The International Monetary Fund (IMF) noted in its country report on Guyana today that the Government of Guyana (GoG) has made significant strides in modernizing the framework that would be used to ensure proper governance of the oil and gas industry.
Expounding on the work Guyana has done, the IMF outlined that the Petroleum Exploration and Production Act that was approved in August 2023 enhances the government’s ability to regulate the exploration and production of oil. This is also complemented by the introduction of a new model Production Sharing Agreement (PSA). With the government auctioning 14 new offshore blocks for oil and gas exploration and discovery, the IMF highlighted that the new PSA reflects substantial improvements, including increased royalties, a lower cost recovery ceiling, and the introduction of a corporate tax.
The report also underscores the successful implementation of the Local Content Act, brought into operation in 2022, thereby establishing a suite of robust rules to be followed on utilizing local employment and contractors in the energy sector. That law also introduces a ceiling to be followed on local labor usage and contractual terms, including payments to local suppliers.
The IMF also said the establishment of the Local Content Secretariat and a comprehensive register showcase the country’s commitment to fostering local participation.
The report states, “The Register now includes 876 Guyanese companies as of end-June 2023, and the Secretariat has approved over 43 five-year local content master plans to date.”
Additionally, the IMF commended the government’s broader efforts to enhance the business environment, including the legal framework strengthening, streamlining permits and inspections through a digital window, and addressing labour shortages in the judicial sector. The report also notes the positive impact of increased electricity supply and its reliability, along with reduced costs and time for access.
Highlighting Guyana’s remarkable economic growth since the initiation of oil extraction, the IMF emphasized the tripling of the economy’s size and the highest real Gross Domestic Product (GDP) growth globally in 2022.
“Oil production is ramping up rapidly, supporting the highest real GDP growth in the world in 2022 (62.3 percent). With the help of oil revenues, first transferred to the budget in 2022, the government has started investing heavily to address large development needs,” the IMF said. To this end, the report indicates strong economic fundamentals without signs of inflationary pressures.
Looking ahead, the IMF said Guyana’s oil reserves per capita are one of the highest in the world; predicting, “Going forward, oil production will continue to expand rapidly as four new fields will come on stream by end-2028.”
It was stated too that sustained real non-oil GDP growth is also expected, as the government continues to invest in human capital, lower energy costs, and build infrastructure, including for climate change adaptation and strengthened international reserves.