January 15, 2007 Monday Zilhaj 24, 1427
Timely data for analysis and policy making
By Dr Abdul Karim
THE need for reliable and timely available statistics can never be over emphasisd. They are a must for those who may be interested in the subject on academic grounds, or as policy- makers, producers and consumers, both at home and abroad. They are the basic input for diagnosis, prescription and feedback of the impact of the remedy. There are three basic economic variables, namely national income, monetary data and inflation. First the national income accounts which indicate the resources an economy has for various uses.
National income accounts are initially prepared for the on-going year and the estimates for the preceding year revised, on the eve of the federal budget, most often presented in early or mid-June. The initial estimates for the year, before it is complete, are thus based on incomplete information which gives the actual situation for the first nine months of the year, where available, and projections for the remaining period, not infrequently reflecting official targets. As such, they are no more than guesstimates.
Instead of revising them as soon as complete data for the year becomes available, authorities prefer to hang on to the raw estimates till next June As a result, the users have to live with outdated information so much so that even the annual report of the State Bank,so eagerly awaited around October-November, gives an analysis of the actual performance of various sectors of the economy in the preceding year but relates it to the June overall growth estimates.
The availability of fiscal data used to be the main difficulty but the situation has since improved considerably and this is now available on a quarterly, even though it is provisional. At the moment, not only the data for FY06, but also for the July-September 06 quarter is available on the ministry of finance web site (WS). There is no justification to wait till next June and not to revise national income accounts during the course of the year. It would not be difficult to do so by the end of September or early October. This would be a big help to the SBP annual report for more enlightened conclusions, apart from numerous other uses.
The WS figures have been marked as Provisional, a term not used in its ordinary connotation but signifying Provisional Actuals, indicating a position between revised estimates (RE) and the Final figure. They are thus better than REs given in annual budget statements (ABS).
The State Bank annual report for FY 06 has used this WS information, in its analytical portion, without any qualification, not indicating the Provisional nature of the data, as is clearly marked on the WS statements. This makes them look like the Final figures. For analyzing the federal budget, the report does not make use of WS information but ABS based RE. There is a significant difference between the two sets of figures. For instance, Total Federal Expenditure during FY 06, according to RE, is Rs1,196.4 billion whereas the WS unmentioned figure is Rs.!,079.6 billion, a difference of 10.8 per cent. In RE Revenue Expenditure and Development Expenditure have been placed at Rs1,072.0 billion and Rs53.4 billion as against Rs.853.5 billion ;and Rs.226.1 billion respectively in WS.
As regards financing, Revenue Receipt (net) is RE is Rs721. 3 billion when WS shows it as Rs.714.4 billion. External Resources in RE stand at Rs235.9 billion as compared with Rs148.9 billion in WS. Similar differences may be noted in provincial finance.
The most striking difference is in the figure of bank borrowing or deficit financing. Bank borrowing by the federal government has been shown as Rs66.8 billion in RE whereas WS puts it at Rs111.9 billion. At the same time WS shows the apparently unlikely retirement of bank borrowing to the tune of Rs.40.9 billion yielding the net overall figure of Rs70.9 billion which tallies with the Monetary Survey. RE for provincial governments is not given in the Report.
WS indicates accretion of Rs.2.7 billion under saving schemes whereas the table on national saving schemes in the report shows a reduction, or outflow of Rs.5.8 billion, from Rs.940.0 billion to Rs.934.2 billion.
The availability of fiscal data has improved, but surprisingly data on production remains a problem. This makes even sectoral analyses very difficult. The State Bank annual report, FY 06, which was released on December 2, 2006, five months after the year was out, brings home serious difficulties in this regard. For instance, the data on agricultural crops used in the report is provisional and is the same that was given in the Economic Survey, FY 06 released in June 06.
