The unexpected economy with the most growth in 2022

he International Monetary Fund A chart revealed that some of the countries with the most growth in 2022 were islands: Fiji, at 12.5%, and Seychelles, at 10.9; and Barbados, 10.5.

However, there is a country that is growing more than any other. And it is not a world power, but rather a small region in the north of South America. It comes to Guyanaa place where its GDP has tripled in the past five years, making it the fastest growing economy in the world.

Located between Venezuela, Suriname, and Brazil and with a population of 800,000, the country recorded a growth of 62.3% in 2022, and is the most developed country by far. Its capital is George Town It is the only country in South America where English is spoken.

Historically, Guyana has been one of the poorest countries in the Americas. This can be seen reflected in some of the data. For example, more Guyanese people live outside the border area than in the same country. In contrast, it has the second highest infant mortality rate on the continent, after only Haiti.

The country has recently relied its economy mainly on the production of rice, sugar and gold. But in 2015 things started to change. That year, the American company Exxon Mobil Found oil in the Guyana Sea. This discovery was followed by many others.

They’ve found so much oil that Guyana has become the world leader in offshore discoveries since 2015, with about 30% of oil discovered worldwide since then. And this is where it all started to look better.

This miraculous discovery brought with it a lot of foreign capital, which led to the growth of the gross domestic product and the development of this place in an unexpected way. Oil became more than 70% of what it exports and the rest of its production declined.

But not everything is so easy. One of the problems with Guyana is that it is a very politically divided country. Since its independence from the United Kingdom, the country has been significantly divided into two groups: the Indo-Guyana, descendants of slaves from India brought by the English, People’s Progressive Party; and Afro-Guyanese National People’s Congress.

For this reason, almost any political decision is bypassed by this polarization. One of the first things the Government of Guyana had to do was negotiate with foreign companies. And as usual, the quarrels started here.

In 2016 he was the president David Granger, of Afro-Guyanese descent. His government made one of the first agreements with the exploration company Exxon. But this agreement was not very favorable for the country: it implied the fact that the state would charge a 2% royalty on the extracted oil.

The company can then use 75% of the profits to pay for operations before and during exploration, with the remaining profits split 50-50 between the company and the state. So unpopular was this agreement that in 2020 Granger lost a hotly contested election with the Indo-Guyanese, Irfan Aliwho is the current president.

His government put out a new tender which included a 10% royalty to the government from the extractions, 65% to the company to cover its costs, to which 10% would be added in taxes, and from there the remainder would be divided 50-50. .

In 2021, the government created a sovereign wealth fund for oil profits, but quickly approved a budget of $600 million from this fund for the following year, up 44% from the previous year.

His plan is based on investing in infrastructure, education, and a low-carbon development project by 2030. The latter is one of his most ambitious targets and focuses on producing renewable energy, protecting biodiversity, and promoting sustainable tourism.

But there is no guarantee that this money will be used in the right way. according to him International Transparency IndexGuyana ranks 85th out of 180 countries in corruption levels.

If the necessary cooperation and stability are achieved, it is estimated that by 2027 Guyana could grow by about 25% annually, achieve a per capita GDP of $35,000 and become the country with the highest per capita GDP in South America.

But aside from the importance of transparency in the accounts, the Government of Guyana also sees this situation as a race against time. There is a global consensus on the quest for a carbon-neutral world by 2050, and if it materializes, this million-dollar discovery won’t have much value.

Oil may seem like a blessing, but it has been proven that its profits are rarely in the right hands. Guyana faces a huge challenge. Its potential for growth is linked to the fact that it is able to achieve political stability and order in its financial resources. And only time will tell.