The In­ter-Amer­i­can De­vel­op­ment Bank (IDB) says the out­look for Guyana is still high­ly un­cer­tain, giv­en per­sis­tent geopo­lit­i­cal ten­sions that con­tin­ue to push up in­ter­na­tion­al oil prices.

“Al­though Guyana tran­si­tioned to be­come a net oil ex­porter in 2019, the coun­try still pro­duces 90 per cent of its en­er­gy from im­port­ed oil. As a re­sult, elec­tric­i­ty and fu­el prices con­tin­ue to be chan­nels through which the Guyanese econ­o­my can be neg­a­tive­ly im­pact­ed,” the IDB said.

“More­over, as Guyana is now an oil pro­duc­er, oil shocks can lead to Dutch dis­ease risks, spurred on by an in­flux of oil rev­enues and ex­ces­sive gov­ern­ment spend­ing. With­in this con­text, the IMF fore­casts that Guyana’s gross do­mes­tic prod­uct) GDP growth ex­pan­sion in 2026 will be small­er than orig­i­nal­ly pre­dict­ed but with man­age­able macro-fis­cal risks.”

In its re­port ti­tled “Fis­cal Re­silience, Debt Re­duc­tion and Do­mes­tic Re­source Mo­bi­liza­tion in the Caribbean”, the Wash­ing­ton-based fi­nan­cial in­sti­tu­tion said that the Guyana gov­ern­ment is help­ing to mit­i­gate much of the cur­rent oil price shock through main­te­nance of a ze­ro-rate tax on fu­el promised in its 2026 bud­get, in­tro­duc­tion of a new uni­ver­sal cash grant (US$500); main­te­nance of elec­tric­i­ty sub­si­dies and as­sis­tance to key sec­tors, in­clud­ing ed­u­ca­tion.

“As a re­sult, the gov­ern­ment is ex­pect­ed to run a larg­er pri­ma­ry deficit than orig­i­nal­ly bud­get­ed. Nev­er­the­less, macro-fis­cal risks are ex­pect­ed to re­main large­ly con­tained giv­en Guyana’s with­draw­al rules, which lim­it oil prof­it with­drawals from its Nat­ur­al Re­source Fund; high con­ces­sion­al­i­ty of the debt port­fo­lio; a low debt ser­vice ra­tio; and con­tin­ued high GDP growth,” the re­port not­ed.

The IDB said it is al­so ex­pect­ed that in­fla­tion pres­sures in Guyana will in­crease. The In­ter­na­tion­al Mon­e­tary Fund (IMF) fore­casts fur­ther de­vi­a­tion of the Guyana in­fla­tion rate from the US price trend, in­di­cat­ing the pos­si­bil­i­ty of ex­tend­ed re­al ef­fec­tive ex­change rate ap­pre­ci­a­tion.

“This is a key barom­e­ter for Dutch dis­ease risks. How­ev­er, ap­pre­ci­a­tion of Guyana’s re­al ef­fec­tive ex­change rate has been rel­a­tive­ly sub­dued, grow­ing at an an­nu­al rate of about 0.01 per cent on av­er­age be­tween 2019 and 2025, the same rate of growth as five years pri­or.

“In this re­gard, proac­tive and vig­i­lant pol­i­cy-mak­ing is high­ly ad­vis­able, de­spite the prob­a­bil­i­ty of larg­er-than-usu­al fore­cast er­rors and the pos­si­ble un­re­li­a­bil­i­ty of for­ward es­ti­mates.”

The IDB re­port notes that fore­casts for this year could be un­re­li­able be­cause of the volatile geopo­lit­i­cal en­vi­ron­ment.

“Nonethe­less, in­creased un­pre­dictabil­i­ty nat­u­ral­ly points to the need for care­ful eco­nom­ic man­age­ment, in­clud­ing co­or­di­nat­ed fis­cal and mon­e­tary poli­cies, es­pe­cial­ly in a con­text such as that of Guyana, which is so ex­posed to ex­ter­nal en­er­gy price risks.

“In Guyana, bal­anc­ing fis­cal and fi­nan­cial sec­tor sup­port for de­vel­op­ment and growth with mon­e­tary ef­forts to sta­bilise the ex­change rate, while al­so tar­get­ing ac­cept­able lev­els of in­fla­tion, is of even greater im­por­tance in the cur­rent en­vi­ron­ment,” it said, adding that the gov­ern­ment’s ef­forts to re­duce the coun­try’s im­port de­pen­dence, par­tic­u­lar­ly on food and crude oil, are con­sis­tent with these pol­i­cy ob­jec­tives.

The IDB not­ed that Guyana’s out­put per­for­mance strength­ened fur­ther in 2025, pro­mot­ing so­cio-eco­nom­ic de­vel­op­ment while help­ing to in­su­late the coun­try against in­creased glob­al un­cer­tain­ty and as­so­ci­at­ed risks.

It said that Guyana re­leased its 2024 Labour Force Sur­vey and pre­view of the 2022 House­hold Cen­sus in April 2026, with the sur­veys re­spec­tive­ly high­light­ing im­proved labour and pop­u­la­tion dy­nam­ics.

