A continuing theme of Guyanese economic development policy has been the attempt, without great success, to expand agriculture and to diversify the economy. A seven-year development program (1966–72) aimed to move the country's economy away from its heavy dependence on sugar, rice, and bauxite and to increase funds for scientific, vocational, and technical training and agricultural education. A key feature of the 1972–76 development plan was its emphasis on improving Guyana's health and housing standards.
A decisive change in economic orientation was marked by the proclamation on 23 February 1970 of a cooperative republic. The government embarked on a policy of cooperative socialism by nationalizing the bauxite industry, seeking a redistribution of national wealth, and fostering the establishment of cooperative enterprises for agricultural production, marketing, transportation, housing and construction, labor contracting, services, and consumer purchases. Within a decade, about 80% of the economy was in the public sector.
As economic conditions declined in the late 1970s and early 1980s, the government instituted such austerity measures as import restrictions, foreign exchange controls, cutbacks in planned government spending, and layoffs of government employees.
From 1953 through 1986, Guyana received US $115.5 million in nonmilitary loans and grants. Multilateral assistance during the same period equaled US $265.4 million, of which 42% came from the IDB and 30% from the IBRD. The 1985 declaration by the International Monetary Fund (IMF) that Guyana was ineligible to receive further assistance until outstanding debts with the fund had been repaid was an indication of how severe the nation's financial crisis had become. In 1983, the United States had vetoed aid from US and IDB sources, and late in 1985 a barter agreement with Trinidad and Tobago was suspended because of Guyana's failure to repay outstanding loans. As a result, the Hoyte government sought a rapprochement with international lending agencies: a delegation from the IMF, the World Bank, and the IDB visited Guyana late in 1986, and early in 1987 the Guyana dollar was devalued by 56%.
In the late 1990s, primarily as a result of economic reforms, agricultural output grew at a stable rate. Manufacturing output also grew because of improvements in electricity generation and distribution and improved incentives for private investments. These factors combined made continued recovery with real growth rates in excess of 5% per year possible until 1997. Drought and political instability threatened a decade of economic development.
The continuation of sound macroeconomic policies and public sector reform, together with multilateral and bilateral assistance, is crucial to sustaining growth. The fiscal situation is expected to continue improving in the short and medium term, largely as a result of increased current revenues. The inflation rate is likely to stay low, while the medium-term external position of Guyana will remain clouded by the large external debt outstanding, so that the search for debt relief and preferred lending from international donors remains essential.
In 2000, Guyana became eligible for $590 million in debt service relief under the IMF/World Bank Heavily Indebted Poor Countries (HIPC) Initiative. In 2002, Guyana negotiated a three-year $73 million Poverty Reduction and Growth Facility (PRGF) Arrangement with the IMF, to support the government's economic reform program.