by Ravin Singh
Despite claims by some that Guyana’s economy is performing poorly, the International Monetary Fund (IMF) is reporting that the country’s economic growth has strengthened with real Gross Domestic Product (GDP) growing by 4.1 percent for 2018 – two percent more than the previous year.
The findings were presented in a concluding statement following the IMF’s 2019 Article IV Mission.
The Mission to Guyana was led by Mr. Arnold McIntyre who visited Georgetown during June 3–14 to hold discussions for the 2019 Article IV Consultation.
In its concluding statement, the mission reported that the growth in real GDP was led by the construction and services sectors.
This year, the mission projects real economic growth to be 4.4 percent, and this will be driven by the same sectors, ahead of oil production next year, and a strong recovery in the mining sector.
Inflation, it was disclosed, remained stable at 1.6 percent at the end of 2018, largely due to stable food prices and exchange rate.
Further, the international financial institution highlighted that credit to the private sector grew by 4 percent in 2018, compared to 2.1 percent in 2017. And while the banking sector nonperforming loans (NPLs) to total loans ratio fell slightly to 11.9 percent, compared with 12.2 percent the year before, the mission noted that significant progress were made in the legislature to strengthen the financial sector.
For 2018, four bills were approved by the Parliament, covering deposit insurance, emergency liquidity assistance, bank resolution, and national payment system.
However, the IMF was keen to note that the mission supports the authorities’ resolute efforts in implementing 2016 Financial Sector Assessment Program (FSAP) recommendations.
Despite a robust economic performance, however, the IMF highlighted the need for structural reforms to support economic diversification, and achieve inclusive and equitable growth.
The concluding statement specifically identified infrastructure bottlenecks, skilled labor shortages, and weaknesses in electricity supply as major obstacles to growth.
Against this backdrop, the mission supported the authorities’ proposed increase in investments to improve access to roads, electricity, and telecommunication services to enhance economic activities, including the hinterland.
Further, it was noted that simultaneous investment must be made to upgrade the country’s education system as this would enhance skills and employment prospects for the country’s human resource.
“To address skills gap and satisfy an expected increase in labor demand, Guyana could adopt more liberal or open immigration policies, including free movement of all categories of workers from other CARICOM countries. Promoting more flexible working arrangements could help increase female labor participation.” the statement recommended.
At the same time, the mission said it did not foresee any significant spillovers from the crisis in Venezuela at present. However, it was keen to note that the influx of migrants into the hinterland and rural areas could put socio-economic pressures on the local communities.
The Government has already established a National Multi-Sectoral Coordinating Committee which announced earlier this year that there are over 5,000 documented Venezuelan migrants in Guyana – the bulk of which has settled in Region one (Barima-Waini).
As such, efforts are being made to introduce a programme to help them become self-sufficient, through funding from the Australian Government. The programme, which is being spearheaded by the International Organisation of Migration (IOM), provides the migrants and locals with support in the agricultural sector.
(Top Photo of Kingston in Georgetown by Keron Bruce)
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