Oil & Gas Virtual Summit


Oil & Gas Virtual Summit

1-2 December 2020


Presentation by Dr Gobind Ganga, Governor Bank of Guyana.

Not so long ago Guyana was viewed as a beautiful country, full of potential, but lacklustre in growth. Today this is not so, she has attracted lots of interest from around the world and her potential is poised to being realised. This conference is indicative of that fact.

As Investors, many of you are not only seeking opportunities in the oil and gas sector, but also in other sectors. Let me say from the outset investment opportunities in Guyana are vast.

The Bank of Guyana as a major institution in Guyana has been working assiduously to ensure that Guyana’s economy remains strong, encourages investments and is willing and able to support the oil and gas sector within Government’s broader mandate.


Let me first share with you the macroeconomic fundamentals of Guyana over the last 10 years.

Macroeconomic Review

Over those years, our macroeconomic fundamentals have remained strong. Guyana has a diversified economy and have seen economic growth in all sectors over the years. During the 2010-2014 period, real GDP growth averaged 4.0 percent. After the discovery of oil in 2015, economic growth continued, with GDP growing an average of 2 percent over the 2015 to 2018 period. Following oil production in December 2019, Guyana’s real GDP growth was 5.4 percent while for the first half of 2020, the economy grew by 45.9 percent.

Inflation remained single digits as there were no significant spike in prices with an average of 2.7 percent between 2010 and 2014, followed by a deflation of 1.8 percent in 2015. The average inflation was 0.7 percent during 2015 to 2018 while at end-2019, the inflation rate was 2.1 percent.

The G$/US$ exchange rate ranged from G$203.50 in 2010 to G$206.50 at end-2014. From 2015-2017, the rate remained at G$206.50 before depreciating to G$208.50 in 2018.

The overall balance of payments deficit averaged 2.4 percent of GDP from 2010 to 2014, and ranged between 1 and 3 percent of GDP for the 2015-2019 period. The current account deficit averaged 10.9 percent of GDP between 2010 and 2014. However, in 2016, there was a surplus which amounted to 0.6 percent of GDP, while for 2018 and 2019, the deficit increased significantly to over 30 percent of GDP, largely reflecting the importation of goods & services for use in the oil & gas sector.

The overall fiscal balance as a percentage of GDP averaged 3.3 percent between 2010 and 2014 and 2.6 percent for the 2015-2018 period. For the first half of 2020 the ratio stood at 2.8 percent. Current revenue as a percentage of GDP averaged 19.0 percent for the 2010-2014 period, 19.8 percent from 2015 to 2018 and 22.3 percent for 2019. The debt to GDP ratio averaged 51.8 percent between 2010 and 2014, with declines from 2012, reflective of the rebased GDP series. The average debt to GDP ratio was 35.6 percent for the 2015-2018 period while at the end of 2019, the ratio was 32.6 percent.

Broad money, as a percent of GDP, averaged 49.0 percent for the 2010-2014 period, 38.7 percent for the 2015-2018 period and 43.9 percent for 2019. Credit to the private sector averaged 26.0 percent of GDP for the 2010-2014 period, 23.9 percent for 2015-2018 period and 33.8 percent for 2019. Commercial banks interest rates trended downwards during the review period. The small savings rate averaged 1.8 percent from 2010 to 2014, 1.2 percent from 2015 to 2018 and 0.97 percent at end-2019. The weighted-average lending rate recorded an average of 11.3 percent from 2010 to 2014, 10.3 percent from 2015 to 2018 and 9.18 percent for 2019. These rate would indicate the Bank is supporting an expansive monetary policy.

These strong economic fundamentals is the base of requisite investors’ confidence and hence successful investment prospects in Guyana.

Financial Opportunities in Guyana:

Ladies and gentlemen, there are many financial and investment opportunities in every sector in Guyana. Farming out from the oil and gas sector, there are upstream and downstream opportunities including:

  • Geophysical (Site surveys, seismic data acquisition, processing and interpretation) as well of supply and services for production
  • Downstream: Opportunities within the sector relating to the refining, storage, marketing, distribution and transport of petroleum products as well as logistics.

