Dynamic Economy To Ease Social Instability Risks In Guyana, But Challenges Remain

• Fitch maintains its core view that rapid GDP growth and increased government spending will help promote greater social stability in Guyana, despite elevated inflation in the near term.
• The agency forecasts real GDP growth of 29.0% in 2023, following an estimated 62.3% in 2022, primarily driven by the expanding oil sector.. The government plans to use surging oil revenues to significantly increase spending on capital investments and social initiatives, which Fitch believes will mitigate the threat of large-scale protests in the near term.
• In 2022, Guyana withdrew US$607.6Mn from the National Resource Fund (NRF) with a planned budget to increase withdrawals to US$1.0Bn in 2023 to support the development of the non-oil economy, including structural increases in spending on health, education and housing.
• In light of these factors, Fitch holds Guyana's Short-Term Political Risk Index (STPRI) score at 57.4 out of 100. However, the 'social stability' component remains the lowest-scoring element in the STPRI, at 46.3, indicating ongoing risks stemming from a relatively weak labor market and ethnic tensions between the Indo- and Afro-Guyanese population.

(Source: Fitch Solutions)