An Image of the Guyana Dollar During British Colonial Rule.
The Guyana dollar was created in 1839 when Guyana was still British Guiana. At that time, it was a localized version of the British Pound and one British Guiana dollar at that time was worth one British Pound. By 1955, at the time of the dissolution of British Guiana, the Guyana dollar had devalued to 2 Guyana Dollar to One British Pound. By 1988, the Guyana dollar had further devalued to 10 GYD to 1 USD, and in 1989, the downward economic spiral forced a reevaluation which pegged the Guyana dollar to the US dollar at the rate of 125 GYD to 1 USD.
In the 1960s, 70s, and 80s, the 5-dollar bill in Guyana had considerable purchasing power. Today, the five dollar coin which replaced the note is negligible.
Guyana’s currency is weak because of numerous factors, but one of the most influential of those factors is the low GDP that the country produced over the last several decades. According to an article by Prof. Henry Lewis Jr., published in the Jamaica Observer, “post-independence, after 1966, multiple factors, such as political instability, nationalization of key industries, and escalating external debt, began to weigh heavily on the economy. By the late 1980s, Guyana was one of the countries with the lowest per capita income in the Western Hemisphere, virtually on the brink of bankruptcy.” Henry further explains that, “the People’s National Congress (PNC) Government in 1989 introduced an Economic Recovery Programme (ERP), which included a notable devaluation of the Guyanese dollar from its official rate of GY$10 to US$1 to a rate of GY$125 to US$1. This devaluation was part of a broader reform package intended to liberalize the Guyanese economy. The Guyanese dollar has experienced further devaluation since then, albeit at a slower rate, with the current exchange rate hovering around GY$210 to US$1.“
Some of Guyana’s dollar notes throughout the decades.
But like the phoenix rising from the ashes of its previous life, Guyana’s financial windfall from oil revenues now enables it to have a much stronger currency. According to the IMF, Guyana’s economy remains resilient in the face of global economic tensions, and grew by 47.2% by the end of 2022. This is only a slight variation from the 47.9% projected by the World Bank, which is also projecting growth of 34.3% in 2023 for Guyana. The economy of Guyana is one of the fastest growing in the world with a gross domestic product (GDP) growth of 19.9% in 2021.[16] In 2022, Guyana had a per capita gross domestic product (purchasing power parity) of $42,647 and an average GDP growth of 4.2% over the previous decade. In the long-term, the Guyana GDP is projected to trend around 14.70 USD Billion in 2023 and 15.20 USD Billion in 2024, according to our econometric models.
Grappling with inflation and rising cost of living, Guyana released the 5000 dollar note a few years ago.
While the Guyana government has expressed some amount of resistance to the idea of reevaluating the Guyana dollar, a reevaluation is inevitable. It must be done, and it should be done in an acute and informed way so as to increase the net worth of every Guyanese citizen. The Guyana Government should inform the citizens at least six months ahead of time when it plans to reevaluate the Guyana dollar and by what value so that citizens can set themselves up to benefit from the reevaluation.
To put this into perspective. If an ordinary citizen has GY$210,000.00 in the bank, that money is now worth just US$1000.00. If the Guyana dollar is reevaluated, for example, to 4 Guyana dollars to 1 US dollar, that GY$210,000.00 will be instantly transformed to US$52,500.00.
In this way, Guyanese citizens can become rich overnight in a similar way to which a handful of Americans became millionaires after the stock market crash of 1929.
Remember, the Guyana Government needs to think in the best interest of the ordinary citizen, and needs to think of new and innovative ways of making Guyana’s oil resources benefit every Guyanese. A timely, informed, and acute revaluation of Guyana’s currency can serve a noble purpose in this regard. A six-month notice of the reevaluation can give citizens enough time to take out loans, liquidate assets, and even borrow money from relatives overseas to put in the bank so as to benefit from a pre-scheduled reevaluation.
