Guyana’s strong economy helping to keep inflation in check – IMF

Monetary operations, alongside fiscal and supply-side measures, have helped contain liquidity and exchange rate pressures in Guyana and cushion the effects of higher prices, the International Monetary Fund (IMF) has reported, while warning that inflation is expected to increase in 2026.
In its October 8, 2026, report following the conclusion of its Article IV Consultation with Guyana, the Fund said economic fundamentals remained strong, with available indicators showing no clear signs of overheating or competitiveness pressures.
However, it cautioned that strong wage growth and movements in the real exchange rate based on wages warranted continued monitoring as economic activity remained robust.
Average consumer price inflation stood at 3.3 per cent in 2025, up from 2.9 per cent in 2024. The IMF projects average inflation of 4.1 per cent in 2026, reflecting higher global energy and food prices.
The Fund recommended that monetary policy remain consistent with Guyana’s stabilised exchange rate arrangement and the objective of maintaining price stability.
It said liquidity management should continue through foreign exchange operations, where necessary, alongside increased use of Treasury bills and reserve requirements. These measures would help keep broad money growth broadly aligned with nominal non-oil Gross Domestic Product (GDP) growth.
The IMF said additional monetary tightening would be warranted if pressures arising from domestic demand, credit growth or the exchange rate intensified.
Over the longer term, it recommended strengthening the monetary policy framework by activating the interest rate channel, deepening financial markets, improving macroprudential tools and gradually reducing broad measures used to mitigate price increases.
The Fund also assessed Guyana’s current exchange rate regime as appropriate, while noting that greater flexibility could be considered over the medium term to facilitate economic adjustment and strengthen resilience to external shocks.
The recommendations come as Guyana’s economy is projected to grow by 22.3 per cent in 2026, supported by expanding oil production and continued growth in non-oil sectors.
The IMF reported that real GDP grew by 19.3 per cent in 2025, following average growth of nearly 40 per cent in 2023 and 2024. Oil GDP expanded by 21.1 per cent last year, while non-oil GDP grew by 14 per cent, driven by activity in construction, agriculture, mining and manufacturing.
For 2026, oil GDP is projected to grow by 26.1 per cent, while non-oil GDP is expected to expand by 10.2 per cent.
Although the Fund described the economic outlook as favourable, it identified possible overheating pressures, fluctuations in international oil prices and climate-related shocks among the risks facing the country.
The IMF’s assessment also highlighted the importance of coordinating monetary and fiscal policies as public investment and economic activity continue to expand.
It said Guyana’s rising oil revenues had strengthened its fiscal and external positions, while supporting investment in infrastructure and human capital. The overall fiscal deficit narrowed to 5.5 per cent of GDP in 2025, from 7.3 per cent in 2024.
However, the deficit is projected to widen to 6.4 per cent of GDP in 2026, partly reflecting transfers and electricity subsidies.
The Fund recommended that the Government strengthen its fiscal framework and consider saving a larger share of additional oil revenues if international prices remained persistently high, taking into account the economy’s capacity to absorb increased spending.
It also called for improved expenditure oversight, more effective targeting of subsidies and continued prioritisation of investments that enhance productivity and support vulnerable groups.
The IMF said Guyana’s banking system remained well capitalised and liquid, with improving asset quality, but urged continued monitoring of financial stability risks, particularly concentration risks and rapid growth in the housing market.
It recommended developing a real estate price index and strengthening cybersecurity standards as financial services become increasingly digital.
The report further emphasised the need to improve public-sector accountability, including the timely publication of accounts by public enterprises and Government agencies, the resolution of outstanding cost-oil audits and stronger audit capacity in the oil and gas sector.
The Fund also identified economic diversification, human capital development, employment creation, food security and climate resilience as priorities for sustaining growth beyond the oil sector.
It said continued improvements in official statistics, including national accounts, price data and labour force surveys, would be important for effective policymaking.
The IMF’s recommendations form part of its broader assessment of the policies needed to maintain macroeconomic and financial stability while ensuring that Guyana’s expanding oil wealth supports sustainable, long-term development.