The World Bank Group has completed A Pivotal Moment for Guyana: Realising the Opportunities, its first Systematic Country Diagnostic (SCD) for Guyana.
An SCD is an assessment of the constraints a country faces and the opportunities it can take to accelerate progress in reducing poverty and improving living standards for its people. The SCD draws on findings of research done by the World Bank Group and benefitted from feedback received during consultations with key stakeholders in Guyana including government officials, civil society groups, private sector representatives, international experts, and development partners.
Guyana is a small State with abundant natural resources, but the country has a legacy of jobless growth and deep geographic disparities and inequalities. In 2018, Guyana’s national poverty headcount rate was among the highest in the Latin America and Caribbean region at 43.4 per cent. Within that, there are regional differences, with poverty rates highest in the interior region, where communities have limited access to economic opportunities, health care, and public services. Over 80 per cent of the country’s poor live in rural areas. Economic and social factors have contributed to high emigration rates, with 39 per cent of all Guyanese citizens currently residing abroad. Among those with tertiary education, the rate is even higher. In 2020, the COVID-19 pandemic has stretched the country’s health systems and has enhanced vulnerabilities in access to care.
The discovery of offshore oil and the start of production have placed Guyana among the countries with the most natural resources per capita and situated the country at a pivotal moment. The sector has the potential to transform the structure of the Guyanese economy, but also poses unprecedented challenges. Development in oil-producing countries can come at a high environmental cost, which needs to be managed. In addition, the management of the expected revenues and their macroeconomic impact will determine whether this resource exacerbates existing development challenges or helps the country to overcome them.
Oil revenues are expected to be large, but for this to translate into achieving long-term and sustainable growth, that reaches all levels of the population, good governance and strong public institutions are vital. Guyana must improve its human capital development and health indicators, reduce poverty levels, and balance growth with environmentally sustainable practices. As the Government begins to develop the oil and gas sector, ensuring governance mechanisms that adhere to international environmental and social standards is critical to avoid many of the issues other resource-rich countries have faced.
The SCD report offers a vision of Guyana as a high-income economy on the path of inclusive and sustainable growth, with social cohesion and environmental resilience. It suggests several priority areas and related policy actions to achieve these goals:
o This includes balancing fiscal spending with the absorptive capacity of the economy and managing the exchange rate.
o Mitigating fiscal risks arising from climate change is important as well as ensuring environmental sustainability.
o Boosting investment in climate-resilient infrastructure and adherence to environmental protection standards can facilitate more sustainable development and urbanisation.
o Addressing governance challenges will be necessary to expand access to high-quality public services and increase government transparency and accountability, while sustainably managing the oil and gas sector and financial assets. It will also be important to encourage greater public engagement and more collaboration among government agencies.
o This involves strengthening the public sector to deliver services and ramping up public spending on resilient infrastructure with environmental protection.
o Employment rates are already relatively low in Guyana, with a 54.5 per cent labour force participation rate in 2017, lower than the regional average. Currently, limited competition, a weak business climate, and small, underdeveloped markets are some of the challenges limiting employment. Policy actions should aim at improving the business environment, maintaining public sector employment at sustainable levels, and leveraging untapped human and natural capital.
o A child born today in Guyana will reach just 49 per cent of her potential had she enjoyed complete education and full health. Currently, Guyana has only 1.6 hospital beds per 1,000 people, lower than the Caribbean average of 2.3. Large-scale investments in education and health, along with infrastructure, are needed to increase the opportunities for Guyanese people, including: full coverage of basic services like improved water and sanitation, roads, electricity, primary and secondary education, health care, and financial services. Such full coverage of essential health and education services needs to address the country’s geographic disparities.
o Future policy actions recommended include strengthening the social protection system, achieving universal health care, and quality systems for tertiary and technical education.
Measures that support environmental sustainability and green growth in Guyana should underpin all these policy areas. In addition, basic conditions vary greatly across different regions of Guyana, so public policies should be adapted and prioritised to overcome these regional deficiencies and ensure successful development outcomes. The SCD suggests addressing the geographic disparities by identifying unmet development goals per region and prioritising basic service delivery and infrastructure that match the needs in each region to support the social and economic well-being of all Guyanese.
The SCD will provide the analytical basis for the Country Partnership Framework (CPF), a strategy document that sets priority areas for the World Bank Group’s engagement in a country. The new CPF for Guyana will guide the WBG’s program over a five-year period and preparation will begin in 2021.