https://www.cepal.org/en/publi...a-and-caribbean-2020

Balance Preliminar de las Economías de América Latina y el Caribe ▪ 2020

Guyana

The year 2020 will be a year of economic transformation for Guyana; just not as much as was predicted. Estimates early in the year predicted Guyana would grow by 85% in 2020. However, the domestic and international effects of the COVID-19 pandemic served to lower expectations; growth is now projected at 30,9%.
The first case of COVID-19 was registered on 12 March 2020. While the rate of spread of the disease was initially slow, it began to accelerate in August; by the end of October there were over 4,000 confirmed cases in the country. The government implemented a number of measures to slow the spread of the disease. To reduce the number of international visitors the international airports were closed on
March 18 and the ferry service with Suriname was halted. To enforce social distancing, the government suspending sporting events, limited gatherings for social activities including weddings and funerals and closed gyms, spas, clubs and other non-essential services.

As a result of support and mitigation measures by the government, the fiscal balance went into deficit for the first six months of the year. The slowdown in domestic economic activity led to a fall in employment and almost flat Inflation.
The slowdown in economic activity as a result of the pandemic negatively impacted on government revenue. In addition, fiscal implementation was delayed as the final declaration of the 2 March election result was not declared until 16 June. Prior to presentation of the new government’s budget spending was constrained by the laws of the country. As a result, there were significant decreases in both current revenue and capital expenditure. Over the first six months of 2020, total revenue fell by 10% relative to the same period in 2019, while total expenditure fell by 4.4%. Resultingly, the overall balance fell from a surplus of 0.2% of (full year) GDP in the first half of 2019 to a deficit of 0.4% over the same period in 2020.

The government announced or implemented a number of relief measures to deal with COVID-19, including a removal of value added tax (VAT) on utility bills, waiver of VAT and duties on medical supplies, extension of deadlines for the filing of tax returns, distribution of food packages to support the vulnerable population affected by the COVID‐19 pandemic and cash transfer for small farmers.
The Bank of Guyana’s monetary policy stance remained accommodative in 2020. The reserve requirement ratio and discount rate remained unchanged at 12.0% and 5.0% respectively. Over the first six months of the year the net redemption of treasury bills for monetary purposes amounted to G$ 352 million. In response to the COVID-19 crisis, the Central Bank has implemented several financial measures, including a three-month moratorium to classify affected loans as non-performing, and encouraged financial institutions to offer relief such as reduction in interest rates and deferral of loan payment.The Bank of Guyana’s official US exchange rate remained steady at G$ 208.5 to US$ 1 over the first six months of 2020. Throughout the rest of the year, the exchange rate is expected to remain steady as the authorities seek to keep prices stable.

December 2019 saw the introduction of crude oil to Guyana’s export portfolio. This new commodity resulted in the merchandise trade balance moving from a deficit of US$ 627 million or 12.1% of GDP in the first half of 2019 to a surplus of US$ 143 million or 2.8% of GDP over the same period in 2020. Crude oil contributed US$ 452 million to the total export value. Traditional exports of gold and rice also increased, due to increases in volume and prices for both commodities. Exports of
sugar, timber bauxite and other products declined. Imports fell by 20% due to reduced consumption resulting from the various lockdown measures. The current account deficit contracted by 64% (in nominal terms), and moved from 16.9% of GDP to 6.0%.The non-oil sector shrank by 4.9% in the first half of 2020, relative to the same period in 2019.

The contraction was due mainly to reduced production in the services sectors due to lock down and social distancing measures. Conversely, the nascent oil sector grew by 45.9%. While oil production was initially projected to increase to 120,000 bpd (barrels per day), this target has not been yet realized.Reduced international oil demand stemming from the pandemic’s effects resulted in lower prices. Also,in June production was reduced to 30,000 bpd due to issues with the Liza Phase I gas compressor.Production increased to 63,00 bpd on average in the third quarter and is expected to average 105,000 bpd in the fourth quarter.

Growth is estimated at 30,9% for full year 2020 and 8.1% for 2021.

Year-on-year inflation was 0.9% in September 2020. There was deflation in several sectors, as prices fell in the following categories: clothing (-1.8%), footwear and repairs (-0.9%), housing (-0.7%) and transport and communications (-1.3%). The factors pulling the inflation rate up were increases in food prices (2.5%) and medical care and health services (4.8%); the latter reflected supply shortages
resulting from increased medical care due to the pandemic.

The contraction in the services sector led to reduced employment fell in the private sector. In addition, employment in the public sector fell by 3.3%, due mainly to 12.7% lower recruitment by public corporation GUYSUCO.