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GDP estimates: a failure of ‘Planning’?

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GDP estimates: a failure of ‘Planning’?

BR Research
June 9, 2023


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The federal finance minister had a profound moment of candidness yesterday. During the press conference for the presentation of the Economic Survey of Pakistan 2022-23, the FM attempted to dodge a query regarding the reliability of GDP estimates by diverting the query to minister Planning, adding that “the Pakistan Bureau of Statistics (PBS), working under the Planning Commission, is responsible for collection and reporting of statistics, and does a stellar job at it”. The finance minister could not have better encapsulated the malaise that plagues the reliability of national economic statistics, and that too in such few words.

As the custodian of economic growth and fiscal management, the finance ministry is a consumer of statistics, and thus has a conflict of interest in overseeing their collection and reporting. For the finance minister, therefore, it is a certificate of credibility that the collection of economic growth statistics - as reported by the Survey – is conducted by an arm of a different ministry rather than his own (which could, theoretically, have an inherent interest in massaging growth estimates to window dress own performance). As part of the Statistics division, PBS is housed under the Planning ministry, which – at least to the FM - proves that its reporting is autonomous and in no way influenced by Q-block.

That may be, but does placing PBS under the Planning Commission guarantee its operational autonomy? The General Statistics (Reorganization) Act, 2011 under which the bureau was established in its modern form does not seem to think so (at least as per the copy of the Act uploaded on the National Assembly website, notified through The Gazette of Pakistan May 31, 2011).

The Act notifies establishment of an organization for collection of general statistics, functioning under a Governing Council, however, with no reference of reporting or subordination to any ministry or division of the federal cabinet. In fact, as per the Act, the planning minister is not even supposed to be a member of PBS’ Governing Council, which is instead chaired by the finance minister in ex-officio capacity.

Unfortunately, because the Act does not make explicit reference to the operational autonomy of the Bureau of Statistics, the federal government is well within its rights to put it under any division. Clubbing PBS with the Statistics division – under Plan Comm. – then makes logical sense to avoid redundancies in functions.

However, it would be a mistake to pretend that the Bureau can maintain autonomy in its operations as long as it is attached to any ministry or division in any form. Attachment to Planning is a particularly terrible idea, as the ministry is responsible for the performance of national economic and social development indicators, and therefore faces a conflict of interest in reporting statistics, just as Finance.

It is no surprise then that the estimates of economic growth and development routinely draw flak and criticism from across the political spectrum, be if estimates of inflation, GDP, or population census.

Consider that the GDP estimate for outgoing fiscal year reports a 6 percent rise in energy and utilities segment, in a year when energy tariffs rose by 42 percent on average. Or that the small-scale manufacturing or cottage industry output is reported to have grown by 9 percent, in a year when LSM is reported to have declined by 7 percent. Or that the transport and logistics segment is estimated to have grown at 4.75 percent over last year, in a year when wholesale and retail trade turned negative. Or – focusing on this section’s favorite punching bag - Livestock has consistently shown average growth over 3.5 percent for the last 25 years – never mind the level of inflation, demand, natural disaster, or any other endogenous or exogenous variables ever affecting growth in sectoral output.

The reliability (or lack thereof) of Pakistan’s national economic statistics is thus a crisis of Planning, specifically its dotted reporting line to the ministry. If wishes were horses, one could have hoped for Bureau’s autonomy becoming a pre-condition in a future IMF program (just as was the case with SBP’s autonomy). However, considering that the finance minister has still not gotten over central bank’s independence, complaining about it again in yesterday’s press conference, it is hard to find any faith in future of Pakistan’s statistics reporting.


 
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