Georgetown: Infrastructure bottlenecks, skilled labor shortages, and weaknesses in electricity supply are major obstacles to growth in Guyana, but, the International Monetary Fund (IMF) in a report released on Monday stated real GDP grew by 4.1 percent in 2018, up from 2.1 percent in 2017.
This growth the report noted was led by construction and services sectors. Inflation remained steady at 1.6 percent at end-2018, on the back of stable food prices and exchange rate.
A visiting International Monetary Fund (IMF) Mission concluded that economic growth in Guyana strengthened in 2018 with broad-based expansion across all major sectors.
The team, which met was led by Mr. Arnold McIntyre, visited Guyana between June 3–14 and held discussions with top government officials and other agencies. The team met Prime Minister, Moses Nagamootoo, Finance Minister Winston Jordan, Minister of Legal Affairs and Attorney General Basil Williams , Central Bank Governor Dr Gobind Ganga, other senior officials, representatives from the private sector, banks, the opposition party, labor unions, and other stakeholders.
The report stated that for 2019, the mission projects real economic growth of 4.4 percent, driven by continued strength in the construction and services sectors ahead of oil production in 2020, and strong recovery in mining.
It was also noted that the commencement of oil production in 2020 presents an opportunity to scale-up capital and current spending at a measured pace over the medium term to address infrastructure gaps and human development needs, while attenuating debt sustainability concerns at the same time.
The mission welcomed the passage of the Natural Resource Fund (NRF) legislation for managing the country’s natural resource wealth; it underscores the authorities’ commitment to fiscal responsibility.
“To ensure fiscal responsibility is achieved, the mission recommends complementing the NRF legislation with a fiscal framework that constrains borrowing and achieves a balanced budget in the near- to medium-term,” the report noted.
To achieve this target, the annual non-oil deficit should not exceed the expected transfer from the NRF. This would ensure that excessive public expenditure will not lead to debt growing at the same time as the NRF accumulates.
It is also necessary to preserve the spirit of the NRF framework, which appropriately aims to save part of the income from oil as net wealth for future generations.
The pace of scaling-up public spending needs to be gradual to reduce bottlenecks from absorptive capacity constraints, avoid waste, and minimize macroeconomic distortions related to “Dutch” disease that has often inflicted economies experiencing sizable increases in resource-based income.
The report underscored that 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. Further regulatory and administrative reforms—including property rights and insolvency regime and reducing bureaucratic red-tape—would help strengthen competitiveness,” the report stated.
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