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Quick Facts
- Population:
- GDP (PPP):
- $6.7 billion
- 3.4% growth
- 3.2% 5-year compound annual growth
- $8,519 per capita
- Unemployment:
- Inflation (CPI):
- FDI Inflow:
Guyana’s economic freedom score is 56.2, making its economy the 124th freest in the 2020 Index. Its overall score has decreased by 0.6 point due to a decline in the fiscal health score. Guyana is ranked 24th among 32 countries in the Americas region, and its overall score is well below the regional and world averages.
Guyana’s economy has been considered mostly unfree since 2012. GDP growth, however, has been improving in advance of an oil boom that will come on stream in 2020 and has the potential to transform the country, as a petrostate, into the fastest-growing economy in the region.
With an oil windfall poised to materialize in 2020, it would be in Guyana’s best interest for the government to take firm steps immediately to strengthen the rule of law, especially judicial effectiveness and government integrity, and improve the freedom and competitiveness of financial institutions.
Background
After former slaves in British Guyana settled in urban areas, indentured servants from India were recruited to work on plantations. The resulting ethno-cultural divide has led to turbulent politics. Government corruption, endemic violent crime, and drug trafficking have been aggravated by the collapse of neighboring Venezuela. Guyana has been independent since 1966, and its governments have been socialist-oriented. In 2019, President David Granger’s democratic-socialist coalition was forced to put policymaking aside because the year was dominated by ongoing debate and legal maneuvering over the timing of the next general election, now set for March 2020. The principal opposition party is the left-wing People’s Progressive Party/Civic. Exports of sugar, gold, bauxite, shrimp, timber, and rice currently represent nearly 60 percent of formal GDP.
Guyana’s property rights system is overly bureaucratic and complex, partly because of overloaded, overlapping, contradictory, and nontransparent regulations. Personnel shortages, delays, and inefficiencies undermine the judicial system. Courts are slow and ineffective in enforcing contracts or resolving disputes. The public generally perceives officials at all levels as corrupt. Compliance with legislation is uneven.
The top personal income tax rate is 33.3 percent, and the top corporate tax rate is 40 percent. Other taxes include property and value-added taxes. The overall tax burden equals 26.2 percent of total domestic income. Government spending has amounted to 34.5 percent of the country’s output (GDP) over the past three years, and budget deficits have averaged 4.7 percent of GDP. Public debt is equivalent to 57.0 percent of GDP.
A lack of transparency makes it hard to run a private business, but some progress is being made. Further regulatory and administrative reforms are needed. The labor force lacks skills. The IMF recommends more flexible work arrangements to increase female labor participation. After years of losses requiring heavy subsidies equaling 1 percent to 2 percent of GDP, the government has taken steps to sell the state-owned Guyana Sugar Corporation.
The total value of exports and imports of goods and services equals 106.0 percent of GDP. The average applied tariff rate is 6.6 percent, and various nontariff measures limit overall trade freedom. Most new foreign investments are screened. The approval process for investments can be burdensome and nontransparent. The banking sector, plagued by inefficiency and a poor institutional framework, has become more fragile.