibility Framework: Complement the NRF with a fiscal responsibility framework to ensure sustainable management of oil revenues.
• Monitor Absorptive Capacity: Continuously monitor the economy's ability to absorb increased spending and be prepared to scale back if needed.
• Improve Public Investment Management: Address shortcomings identified in the 2017 Public Investment Management Assessment (PIMA) and expenditure review before scaling up public investment.
• Strengthen Financial Sector Resilience: Implement the 2016 FSAP recommendations and address high nonperforming loans and under-provisioning.
• Enhance Competitiveness and Governance: Promote economic diversification, reduce youth unemployment, improve female labor participation, and strengthen governance and transparency frameworks.
• Boost Inclusive Growth: Improve the business climate, reform public enterprises, and address skills shortages and infrastructure gaps.
• Climate-Resilient Infrastructure: Develop infrastructure networks that are resilient to climate change.

Risks and Challenges

• Downside Risks: Increased dependence on oil revenues could expose the economy to oil price volatility and lead to the "natural resource curse," with inflationary pressures, loss of competitiveness, and governance concerns.
• Upward Risks: Effective management of further oil discoveries and production could lead to significant long-term economic benefits.
• Non-Oil Sectors: A slowing global economy may impact non-oil exports such as sugar and rice.

Institutional and Governance Issues

• Transparency and Accountability: Continued efforts are needed to implement the 2019 Extractive Industries Transparency Initiative Report recommendations.
• Anti-Corruption: Strengthening anti-corruption frameworks, including the work of the Integrity Commission, is essential to improve governance and investor confidence.
• Capacity Building: Addressing institutional capacity weaknesses will help in the implementation of reforms and policy actions.

Summary of Key Economic Indicators

Conclusion

The IMF Executive Board welcomed Guyana's economic progress and highlighted the importance of managing the oil wealth effectively to ensure long-term sustainable growth. It emphasized the need for structural reforms, fiscal discipline, and improved governance to harness the benefits of oil production while mitigating associated risks. The consultation also called for continued efforts to strengthen transparency and accountability in the natural resource sector.