IMF praises Guyana’s cash transfers, strengthened governance of ‘oil money’ fund

Last Updated on Friday, 7 March 2025, 23:15 by Writer

The International Monetary Fund (IMF) on Friday praised Guyana’s cash transfers, saying that it helped to tackle poverty but cautioned the country about the likely impact from lower oil prices and climate shocks.

“Staff assesses that social transfer policies implemented in recent years have increased disposable income and reduced the poverty rate,” the IMF said in its Staff Concluding Statement of the 2025 Article IV Mission.

Unofficial estimates put Guyana’s poverty rate at 38.8%.

The transfers are being provided to, among others, disabled persons, farmers, school children, mothers of newborn babies and dialysis recipients. Government is currently distributing a GY$100,000 cash transfer to all Guyanese 18 years and older as of January 1, 2025.

The IMF mission, which met with top officials, representatives from the private sector, banks, labor unions, the opposition and other stakeholders, said if more transfers are provided, Guyana would be able to further address poverty. “Going forward, additional targeted transfers, integrated into a medium-term fiscal framework, could further support inclusive growth and help Guyana advance faster toward its sustainable development goal (SDG) of no poverty,” the IMF said.

The IMF staff team, led by Ms. Alina Carare and Ms. Lusine Lusinyan, who held discussions virtually and in Georgetown for the 2025 Article IV Consultation during February 24–March 7, 2025, also singled out improved governance of the Natural Resources Fund (NRF) into which are paid oil revenues.

“The authorities have advanced in enhancing governance of the NRF and modernizing public sector operations,” the IMF said.

The 2023 NRF and Public Accountability and Oversight Committee Annual Reports have been presented to the National Assembly, regular notifications of receipts of petroleum revenues, as mandated by law, are published in the Official Gazette and presented to the National Assembly, and the Bank of Guyana publishes monthly and quarterly reports of the NRF’s financial performance, the Fund said.

The opposition representative on the NRF’s Investment Committee, Dr Terrence Campbell recently filed a High Court case seeking several reliefs hinged on his concerns that transfers to the Consolidated Fund were not related to proposed expenditures. Government has said that the oil revenues were being mixed in with revenues from other sources.

The IMF forecasts that Guyana’s economy is expected to grow on average 14% per year over the next five years, driven by robust oil production amid a growing share of the non-oil sector. Non-oil GDP is projected to expand on average by about 6¾% per year.

Risks to the outlook are broadly balanced. On the upside, further oil discoveries and productivity-enhancing investments, including to strengthen energy resilience would further bolster Guyana’s economic prospects.

The IMF added that downside risks stem from overheating pressures which, if not contained, could lead to higher inflation and real exchange rate appreciation beyond the level consistent with a balanced expansion of the economy. Commodity price volatility in a highly uncertain global environment and climate shocks could also adversely affect inflation and alter the macroeconomic outlook, the global financial institution said.

For Guyana’s economic outlook, real GDP and real non-oil GDP are projected to grow by about 10¼% and 13% in 2025, respectively. Inflation is expected to edge up to around 4% by the end of 2025 from close to 3% at the close of 2024. Following a strong fiscal impulse in 2024, the budget deficit is expected to narrow from 7.3% of GDP to just below 5% of GDP in 2025, as higher oil revenues more than offset the projected increase in spending. The large current account surplus of 24½% of GDP in 2024 is projected to moderate to about 9% of GDP in 2025 reflecting the imports of the fourth oil floating production storage and offloading (FPSO) vessel.