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Located on the north-eastern coast of South America, with an area of approximately 214,969 sq km, the Co-operative Republic of Guyana is one of the largest countries in the Caribbean. Over 80 percent of Guyana’s land mass is covered by tropical rainforest and mountains, thus not surprising its economy was traditionally based on the exports of forestry products, minerals such as bauxite and gold as well as sugar and rice.
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However, despite its abundancy in natural resources, the Guyanese government struggled to manage public finances and provide social services to its population. From its 1966 independence to the late 1980s, the country embarked on an economic development strategy characterized by state control of major productive sectors and financial institutions as well as extensive controls of prices, credit, and foreign exchange. However, this governance model failed to sustain real increases in living standards over time. A second economic phase started in the late 1980s with major economic reforms following an economic recovery programme supported by the International Development Agency (IDA) and the International Monetary Fund (IMF) in 1988. This programme included broad macroeconomic measures and structural reforms to dismantle state controls, reduce expenditure and reform the tax system.
Through its reforms Guyana was able to achieve positive rates of growth however its debt to GDP ratio was still too high with rates of 377.8%, 327.6%, 219.3% in 1994, 1995 and 1996 respectively. This led to the country being enrolled in the International Monetary Fund and the World Bank’s Heavily Indebted Poor Countries (HIPC) Initiative in 1996. Under this programme, the Guyanese government exceeded expectations and, by 1999 Guyana reached the completion point and was provided $49.1 million in debt relief.
Moreover, given its success the Board of Executive Directors of the Inter-American Development Bank approved interim debt relief for Guyana within the framework of the Enhanced HIPC Initiative, the second stage of the global program, in 2002.
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In recent years, the Guyanese economy has experienced moderate growth, based largely on agriculture and the discovery of offshore oil reserves in 2015 and 2019.
In a five-year period, Guyana has steadily increased its GDP growth, recording a GDP growth of 0.7% in 2015 followed by 3.8 and 3.7 for the following two years. 2019 saw a GDP growth of 4.4% and 5.4% the next year, but it was in 2020 that Guyana recorded its highest GDP growth of 43.5 %. These figures are also reflected in the total debt as a percentage of GDP where it stands at 19 percent in 2020, 6 percent less than the previous year of 25 percent. These figures represent the high productivity in the Guyanese economy despite the losses sustained during the Covid-19 pandemic.
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While the remaining countries in the Caribbean has been struggling to maintain a positive GDP growth, Guyana has been the only Caribbean country for the year 2020 to retain positive GDP. This is partly due to Guyana’s increasing investment in the oil and gas sector.
The medium-term prospects look positive for Guyana given the discovery of vast oil reserves in the national’s waters. Guyana’s medium-term prospects remain positive with the discovery of vast oil reserves in Guyana’s waters that will provide decades of substantial oil revenues.