Previous Quarterly Editions
Expropriation Risk: 53 55 54 55 ►Political Violence Risk:39 39 39 39 ►Terrorism Risk:15 15 15 15 ►Exchange Transfer and Trade Sanction Risk: 25 35 44 44 ►Sovereign Default Risk:37 37 37 37 ►
TREND ►
Protest intensity in 2022 and Q1 2023* 2022 Q1 2023Cost of living : Very High MediumAll protest: Medium Low
Cost-of-living protest risk in 2023*Wage protest: Medium Food/fuel policy protests: Low
*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 calculations, see the introductory essay.
Since 2022, Guyana has been experiencing a period of rapid growth in government spending, fuelled by rising oil revenues. The government, led by President Irfaan Ali, took office in August 2020, and in 2021 raised overall spending by 19% to GYD387 billion. In 2022, the government made its first withdrawal from the Natural Resources Fund – into which all oil revenues are deposited – leading to total spending rose by 53% to GYD593 billion.
The 2023 budget provides for a further increase in spending by 32%, to GYD782 billion, of which just over GYD200 billion is funded by withdrawals from the Natural Resources Fund. Most of the increased spending has been on infrastructure – including roads, bridges, schools, hospitals – but the budget also included measures to increase wages, pensions, and transfers to students and pensioners.
The rapid expansion in spending is contributing to inflation and labour shortages. The urban Consumer Price Index rose from an annual rate of 5.7% in December 2021 to 7.2% at the end of 2022. Food price increases have been accelerating since 2021, rising from 11.6% in that year to 14% in 2022. In the year ending February 2023, food prices rose by 12.6%.
One of the main daily newspapers has been running regular articles and interviews highlighting how inflation has been affecting ordinary citizens through falling real incomes. Rising prices have also led to demands for increased wages for public sector workers.
The demands of the booming economy have resulted in a shortage of labour and higher wage rates, particularly in construction and services. Both aspects are feeding back into prices. In some sectors such as construction, the shortage is being mitigated by migrants fleeing Venezuela and Haiti, with some reports estimating the number of Venezuelan migrants in May 2022 at about 24,000, or 3% of the population.
In 2022, the government responded to the inflation by eliminating the excise tax on petroleum products and freezing water and electricity tariffs. In addition, the government distributed free fertiliser to farmers to help reduce their operating costs, provided one-time cash grants to households in rural areas, and increased monthly pension and disability payments.
The effects of inflation on the poor – combined with the view among opposition parties and some non-governmental organisations that oil revenues are benefiting only a relatively small, politically connected, segment of the population – could lead to social unrest and insecurity. To date, protests against high prices and lagging wages have been small, but they may grow if inflation persists. In neighbouring Suriname, for instance, a crowd protesting high prices, cuts in subsidies, and other austerity measures, as well as corruption, tried in July 2022 to storm the president’s office.
Insecurity has been a longstanding concern. Recently, the governments of Canada and the U.S. issued warnings to travellers about the need to exercise a high degree of caution because of high crime rates, noting violent crime is prevalent, often associated with drug trafficking. The U.S. advisory dated October 2022 suggests individuals should reconsider travel to Guyana due to crime. Separately, the U.S. State Department has advised businesses considering investing in Guyana to develop adequate security systems.
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, but there have been no recent cases. In light of the government’s policy of attracting foreign investment and honouring contracts, there is little risk of expropriation.
The risk of political violence is linked to longstanding tensions between the ruling People’s Progressive Party/Civic– whose support traditionally derives mainly from the East Indian community– and the main opposition People’s National Congress Reform (PNCR), whose support is anchored in the African community.
In 2022, there were protests 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, there was another protest related to the 2022 killing that culminated in the burning of cars and vendors’ stalls, as well as looting at a market outside Georgetown. The police have issued wanted bulletins for twelve men accused of domestic terrorism in relation to that event.
Tensions rose in March 2023 when an executive member of a small opposition party, Tacuma Ogunseye, of the Working People’s Alliance, called on supporters to use the day of forthcoming local government elections on June 12 as a day of “national resistance and African uprising”, noting he expected the polls to be rigged in favour of the ruling party. Ogunseye said the Working People’s Alliance would ensure “our brothers and sisters in uniform do the right thing, and this thing will be over quickly.”
A majority of the police and defence force are Afro-Guyanese. The leader of the PNCR said he respected Ogunseye’s right to free speech, but the language he used was unfortunate, and the PNCR does not support the call to boycott the polls. President Ali has described the statements promoted hate, racism, and terrorism.
Guyana is not known to have terrorist groups, nor has it been a target of terrorist activity. However, there is a risk, as the country emerges as an important oil and gas producer, it could attract greater attention from terrorist groups.
In March, the U.S. Embassy alerted there had been threats against U.S. interests and urged its citizens in the country to be alert, though offered no further details. In 2019, a report by the U.S. State Department noted in neighbouring Trinidad and Tobago, Islamic State sympathisers were the main terrorism concern in that country.
There are no formal controls on the transfer of funds. However, in recent months the Georgetown Chamber of Commerce and Industry has raised concerns some banks have not always been able to meet the foreign exchange needs of its members. The Chamber, the banks, and the central bank have held discussions on how to resolve this issue. However, the central bank governor has stated there is adequate foreign exchange to meet demand. Guyana has good relations with its main trading partners and there is little risk of trade sanctions.
debt accounted for 13% 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 interest on the external debt to be 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 USD735 million at the end of January 2023.
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