need to manage the risks of large inflows
to prevent overheating the economy and
GUYANA Key conditions and Dutch Disease effects. The development of
the oil and gas sector also implies the need
challenges to implement ambitious domestic mea-
sures to achieve net-zero emissions as oil
Table 1 2021
Guyana is going through a period of ex- production is expected to cause a steady
Population, million 0.8
ceptional growth with the development of increase in GHG emissions.
GDP, current US$ billion 8.1 its oil and gas sector. Real GDP per capita For sustainable pro-poor growth, more
GDP per capita, current US$ 10259.9 is expected to reach US$ 26,000 by 2024, efficient and effective public service de-
a 97.8
School enrollment, primary (% gross) more than double 2020 levels, with the livery is essential including in health,
a 70.0 share of the oil and gas sector rising to ap- education, and digital connectivity. This
Life expectancy at birth, years
Total GHG emissions (mtCO2e) 22.3 proximately 74 percent of total GDP. Nev- will also require sound and transparent
Source: WDI, Macro Poverty Outlook, and official data.
ertheless, agriculture, gold, bauxite, and management of oil revenues to avoid
a/ WDI for School enrollment (2012); Life expectancy timber production remain relevant as they increased polarization and further ero-
(2020). account for a significant share of jobs. sion of already weak institutions. It also
The transformation also implies a signif- requires adjusting the current foreign ex-
icant increase in revenues which, up to change regime including greater flexibility
2021, were being saved in a Natural Re- to respond to shocks and boost compet-
source Fund (SWF) outside of the econo- itiveness. Guyana’s exchange rate regime
my. A Natural Resource Fund (NRF) Act, remains a de facto stabilized arrangement
Guyana's economy is expanding at an ex-
adopted in December 2021, introduced a with foreign exchange rate interventions.
traordinary rate fueled primarily by the ex- revised framework for the management
traction and export of crude oil. Local-con- and transfers from the SWF. The Act al-
tent rules will support non-oil economic lows transfers to the budget starting in
activity. In parallel, increasing oil and gas 2022 which should average between 4 to 5 Recent developments
percent of GDP over the medium term.
revenues will allow financing to address Guyana's resource wealth contrasts with Real GDP expanded by 20 percent in
development needs and tackle poverty. the overall needs of the population, 2021, owing primarily to an expansion
Nevertheless, significant risks remain in- marked by ethnic and social polarization. of oil production, which averaged about
cluding management of oil wealth to avoid Poverty and social exclusion, including 110,200 barrels per day. The non-oil
limited access to basic services, are partic- economy also expanded, rising by 4.7
Dutch disease effects and inflationary pres-
ularly severe in Guyana’s hinterland and percent in 2021 reflecting a recovery
sures. Improvements in the quality of pub- among Amerindians. in construction and services. Agriculture
lic spending are critical. Guyana’s develop- As increased fiscal revenues will allow contracted due to the impact of adverse
ment is dependent on mitigating ethnic Guyana to boost outlays, there is a need to weather conditions during the year. In-
tensions, strengthening institutions, and ensure that spending is efficient and that flation averaged 6.2 percent in the first
reforms support private sector growth half of 2022, reflecting higher food
upgrading infrastructure. while also addressing social and infra- prices which rose by 10.2 percent during
structure gaps. In parallel, Guyana will the same period.
FIGURE 1 Guyana / Oil production, real oil, and real non-oil FIGURE 2 Guyana / Selected food insecurity indicators in
GDP, 2019-2024 December 2021
Real GDP (G$B, 2012 prices) Oil production (thousand barrels per day) Percent of households
5,000 450 50
4,500 400
40
4,000 350
3,500 30
300
3,000
250
2,500 20
200
2,000
150 10
1,500
1,000 100
0
500 50 Ran out of food Ran out of food An adult did not An adult could
[pre pandemic, [last 30 days] eat for an entire not eat healthy
0 0 feb-2020] day and nutritious
2019 2020 2021 e 2022 f 2023 f 2024 f [last 30 days] food
Oil GDP Non-Oil GDP Oil Production (rhs) [last 30 days]
Source: World Bank staff estimates. Source: World Bank staff estimates based on World Bank and UNDP LAC High
Notes: f=forecast. 2024 values assume full-capacity production in Liza I and II. Frequency Phone Surveys, Phase II, Wave 2.
