A quarterly economic review published this month by the IDB says that the macroeconomic outlook for Guyana is highly uncertain given the impact of persistent geopolitical tensions on oil prices and it cited the need for strong institutions to ensure resource windfalls are managed transparently.
The review in the Inter-American Development Bank’s (IDB) Caribbean Economics Quarterly for August said that although Guyana transitioned to become a net oil exporter in 2019, the country still produces 90 percent 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. 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”, the review said.
Within this context, it said that the IMF forecasts that Guyana’s GDP growth expansion in 2026 will be smaller than originally predicted (IMF 2025b, 2026a), but with manageable macro-fiscal risks. It noted that the government is helping to mitigate much of the current oil price shock through maintenance of a zero-rate tax on fuel. It also cited the 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 Review said.
It is also expected that inflation pressures in Guyana will increase. “The IMF forecasts further deviation of the Guyana inflation rate from the U.S. 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 percent 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. 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”.
The quarterly review added “In Guyana, balancing fiscal and financial sector support for development and growth with monetary efforts to stabilize the exchange rate, while also targeting acceptable levels of inflation, is of even greater importance in the current environment. The government’s efforts to reduce the country’s import dependence, particularly on food and crude oil, are consistent with these policy objectives”.
Looking ahead, the IDB review said the challenge is not fiscal consolidation, “but rather to calibrate spending, establish savings mechanisms, and build strong institutions to ensure that resource windfalls are managed transparently and support intergenerational equity. This also points to the need to ensure that expenditure and investments are carefully selected to support faster growth, particularly in non-oil sectors (IMF 2025a).”
This Caribbean Economics Quarterly is produced by the economics team of the Caribbean Country Department of the Inter-American Development Bank (IDB). Preparation of this report was led by Valerie Mercer-Blackman (Regional Economic Advisor for the Caribbean) and Henry Mooney (Economics Principal Specialist) under the general supervision of Anton Edmunds (IDB General Manager for the Caribbean).
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