The International Monetary Fund (IMF) is projecting Guyana’s economic growth for 2013 to be 4.8 per cent continuing the broad-based robust expansion in economic activity over the past few years.
The Washington-based financial institution, which has just concluded an Article IV consultation on the country, said that during the last decade, Guyana’s strong macroeconomic performance has contributed to a reduction in public debt levels and sustained poverty reduction.
It said that the economy has experienced seven years of uninterrupted growth averaging about four per cent annually.
The key pillars of the macroeconomic resurgence have been sustained reforms, in particular the implementation of the Value Added Tax (VAT), favourable commodity prices, significant inflows of Foreign Direct Investment (FDI) and debt relief under the Heavily Indebted Poor Countries Initiative (HIPC) and Multilateral Debt Relief Initiative (MDRI) initiatives.
The IMF said real economic activity expanded by 4.8 per cent in 2012 on the back of broad-based growth in agriculture, manufacturing, mining, construction and other services.
It said 12-month inflation remained low at 3.4 per cent, notwithstanding higher energy and food prices. Last year, the overall fiscal deficit was 4.5 per cent of Gross Domestic Product (GDP), virtually unchanged from the 2011 outturn.
The IMF said that central government revenues net of grants declined by 0.8 per cent of GDP, reflecting lower income and consumption tax receipts, and non-interest current expenditures rose by one per cent of GDP mainly on account of higher transfer payments to the electricity and sugar companies.
The IMF said that the deterioration in the central government balance was offset by improved performance of state-owned enterprises whose financial position shifted from deficit to surplus.
The external current account balance was broadly unchanged from 2011 and gross international reserves stood at 4.2 months of imports at end-2012.
Meanwhile, the banking soundness indicators have remained strong, with capital adequacy ratios well above the regulatory minimum requirement, non performing loans (NPLs) between 5 and 6 percent over the last three years, and provisioning for bad loans at comfortable levels.
IMF said the macroeconomic outlook is generally positive for 2013 and the medium term and that growth is projected at 4.8 per cent in 2013, continuing the broad-based robust expansion in economic activity.
It said the 12 month inflation was expected to remain low at around 3.5 per cent by year-end.
“The revised 2013 budget envisages an overall fiscal deficit of 5.2 per cent of GDP, largely related to worsening performance of public enterprises which are projected to return a deficit of 0.4 per cent of GDP compared to a surplus of 1.3 per cent in 2012.
“Higher VAT receipts are projected to raise central government non-grant revenue by 0.9 per cent of GDP,” it added.
The IMF said it welcomed Guyana’s strong growth over the past several years, underpinned by favourable commodity prices and robust foreign direct investment.
While the medium-term economic outlook remains positive, the IMF said it was encouraging the authorities to persevere in their commitment to sound policies and reforms to strengthen policy buffers, promote more inclusive growth, and further reduce poverty.