In what will be seen as a cautionary tale for this country and its impending oil wealth, the IMF 2019 staff Report on Guyana has cited pitfalls from Trinidad and Tobago and Ghana to underline what can go wrong.
In its report released on Tuesday, the IMF said that income from Guyana’s oil has the potential to transform the economy but will need to be managed effectively to limit macroeconomic distortions related to Dutch disease and governance weaknesses. It said that oil production is expected to begin in the first quarter of next year, averaging 102,000 barrels/day (bpd), and rising to an average of 424,000 bpd in 2025.
It added that the main direct effect of the oil sector on the domestic economy will be through fiscal revenue and its use. The report noted that the authorities have legislated a Natural Resource Fund (NRF) Act 2019 which provides a framework for establishing a natural resource fund, a Public Accountability and Oversight Committee to report on the Fund, and a transfer rule that determines fiscal transfers from the NRF to the budget. In the event of a delay in initial oil production, the report notes that NRF Act does not allow the front-loading of oil-financed spending in advance of the securing of oil revenue.
