IMF Sees Promise and Peril in Guyana’s Historic Oil Boom

Guyana, once one of South America's poorest countries, has captured the world's attention with its staggering economic growth, fueled by offshore oil discoveries in the Stabroek block. The International Monetary Fund (IMF), in its 2025 Article IV Consult, praises the government’s early gains while warning of emerging macroeconomic and institutional risks that could undercut long term prosperity.

The IMF notes that Guyana has averaged 47% real GDP growth annually since 22, the highest globally, driven by oil exports that exceeded US$18bil in 2024. Non-oil sectors are also growing rapidly, with services, construction, and agriculture showing sustained expansion. Inflation remains contained at 2.9% despite the boom, largely due to prudent exchange rate anchoring and modest monetary expansion. The IMF projects that from 2025 to 2029, Guyana’s economy will continue to grow at an average rate of 14%, with non-oil GDP rising 6.75% annually, nearly 3x its pre-oil average.

With oil revenues pouring in, Guyana’s Natural Resource Fund (NRF) has ballooned to over US$3.1 billion, roughly 12.5% of GDP, and is expected to exceed 32% of GDP by 2030. These funds have been critical to financing infrastructure, public sector wages, and healthcare and education programs. However, the IMF warns that without strict fiscal anchors, the NRF could become a political tool rather than a long-term stabilization mechanism.

Risks on the Horizon

Despite the current success, the IMF’s consultation report lays out 4 primary risks:

1. Overheating and dutch disease: With imports surging and domestic capacity still limited, the risk of inflation and real exchange rate appreciation could undermine the competitiveness of non-oil sectors.
   

2. Commodity price volatility: A sudden drop in oil prices or output disruptions would erode government revenues and strain the current account (exports minus imports).
   

3. Governance and institutional weakness: The IMF notes that public procurement, anti-corruption enforcement, and fiscal transparency remain vulnerable (Guyana ranks 39/100 on the corruption index, way below threshold). Without improvements, social tensions over perceived inequitable wealth distribution may intensify, especially in the leadup to the 2025 elections.
   

4. Climate exposure: Guyana’s low lying geography makes it highly vulnerable to extreme weather and sea level rise (i.e flooding). The IMF suggests that public investment planning must incorporate climate resilience more systematically.
   

IMF Recommendations

To manage the boom and secure long-term benefits for all citizens, the IMF urges the government to:

• Adopt a medium term fiscal anchor beyond the current debt ceiling, possibly linking expenditure to non-oil GDP growth.
  

• Continue modernizing monetary policy tools and strengthen macroprudential oversight.
  

• Maintain the fixed exchange rate regime in the short term, but begin planning for eventual managed flexibility.
  

• Improve institutional quality, including public financial management, AML/CFT frameworks, and statistical capacity.
  

• Enhance transparency in oil revenue usage and accelerate implementation of e-procurement and digital governance tools.
  

The IMF sees in Guyana both a “historic opportunity” and a set of “formidable policy challenges.” The nation’s small population and massive oil windfall make it uniquely positioned to rapidly achieve middle to high income status. However, the Fund is clear, success hinges on managing the influx of capital, ensuring equitable distribution, and building institutions that outlast the boom. Whether Guyana becomes the Qatar of the Caribbean or repeats the resource curse seen elsewhere will depend not on geology, but on governance.