MPO 1 Oct 22
Negative impacts from the pandemic on despite increased spending on imports of the international reserves position will
employment and household income per- food and fuel. gradually improve to average above 2
sisted in 2021 and are likely to have in- months of total imports.
creased poverty and food insecurity. The The fiscal deficit is expected to narrow to
World Bank - UNDP High-Frequency an average of 1 percent of non-oil GDP
Phone Survey conducted in June and De- Outlook underpinned by a strong increase in rev-
cember 2021 showed that about 40 percent enues. Increased revenues, largely tied to
of households ran out of food due to a lack Guyana's economy is expected to remain inflows from the NRF will help offset high-
of money or other resources within the 30 one of the world's fastest-growing in the er spending on capital infrastructure pro-
days preceding the survey. Furthermore, medium term (2022-2024), with real GDP jects, wages, and transfers. In this context,
almost half of the households had still not expanding at an annual average rate of public debt is expected to fall to 18.2 per-
recovered their pre-pandemic level of in- 34.7 percent. This reflects a more than cent of GDP by 2024.
come. Recovery was uneven. While male tripling of oil production capacity to Guyana’s increasing reliance on the ex-
unemployment was nearing the pre-pan- around 418,000 barrels per day by 2024. tractive sector raises its vulnerability to
demic level in the third quarter of 2021 (lat- Non-oil growth will also accelerate aided oil-related shocks. It also faces well-
est data available), the female unemploy- by new bauxite, sand and stone, and gold known risks associated with resource-
ment rate remained elevated. mining capacity, as well as a rebound in dependent economies, increasing reliance
The fiscal deficit increased by 0.8 percent- the agricultural sector following devastat- on the state which can affect private sec-
age points to 10.1 percent of non-oil GDP ing floods in 2021. Inflation will remain el- tor competitiveness, and an erosion of in-
in 2021. The widening was primarily dri- evated as a result of increased government stitutions. Maintenance of an operational
ven by increased spending tied to flood re- consumption, higher input costs, and sup- SWF is central to mitigating the imbal-
lief assistance to farmers and households ply chain disruptions. This threatens the ance between the resource inflow and
in response to the floods in 2021, and capi- purchasing power and food security of the economy’s absorptive capacity while
tal expenditure. Public debt fell to 38.6 per- poor and vulnerable households. also limiting waste. Moreover, oil pro-
cent of overall GDP in 2021 due to in- Poverty reduction will depend on the per- duction has environmental consequences
creased economic growth. formance of the non-oil economy through that must be carefully considered, and
The current account deficit (CAD) job creation, including those linked to pub- the sector may face additional risks as
widened to 20.5 percent of GDP in 2021, lic investment projects and local content the world transitions away from fossil
driven largely by the importation of for the oil sector, as well as the redistribu- fuels. Furthermore, the pandemic result-
Guyana’s second floating production stor- tion of resource revenues. The government ed in severe disruptions in education
age and offloading (FPSO) vessel, Liza has been proactive in reducing taxes and with a third of school-aged children not
Unity, and increased net service payments. increasing transfers to vulnerable busi- attending school in mid-2021. If result-
The CAD was primarily funded by private nesses and households to mitigate the im- ing learning gaps are not addressed, this
inflows, while international reserves in- pact of rising prices. can have substantial long-term impacts
creased by 19.1 percent to US$ 810.8 mil- Increased exports of oil, gold, and baux- on welfare. Given Guyana’s history of
lion (1.7 months of total imports). With the ite, as well as lower imports, will trans- ethnically polarized protests, the possibil-
non-repetition of the exceptional import form the current account into an annual ity of civil unrest challenging the gov-
for the mining sector, the current account average surplus of 33.2 percent of GDP ernment's authority constitutes another a
recorded a surplus for the first half of 2022 over the medium term. In this context, risk to the economic outlook.
TABLE 2 Guyana / Macro poverty outlook indicators (annual percent change unless indicated otherwise)
2019 2020 2021 2022e 2023f 2024f
a
Real GDP growth, at purchaser prices (total) 5.4 43.5 20.0 57.8 25.2 21.2
b
Real GDP growth, at factor prices (non-oil) 4.3 -7.3 4.7 10.7 6.9 6.8
Agriculture -0.5 4.1 -9.1 12.1 2.6 2.1
Industry 5.4 -10.5 5.2 8.7 5.8 4.2
Services 6.3 -11.6 13.2 11.0 9.7 10.4
Inflation (Consumer Price Index) 1.4 1.0 4.8 6.5 6.0 5.0
c
Current Account Balance (% of GDP) -54.6 -15.0 -20.5 42.3 29.6 27.7
Net Foreign Direct Investment Inflow (% of GDP) 32.8 37.7 54.9 -36.9 -23.1 -18.0
d
Fiscal Balance (% of GDP) -2.8 -9.4 -10.1 -1.4 -1.1 -0.4
Debt (% of GDP) 34.2 47.4 38.6 22.0 20.0 18.2
d
Primary Balance (% of GDP) -2.0 -8.6 -9.5 -0.8 -0.4 0.2
GHG emissions growth (mtCO2e) 3.7 7.4 5.0 15.5 10.2 10.1
Energy related GHG emissions (% of total) 13.7 19.2 22.5 31.4 36.6 41.3
Source: World Bank, Poverty & Equity and Macroeconomics, Trade & Investment Global Practices. Emissions data sourced from CAIT and OECD.
Notes: e = estimate, f = forecast.
a/ Total GDP at 2012 prices.
b/ Non-oil GDP at 2012 prices.
c/ BOP definition in current US$.
d/ Share of non-oil GDP.
MPO 2 Oct 22