Previous Quarterly Editions
Expropriation Risk: 54 55 55 54 ▼Political Violence Risk:39 39 39 37 ▼Terrorism Risk:15 15 15 15 ►Exchange Transfer and Trade Sanction Risk: 44 44 44 44 ►Sovereign Default Risk:37 37 46 37 ▼
TREND ▼
Protest intensity to date* 2022 2023 High High Unrest risk in 2024**Cost of living: MediumAnti-austerity: Medium
*Note: Protest intensity is calculated based on ACLED. **Risk levels are calculated by WTW. Where data are missing no risk level will be displayed. For details of 'anti-austerity' calculations, see the essays in the introduction; for details of 'cost-of-living' calculations, see the previous edition of the Index.
Guyana does not face a debt crisis. At the end of June 2023, the country’s stock of outstanding public debt stood at US$3.9 billion, or 25% of GDP — one of the lowest debt ratios in Latin America and the Caribbean. In 2022, debt service payments were equivalent to 1.5% of merchandise exports and 10% of government revenue.
The main risk to the country’s debt sustainability over the medium term is a significant fall in oil prices, on which the economy is increasingly dependent. Oil accounts for about 88% of exports and 70% of GDP. The debt ratio has declined in recent years because of the sharp rise in GDP in line with oil production. The government continues to borrow to finance its infrastructure program. Loans contracted in the first half of 2023 totaled US$924 million.
Guyana’s outlook continues to be favorable, propelled by the rapid expansion of oil production, which rose from 275,000 barrels per day (bpd) at the end of 2022 to 400,000 bpd in June 2023. Production is expected to exceed 500,000 bpd by the end of this year and 750,000 bpd by 2026.
The country experienced a rate of GDP growth of 63% in 2022 (the highest in the world), and the ministry of finance estimates that the rate this year will be 28%, with non-oil GDP rising by 9%. The International Monetary Fund (IMF) projects that the economy will grow by an average of 20% a year during 2024 – 2028. The country will register another large external current account surplus in 2023, and the overall fiscal position is projected to be in balance by 2028.
All revenues from Guyana’s share in oil production are placed in the Natural Resource Fund (NRF), and withdrawals from the NRF, which are limited by legislation, are used to finance the budget. At the end of June 2023, the resources in the NRF stood at US$1.7 billion, up from US$1.3 billion at the end of 2022. Transfers from the NRF totaling US$1 billion in 2023 are expected to finance a quarter of the government expenditure, which is budgeted to surge by 43%, from US$2.8 billion in 2022 to US$4.1 billion this year, following an increase of 53% in 2022.
Most of the increased spending is being allocated to infrastructure — including roads, bridges, housing, schools and hospitals — but the budget also includes funding for increased wages and transfers to students and pensioners.
The surge in spending has led to higher inflation and labor shortages. Official data show that prices rose by 7.2% in 2022, with food prices increasing by 14%. In the year ending June 2023, food prices rose by 5%. The government has established training centers and programs to help upskill the labor force, but a severe shortage has led to inflows of foreign workers into the oil industry and to the use of migrants from Venezuela and Haiti in construction and services.
Some estimates put the number of Venezuelan migrants in 2022 at about 24,000, or 3% of the population. Despite the labor shortage in some sectors, the latest data on unemployment (2021) show an overall rate of 14%, with youth unemployment at 32%, reflecting the skills mismatch in the labor force.
Guyana’s constitution and its legislation protect the rights of foreign investors and owners of property. Expropriation of property is provided for under the 2001 Acquisition of Land for Public Purposes Act, when required in the public interest. Given the government’s policy of attracting foreign investment and honoring contracts, there is little risk of expropriation.
The risk of political violence is linked to long-standing tensions between the ruling People’s Progressive Party/Civic — whose support traditionally resides mainly in the East Indian community — and the main opposition People’s National Congress Reform (PNCR), whose support is anchored in the African community.
In 2022, protests were held in Buxton — an opposition stronghold — against the killing by police of a young Afro-Guyanese man as well as alleged discrimination by the government in awarding contracts and cash transfers to its Indo-Guyanese supporters. In February this year, another protest occurred related to the same 2022 killing that culminated in the burning of cars and looting of vendors’ stalls at a market outside Georgetown, the country’s capital city. Nine people were charged with domestic terrorism in relation to that event.
Tensions were raised in March 2023 when an executive member of a small opposition party, Tacuma Ogunseye of the Working People’s Alliance (WPA), called on supporters to treat the local government elections (held on June 12, 2023) as a day of “national resistance and African uprising,” noting that he expected the polls to be rigged in favor of the ruling party. He said that the WPA would ensure that “our brothers and sisters in uniform do the right thing, and this thing will be over quickly.”
Most members of the police and defence force are Afro-Guyanese. The leader of the PNCR said that he respected Ogunseye’s right to free speech, but the language he used was unfortunate, and the PNCR did not support the call to boycott the polls. President Irfaan Ali said that the statements promoted hate, racism and terrorism.
TREND ►
Guyana is not known to have terrorist groups, nor has it been a target of terrorist activity. There is a risk, however, that as the country emerges as an important oil and gas producer, it could attract greater attention from terrorist groups. On March 29, 2023, the U.S. embassy issued an alert that threats had been received against U.S. interests and urged its citizens in the country to be alert. No further details were provided. In 2019, a report by the U.S. State Department noted that in neighboring Trinidad and Tobago, Islamic State sympathizers were the main terrorism concern in that country.
Guyana has no formal controls on the transfer of funds. In recent months, however, the Georgetown Chamber of Commerce and Industry has raised concerns that some banks have not always been able to meet the foreign exchange needs of its members.
The central bank governor has stated that there are adequate foreign exchange reserves to meet demand in aggregate, but that the inter-bank market in foreign exchange is not sufficiently developed to ensure a smooth flow from banks with surplus foreign exchange to banks that have shortages.
The chamber, the banks and the central bank have discussed how to resolve this issue, and in August 2023, Vice President Bharrat Jagdeo indicated that the government will intervene in the market, if necessary, to address shortages.
Meanwhile, Guyana has good relations with its main trading partners, and there is little risk of trade sanctions.
Guyana’s debt burden is low. At the end of June 2023, the total public debt stood at US$3.9 billion, or 25% of GDP. Domestic debt accounted for 15% of GDP while the external debt was equivalent to 10%, owed mainly to multilateral lenders such as the Inter-American Development Bank. The IMF estimated that interest on the external debt was equivalent to less than 1% of non-oil GDP in 2022 and about 2% of current expenditure.
In addition to a low debt burden, default risk increasingly has been mitigated by rising levels of central bank international reserves, which stood at US$736 million at the end of June 2023.
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