Home »Articles and Letters » Articles » Facts are sacred

Prime Minister Shahid Khaqan Abbasi, in one of his first decisions after taking oath, curtailed the all-encompassing powers enjoyed by Minister of Finance Ishaq Dar during the four-year long Sharif administration, and, most noteworthy, was his decision to take away the Statistics Division from the administrative control of the Ministry of Finance. The first time minister for Statistics is Kamran Michael. When Statistics Division was under Dar's administrative control its data was constantly under attack by independent media and economists for significant data discrepancies - discrepancies from what was routinely generated by bodies/departments under the control of other ministries as well as credible industry sources. What was perhaps indicative of Dar's high-handedness was that he felt no compunction to reconcile the data released by the Pakistan Bureau of Statistics (PBS) with these alternate credible sources.

Data integrity was repeatedly challenged during the third tenure of the Sharif administration but Ishaq Dar's defence, uttered invariably in a belligerent tone, ranged from one of outright rejection of the charge to accusing those who challenged it of an anti-PML-N bias to accusing them of having a personal agenda.

Outright rejection was the easiest to dismiss by Dar's detractors given the obvious disconnect between PBS statistics and those available from other government and industry sources. Equating criticism (or in this case challenging alternate data) with a political bias did not hold water either as the data cited was from other ministries and industry sources. And finally Dar, in an effort to deal with those challenging PBS data as well criticising his policies, took several of our so-called independent economists (including former finance ministers as well as those retired from senior bureaucratic positions in the Ministry of Finance) on advisory boards - a position that many accepted - with the objective of silencing their criticism of his policies; and, in the event, that they were not silenced Dar rightly challenged their performance during their official tenures for consistently failing to resist flawed policies dictated by the chief executive who appointed them. Be that as it may, Dar has convinced few that data discrepancies did not disable the Ministry of Finance from taking informed decisions for the past four years.

Much has been made of data discrepancies in the calculation of key macroeconomic indicators including the components of the Gross Domestic Product (GDP) by the Dar-led Finance Ministry. Statisticians point out that manipulating some data is easier than others, for example, small scale manufacturing sector, which showed an extremely healthy growth in recent years - 6 percent in 2016-17 and 5.5 percent the year before, is on-sent by provinces which is then compiled by the PBS which leaves ample room for manipulation by the compiler of the last resort. What is however more disturbing and a reflection of the PBS's attempt to 'manage' data during the Dar-led Finance Ministry is the widening gap between the State Bank of Pakistan's (SBP) data (with respect to exports and imports) and the PBS data: In its first quarterly report for 2016-17 SBP noted: "usually for any period import data recorded by PBS tends to be higher than that available with SBP: the ten year average difference between the two (for July December is 1.6 billion dollars). However, the difference has widened considerably from fiscal year 2015 onwards and touched an unprecedented 3 billion dollars in July-December fiscal year 2017." In recent weeks, an attempt was made to rationalize this discrepancy which upped the current account deficit.

Budget documents have, over time, become a wish list which envisage higher than ever before outlay on development expenditure (for political reasons), a decline in outlay on current expenditure as well as an overly optimistic revenue target (to appease foreign donors and the heavier the reliance on foreign borrowing as has been evident during the past four years the greater the need for overstating revenue). This tendency is not unique to the Sharif administration. There has thus historically been a discrepancy in the data proposed in the budget documents and the actual figures at the end of the fiscal year with a major discrepancy in the revenue figures that has prompted the Federal Board of Revenue (FBR) to seek advance tax as well as delay refunds.

The budget in years past was presented sometime around the second week of June, while the end of the fiscal year is 30th June, thus Pakistani governments projected expenditure and revenue for the remaining period of the fiscal year - usually two to three weeks maximum. Thus the more 'optimistic' the Finance Minister the more inaccurate the projections. However, the discrepancy between the budget documents and the actual figures at the end of the fiscal year widened considerably this year as Ishaq Dar decided to present the budget before the onset of Ramazan, an understandable decision, but which implies that projections are made for around six weeks rather than three weeks as in previous years. Thus the discrepancy between the data contained in 2017-18 budget documents and the actual position by end June 2017 is even more than usual.

Disbursement for the Public Sector Development Programme (PSDP) for the outgoing fiscal year was given as 715.1 billion rupees in the 2017-18 budget documents however the Ministry of Planning, Development and Reforms gave a total disbursement till 30 June 2017 at 744.12 billion rupees - a difference of 29 billion rupees. Government supporters would no doubt point out that the higher actual disbursement by the end of the year as indicated in the Ministry of Planning, Development and Reforms website is an indication of the government's commitment to meeting the budgeted development expenditure for the year just past. Ignored of course but what must ring alarm bells for the discerning economist is the massive rise in borrowing from foreign commercial banking sector (at high rates of return and low amortization period) in June 2017: a whopping 1.5 billion dollars.

To conclude, the importance of accurate statistical data cannot be underestimated. It not only enables the government to take informed decisions but also enables it to take decisions in a timely manner. The bureaucrat in-charge of the Statistics division is a Dar appointee and it is unclear whether he will be susceptible to any influence from his former boss or not. Be that as it may, one would hope that Kamran Micheal adopts a policy of hands-off other than to hire statisticians on merit - a modus operandi that would make PBS relevant and, most importantly, allow the Ministry of Finance to take informed decisions in a timely manner.



the author

Top
Close
Close