Guyana, a country situated between the borders of Venezuela, Brazil, and Suriname, could be the next oil powerhouse in the world. Due to its unique geographic location, the country is rich in resources such as gold, bauxite, aluminum, and natural gas.
The IMF (International Monetary Fund) reckons that Guyana will experience an upsurge in economic growth going to 2020. The Fund concludes that the country will see an 89% increase in GDP — a 4.4% increase from 2019’s readings. The forecast surpasses the world’s largest economy (United States) by 40 folds.
The dramatic upswing of Guyana’s economic growth is due to its decision to start oil production next month. The CNBC reports that Guyana banks the highest amount of oil per person. Compared to Saudi Arabia’s 1,900 barrels of the offshore reserve per person, Guyana can host 3,900 barrels.
Expectations over Guyana’s economic growth are indefinite since production hasn’t commenced, and discoveries are still ongoing. However, the IMF’s projection is tagged as “ambitious” due to the lack of “regulatory legislation in the country,” the source added.
Guyana first gained traction in May 2015 after ExxonMobil announced the discovery of more than 90 meters of oil-bearing sandstone reservoirs. Since 2008, major oil companies are pouring significant attention to Guyana’s petroleum exploration.
However, analysts suspect a probable challenge over Guyana’s sudden rise in the oil sector. Aside from the lack of regulatory legislation, the country could eventually fall to a “resource curse.”
The IMF, however, was quick to highlight the potential dangers that align with such rapid economic expansion.
“The pace of scaling-up public spending needs to be gradual to reduce bottlenecks from absorptive capacity constraints, avoid waste, and minimize macroeconomic distortions related to ‘Dutch disease’ that has often inflicted economies experiencing sizable increases in resource-based income,” the Fund noted.
