Guyana initially fixed its exchange rate to the USD with limited monetary operations. It then had a period of unstructured discretion when the exchange rate parity was continually adjusted despite heavy controls. In 1991 its exchange rates were successfully unified and then for the most part relatively stable, with some limited financial (and other) liberalisation and some emphasis on price stability, in a long period of loosely structured discretion.
|Years||Targets and attainment||Classification|
|1974-83||currency fixed initially to GBP, then from October 1975 to USD, with very narrow margins set by dominant central bank; exchange controls; monetary policy largely subordinate to fiscal policy and public sector performance, plus credit guidelines for banks; limited use of interest rates from 1978; mid-1981 devaluation versus USD with switch in principle to basket but continued fixing relative to USD; growth of parallel market with rising premium; commodity price shocks met with loose financial policies but tight administrative controls lead to slowing and then sharply negative economic growth plus rising public sector deficits and inflationary pressures 1982-83, with growth of parallel market in goods as well as forex||augmented exchange rate fix AERF|
|1984-90||devaluations January and October 1984 plus change of basket followed by frequent smaller adjustments, but overvaluation remains; some minor liberalisation but policy still leans heavily on administrative controls rather than fiscal/monetary tightening; continued large public sector deficits and (lower) lending to private sector, inflation and balance of payments imbalances worsen, to crisis levels in 1989-90; 1987 large devaluation and establishment of secondary forex window at banks, with rate closer to that of (very wide premium) parallel market; 1989 further large devaluation with unification of (non-parallel) forex markets, to be adjusted on weekly basis; 1990 parallel market legalised in form of free (cambio) forex market open for most transactions (but some still through official market)||unstructured discretion UD|
|1991-2017||1991 exchange rates unified via > 100% devaluation of official rate and forex market liberalised, in context of wider liberalisation and structural reform (designed to transform public sector-dominated into market-oriented economy), plus (this time successful) stabilisation; exchange rate versus USD remains broadly stable with small fluctuations in nominal and real effective rates; 1994 short-lived pressure from government on forex dealers; banks’ excess reserves converted into debentures, start of regular competitive Treasury bill tenders, increased interest rate flexibility; from 1995 further steps towards interest rate flexibility and indirect monetary instruments operated by modernised central bank, especially Treasury bill OMOs which become primary instrument, though monetary growth still affected by fiscal deficits (and their varying external funding); 1995 final unification of official and cambio forex markets (with elimination of parallel market), but market remains segmented as between banks, cambios and central bank) and the interbank market is weak; 1998 reorganisation and recapitalisation of central bank; monetary policy focuses on broad money growth, affected primarily by OMOs; IMF pressure for greater exchange rate flexibility with stronger interbank forex market, authorities long resist, but agree to rethink in context of expected 2020 start of oil production.||loosely structured discretion LSD|
Selected IMF references: SR 1975 p5; RED 1976 pp22,26; RED 1978 pp28-33, 47; RED 1979 pp29-32, 44; RED 1981 pp37, 54, 56; SR 1981 pp9; RED 1982 pp39, 50; SR 1982 pp15-16; RED 1983 pp33-5, 38-9, 40; SR 1983 pp5, 12-17; RED 1984 pp1-3, 21-3, 48; SR 1984 pp1-7; RED 1985 pp55-6; RED 1986 pp1-3; SR 1986 pp14-15, 18-19; RED 1987 pp49-50; RED 1989 pp48-9; SR 1989 pp10, 16-19; STRD 1990 pp79-80; RED 1991 pp1-2, 36; SR 1991 pp4-10, 13, 16-17; SR 1992 pp12-13, 20, 23; RED 1994 pp1-2, 16, 30-2, 41-2; SR 1995 pp5-6; REDSI 1996 pp2-3, 17-24; SR 1996 pp7-8; RED 1999 pp16-19, 21-5; SI 2005 pp51-64; SI 2008 pp14-15; SR 2008 p13; SR 2010 pp11-12; SR 2012 pp14-17; SR 2013 pp13-14; SI 2016 pp15-17. 25; SR 2018 pp36; SR 2019 pp12-13.
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