Economy of Guyana

The economy of Guyana is one of the fastest growing in the world with a gross domestic product (GDP) growth of 19.9% in 2021. In 2023, Guyana had a per capita gross domestic product (purchasing power parity) of Int$60,648 and an average GDP growth of 4.2% over the previous decade. Guyana's economy was transformed in 2015 with the discovery of an offshore oil field in the countryâ€™s waters about 190 km from Georgetown, making the first commercial-grade crude oil draw in December 2019, sending it abroad for refining.

Top Sectors in Guyana

Agriculture in Guyana

Sugar is the most historically important product of Guyana, however, the industry has been in decline due to global competition and other factors. It still is a major export, along with its related products molasses and rum. Banks DIH and Demerara Distilleries are the countries' only distillers, but Guyana is worldâ€™s 14th largest exporter of rum. In 2018, Guyana produced 1.2 million tons of sugar cane, 964 thousand tons of rice, 136 thousand tons of coconut.

Mining in Guyana

Mining has surpassed the economic importance of sugar in recent years, making up a sizable portion of Guyana's GDP. The large-scale gold and bauxite mining operations are all foreign-owned, but the vast proportion of gold and diamond mining is done by small and medium-scale miners.

Petroleum in Guyana

In the 2010s, significant offshore oil finds by Exxon have renewed interest in foreign investment in the country. A 2018 estimate predicts Guyana's oilfields are holding over 3.2 billion barrels. Offshore crude oil extraction began in 2019.

Fishing in Guyana

Most of what is fished is consumed locally, but there is a sizable export market for ocean shrimp. Overfishing of shrimp has led to Atlantic seabob becoming the most commercially important catch. Commercial fishing is mostly marine, as inland fishing is mostly attributed to subsistence fishing done by Amerindians.

Guyana - Key Economic Indicators

Exports & Imports

Guyana's economy is heavily reliant on exports, with its main commodities being gold, rice, and crude oil. Gold currently holds the top spot, contributing over $1.4 billion in 2023, but crude oil is rapidly gaining importance. Fueled by booming oil production, Guyana's exports reached an estimated $3.2 billion in 2023, while imports were around $2.7 billion.

Balance of Trade

Due to the recent surge in oil production, Guyana has enjoyed a trade surplus in recent years. In 2023, this surplus was estimated at around $500 million. This positive cash flow provides resources for the government to invest in development.

Infrastructure Development

Guyana's infrastructure development faces challenges due to its dense rainforests and limited resources. The total paved road network is estimated to be around 6,000 kilometers, concentrated near the coast. Investments in improving roads, bridges, and waterways are crucial for connecting remote areas, facilitating trade, and unlocking economic potential. Additionally, Guyana is prioritizing upgrades to its ports and airports to handle increased cargo and passenger traffic associated with its growing economy. The Cheddi Jagan International Airport expansion project aims to accommodate larger aircrafts and boost tourism.

Fiscal Policy

Guyana's government is experiencing a significant windfall due to oil revenues. This allows for increased spending on social programs, infrastructure development, and debt reduction. The government established a Sovereign Wealth Fund in 2017 to manage oil revenues for future generations.

Monetary Policy

Guyana's monetary policy is overseen by the Bank of Guyana. The bank's primary focus is maintaining price stability and managing inflation. Since Guyana uses its own currency, the Guyanese dollar (GYD), the Bank of Guyana has more flexibility in its monetary policy actions compared to countries that use a shared currency.

Trade Agreements

Guyana participates in several trade agreements that benefit its exports. These include the Caribbean Community (CARICOM) Single Market and Economy (CSME), which provides duty-free access to other CARICOM member nations. Additionally, Guyana has trade agreements with Cuba, Venezuela, and China.

Environmental Regulations

Guyana has established environmental regulations to protect its rainforests, biodiversity, and natural resources. These regulations focus on sustainable mining practices, deforestation control, and pollution mitigation. Balancing economic development with environmental protection remains an ongoing priority for the government. The Guyana Green State Development Strategy (GGDS) outlines a roadmap for achieving sustainable development.

Tax System in Guyana

Capital Gains Tax: Capital gains on the disposal of some assets, like property or investments held for more than one year, are subject to capital gains tax in Guyana. The rate is typically 20%, but there are exemptions for certain assets held for a longer period.
Corporate Tax Rate: The general corporate tax rate in Guyana is 40%. However, some exceptions exist: (i) Specific industries or new businesses may benefit from temporary tax breaks or lower rates. It's important to stay updated on these incentives. (ii) The extractive sector has a separate tax regime with royalties and other levies.
Sales Tax: Guyana has a Value Added Tax (VAT) system, currently set at 16%. This tax applies to most goods and services sold within the country.
Property Tax: An annual property tax is levied on real estate in Guyana. Rates can vary depending on the property type, location, and value. There are also additional property taxes applied during transactions like inheritance and property transfers.
Payroll Tax: Guyana has a social security system funded in part by payroll taxes. Employers and employees each contribute a percentage of wages and salaries towards social security. The combined contribution rate is around 20% (as of 2024).
Tax Deductions and Credits: Guyana offers various tax deductions and credits to incentivize specific activities or ease the burden on taxpayers. Specific details may change, so consulting a tax professional is recommended. Here are some potential examples: (i) Deductions for business expenses. (ii) Allowances for dependent care costs. (iii) Tax breaks for investments in certain sectors or environmentally friendly practices.
Tax Compliance: The Guyana Revenue Authority (GRA) is responsible for tax collection. The efficiency of tax collection has improved in recent years, but challenges persist, particularly in the informal sector.
Tax Burden: The overall tax burden in Guyana can vary depending on individual circumstances and business activities. The existence of VAT can add to the cost of consumer goods, but the government is also trying to attract investment with incentives.

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Guyana

17 Dec 2024

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