Publication: Guyana - Joint World Bank-IMF Debt Sustainability Analysis
Date
2019-09
ISSN
Published
2019-09
Author(s)
World Bank
International Monetary Fund
Abstract
The risk of external and overall debt
distress for Guyana remains moderate, but debt dynamics will
improve significantly with the start of oil production in
2020. All external debt indicators remain below the relevant
indicative vulnerability thresholds under the baseline
scenario, which incorporates the average long-term effects
of oil on economic growth, fiscal balance, and current
account position. The PV of external debt-to-GDP is
projected to decline to 3 percent over the long-term as the
need for external borrowing is offset by the accumulation of
external assets. Stress tests indicate the susceptibility of
Guyana’s external public debt in a very extreme shock which
combines simultaneous shocks to real GDP growth, primary
balance, exports, other flows (current transfers and FDI),
and nominal exchange rate depreciation, as well as second
order effects arising from interactions among these shocks.
The combined effects of these shocks and their second order
effects cause temporary but significant breaches in the
external debt thresholds, prompting a moderate risk rating.
Nonetheless, Guyana has substantial space to absorb these
shocks, reflecting the current low level of external debt.
Guyana’s medium- and long-term outlook is very favorable
given the incoming oil production and revenues, which will
eventually underpin fiscal surpluses and a reduction in
external indebtedness. The authorities reiterated their
commitment in preserving fiscal discipline.
Citation
“World Bank; International Monetary Fund. 2019. Guyana - Joint World Bank-IMF Debt Sustainability Analysis. © World Bank, Washington, DC. http://hdl.handle.net/10986/32559 License: CC BY 3.0 IGO.”