Outside of the oil and gas sector, there are opportunities in public infrastructure. Major bridges, roads, ports and IT infrastructure are needed.  To give an example, it is expected that the new Demerara Bridge will cost in excess of US$300 million to build.

Opportunities exist in agriculture, mining, manufacturing, construction and tourism sectors. Only last week it was reported that permission was granted for investment of over US$1 billion in new hotels over the foreseeable future.

To make these projects reality, a vast opportunity exist in finance. Guyana’s finance sector is small and can offer limited financing to some of the mega projects. However, many of the project will have to be financed by International Banks and other financial institutions.  Additionally, there is room for insurance companies to offer, either jointly with local firms or individually, insurance products to the oil and gas sector.

To encourage investments in oil and gas, the Government has offered incentives to investors including exemption from Value Added Tax (VAT), import duties, taxes and levies on equipment and supplies.

However, those investors who are seeking funding from the Guyana banking sector will have to ensure that proposals are strong and companies are credit worthy. Companies may have to also see alternative source of funding such as corporate loans and bonds suggesting new opportunities in finance.

The Central Bank is highly independent and continues to play its role in regulating the financial system. The banking system remained sound, reflecting adequate levels of capital and profitability. Stress tests conducted by the Bank indicated that the LDFI’s shock absorptive capacity, both at the industry and individual institution levels, remained adequate. This is reflective of a resilient financial system with moderate risk.

Given the importance of an efficient payment system to the functioning of the financial system and the wider economy, the Bank has responsibility for the oversight and regulation of the national payments system and also provides support for payments, clearing and settlement through the operation of the National Clearing House. In 2017, the Bank received support from the World Bank to modernise Guyana’s Payment System. The project entailed implementing a new Payments System Act with supporting regulations and modernization of the Payment System infrastructure. The enhanced payment system, which is expected to be completed by the first quarter of 2021, will ensure that the flow of funds is more efficient and hence a more efficacious intermediation process.

In Guyana, there is free flow of foreign currency as there is no restriction of foreign currency transactions.  Further, we have a liberalised capital account where investors are free to repatriate profits at their will.  The Bank works with the commercial banks to ensure that there is an adequate foreign currency in the system to meet legitimate needs. We are aware of the importance of local content and hence foreign flows will be equally distributed to both foreign and indigenous commercial banks.

The Financial Sector Assessment Program (FSAP) a joint program of the International Monetary Fund and the World Bank which provides a comprehensive framework through which assessors and authorities in participating countries can identify financial system vulnerabilities and develop appropriate policy responses conducted their review in 2016. The Bank has adopted all of the recommendations thereby reducing the risk in the financial sector.

For oil and gas companies in developing countries, perception of commercial and political risks plays a significant part in investment decisions. Our Government understand this and continues to maintain the rule of law, despite the recent elections impasse. Government continues to work on legislations to support the industry and to ensure that there is equity under the law.

Ladies and gentlemen, the oil and gas sector will be a key source for economic growth and will underpin the transformation of Guyana to a modern society. The financial sector will grow over time, both in size and sophistication to meet the needs of the sector. Bank of Guyana continues to ensure that risks in the financial sector are adequately mitigated and there is an even playing field while at the same encouraging growth in products and sophistication.

With this affirmation, all of the Central Bank’s activities are geared to ensure that there is stable economy and friendly investment climate which will promote growth and prosperity in all sectors for our people.

The Bank is reviewing the Bank of Guyana Act and the Financial Institutions Act to ensure that they remain relevant and provide the required oversight of the financial system.

The Bank will continue to support the expansion of digital payment systems to improve payment efficiency in transactions and deepen the participation of citizens.

The Bank recognises that there is need for the deepening of the capital market and is working with counterparts to make this a reality

More importantly, the Bank will continue to work to ensure that the Guyana dollar remains stable and that there is price stability.

Moreover, the Bank is well aware of the Dutch disease and the negative impact it can have on our country. As such we will endeavour to avoid it with appropriate exchange rates to drive a diversified economy.

All of these activities adumbrated will ensure that investment climate remains favourable and the oil and gas sector as well as the other sectors will prosper for the welfare improvement of all of our people.