Guyana’s un­em­ploy­ment rate fell from 14.5 per cent in the third quar­ter of 2021 to 6.8 per cent dur­ing the same pe­ri­od in 2024. In ad­di­tion, Guyana’s pop­u­la­tion in­creased to 900,000, up from 700,000 a decade ear­li­er.

In 2025, Guyana’s GDP grew by 19.3 per cent. This fol­lowed an ex­pan­sion of 43.8 per cent in 2024, sur­pass­ing ini­tial IMF ex­pec­ta­tions of 10.1 per cent pro­ject­ed in Oc­to­ber 2025. Oil out­put growth was slow­er at 21.1 per cent, mir­ror­ing the trend in in­ter­na­tion­al oil prices, but was buoyed by a ramp-up in oil pro­duc­tion late in the fourth quar­ter as the sec­tor wel­comed the com­ing on stream of a new oil ex­trac­tion ves­sel.

The IDB re­port said de­spite the de­cel­er­a­tion in oil GDP growth, the min­ing and quar­ry sec­tor’s share of the econ­o­my in­creased to 79 per cent, from 67 per cent in 2022 and 51 per­cent in 2021, while non-oil sec­tor GDP growth con­tin­ued to ex­pand, in­creas­ing from 13 per­cent in 2024 to 15 per cent in 2025.

Price growth for Guyana was high­er at the end of 2025, with in­fla­tion at 2.9 per cent year-over-year. Costs of mis­cel­la­neous items rose marked­ly dur­ing the pe­ri­od, but the av­er­age con­sumer price lev­el was un­der­pinned by a fur­ther in­crease in the price of food, which has had the great­est im­pact on in­fla­tion.

Food prices in 2025 rose by 4.4 per cent, med­ical care by 4.9 per cent, and mis­cel­la­neous items by 6.8 per cent. How­ev­er, the lat­est da­ta show that in­fla­tion pres­sure eased ear­ly in 2026 pri­or to the ramp-up in in­ter­na­tion­al oil prices. In Feb­ru­ary 2026, Guyana’s year-over-year in­fla­tion rate was 2.6 per cent, again un­der­pinned by high­er food prices, which rose by 5.9 per cent, but with head­line price growth cur­tailed mar­gin­al­ly ow­ing to low­er prices for ed­u­ca­tion and trans­port and com­mu­ni­ca­tion com­pared to the same month in 2025.

The gov­ern­ment of Guyana’s fis­cal deficit has im­proved, as re­flect­ed in the pri­ma­ry bal­ance, which fell to mi­nus five per cent in 2025 from mi­nus 6.9 per cent in 2024. High­er over­all ex­pen­di­tures, dri­ven in part by in­creased trans­fer pay­ments linked to the gov­ern­ment’s is­suance of uni­ver­sal cash grants (cur­rent ex­pen­di­ture), were off­set by a larg­er in­crease in rev­enues— specif­i­cal­ly, re­ceipts of non-tax rev­enues, the ma­jor­i­ty of which were com­prised of oil prof­it with­drawals (85.1 per cent).

Al­so un­der­ly­ing the im­proved fis­cal out­turn was low­er cap­i­tal spend­ing. The re­port not­ed that in a bid to close its large in­fra­struc­ture gap, Guyana has in­vest­ed heav­i­ly, with cap­i­tal spend­ing jump­ing from 21.8 per cent of to­tal ex­pen­di­tures in 2019 to 50.5 per cent in 2023 and 53.8 per cent in 2024, dri­ving an over­all fis­cal ex­pan­sion.

How­ev­er, the IMF has rec­om­mend­ed that the gov­ern­ment bring these ex­pen­di­tures down, with the aim of bal­anc­ing the books in the medi­um term. In 2025, cap­i­tal spend­ing as a share of to­tal ex­pen­di­ture fell to 50.7 per cent, and as a share of GDP fell from 11.5 to 10.2 per cent, mark­ing the first de­cline in the gov­ern­ment’s cap­i­tal ex­pen­di­ture ra­tios since oil pro­duc­tion be­gan.

Over­all debt lev­els con­tin­ue to be high­ly sus­tain­able. The 2025 fi­nanc­ing gap led to in­creased hold­ings of ex­ter­nal debt and a slight in­crease in the to­tal debt ra­tio to 28.6 per­cent from 24.3 per­cent in 2024. Con­se­quent­ly, the ex­ter­nal share of to­tal debt rose to 56.3 per­cent.

How­ev­er, Guyana’s over­all debt port­fo­lio re­mained high­ly con­ces­sion­al, as the coun­try’s debt con­tin­ues to be held pri­mar­i­ly by mul­ti­lat­er­al cred­i­tors (66.2 per cent). In ad­di­tion, the gov­ern­ment’s debt ser­vice costs have fall­en sig­nif­i­cant­ly, from an av­er­age of around sev­en per cent to five per cent, com­par­ing mean debt ser­vice to rev­enue ra­tios from 2014 to 2018 (pre-oil), and from 2019 to 2025, re­spec­tive­ly. —WASH­ING­TON, D.C. (CMC)