IMF Executive Board commends Guyana’s economic performance

IMF Executive Board commends GUYANA’s economic performance

Georgetown, GINA, April 3, 2008

The Executive Board of the International Monetary Fund (IMF) has given the Guyana government thumbs-up in its continued efforts to sustain and improve the country’s economy.In its February 20, 2008 report on the conclusion of the Article IV consultation with Guyana, the Directors commended the Guyana authorities for a second consecutive year of strong real Gross Domestic Product (GDP) growth.They welcomed the government’s commitment to sound macroeconomic and structural policies, as evident by the perseverance with adjustment and reform and the cautious use of external financing. The Directors noted that this commitment is crucial to the diversification of the economy, reducing vulnerability to commodity price and other external shocks, and achieving the Millennium Development Goals (MDGs). It was posited by the Directors that the real effective exchange rate is largely in balance and that the authorities' macroeconomic policies are consistent with external stability. The directors believe that while the current exchange rate regime has served Guyana well, a gradual move to a more flexible exchange rate, and in the context of a fully operational inter-bank foreign exchange market, could help cushion the economy from external shocks.In welcoming the progress achieved in strengthening the public finances the directors also commended government for the successful implementation of the Value Added Tax (VAT) and the authority’s determination to preserve spending discipline. The IMF officials also encouraged the authorities to continue their efforts to reach agreement with creditors that have yet to provide debt relief under the Heavily Indebted Poor Countries Initiative (HIPIC).The administration received support from the directors in relation to reducing the fiscal deficit in the medium-term which will be consistent with long-term debt sustainability. They noted that this will require further improvements in tax administration, control of non-priority spending, and a strengthening of the financial condition of public enterprises.Government’s forthcoming Poverty Reduction Strategy Paper which will guide its medium-term expenditure plans also received a plus.In 2007, economic performance was strong for a second consecutive year. Real GDP growth was estimated at about 5.5 percent and is projected to remain robust at 4.8 percent this year.The current revenue is expected to grow by 1.7 percent to $81.6B and the economy is expected to grow by 4.8 percent which is expected to be broad-based and to reflect expansion in both traditional and new and emerging sectors.The government has also projected that sugar production will increase by 8.8 percent over the 2007 output, rice production is expected to increase by 7.6 percent and the inflation rate is expected to be 6.8 percent