The following observations in the Report underline the resultant difficulty. ââ¬ÅDespite unexpectedly weak harvests of some key crops (cotton, sugarcane and wheat) the impact of the October 2005 earthquake, a tight monetary policy and an unprecedented rise in oil prices, real GDP remained strong at 6.6 per cent.ââ¬ÅUnfortunately, these expectations received a jolt early into the year, with disappointing Kharif harvests for cotton and sugarcane, more than offsetting the impact of strong rice and maize harvests. However, despite this set back, there was still a possibility that the FY 06 agricultural growth could be achieved, if the wheat was substantially above the target.ââ¬Â ââ¬ÅThe first of these is clearly evident in the unexpected below target harvests of cotton and wheat, both of which saw damage from untimely rains and unfavourable temperatures.ââ¬Â ââ¬ÅProvisional estimates suggest that the wheat harvest fell by 1.4 per cent in FY 06 in contrast to a remarkable 10.8 per cent increase in FY 05ââ¬Â¦.
However, decline in yield is a function of (1) delayed sowing of wheat crop due to the late crushing of sugarcane and extended cotton picking and (2) adverse weather conditions during the period of formation and maturity of grain.ââ¬Â ââ¬ÅIf data on large scale manufacturing up to June 06, released by Federal Bureau of Statistics, is incorporated, the GDP growth may be revised upward to 6.8 per cent for FY 06.ââ¬Â ââ¬ÅThe provisional numbers for FY, based on the data up to March, 06, indicate that the industrial growth stood at 5.9 per cent YOY substantially lower than the 11.4 per cent YOY growth recorded during the preceding year.ââ¬Â ââ¬ÅThe estimated date for the full fiscal year FY 06 for mining and quarrying sector show the 4.2 per cent growth for FY 06 compared with 3.8 per cent growth based on July-March FY 06.ââ¬Â
Inordinate delay in data on agricultural and industrial production is hard to understand. This, in any case, serves no useful purpose. On the other hand, it only undermines the credibility of official statistics. How can food inflation, for that matter overall inflation, one of the most pressing problems of universal interest, be studied and understood, much less effectively handled, without reliable data depicting the actual output of food crops?
Authorities would be well advised to take statistics produced by them more seriously and ensure their reliability and availability with the least time lag so that they may serve their basic purposes. These statistics are signals and can evoke rational response from the stakeholders only if they enlighten and do not confuse them.
http://www.dawn.com/2007/01/15/ebr2.htm
Timely data for analysis and policy making
By Dr Abdul Karim
THE need for reliable and timely available statistics can never be over emphasisd. They are a must for those who may be interested in the subject on academic grounds, or as policy- makers, producers and consumers, both at home and abroad. They are the basic input for diagnosis, prescription and feedback of the impact of the remedy. There are three basic economic variables, namely national income, monetary data and inflation. First the national income accounts which indicate the resources an economy has for various uses.
National income accounts are initially prepared for the on-going year and the estimates for the preceding year revised, on the eve of the federal budget, most often presented in early or mid-June. The initial estimates for the year, before it is complete, are thus based on incomplete information which gives the actual situation for the first nine months of the year, where available, and projections for the remaining period, not infrequently reflecting official targets. As such, they are no more than guesstimates.
Instead of revising them as soon as complete data for the year becomes available, authorities prefer to hang on to the raw estimates till next June As a result, the users have to live with outdated information so much so that even the annual report of the State Bank,so eagerly awaited around October-November, gives an analysis of the actual performance of various sectors of the economy in the preceding year but relates it to the June overall growth estimates.
The availability of fiscal data used to be the main difficulty but the situation has since improved considerably and this is now available on a quarterly, even though it is provisional. At the moment, not only the data for FY06, but also for the July-September 06 quarter is available on the ministry of finance web site (WS). There is no justification to wait till next June and not to revise national income accounts during the course of the year. It would not be difficult to do so by the end of September or early October. This would be a big help to the SBP annual report for more enlightened conclusions, apart from numerous other uses.
The WS figures have been marked as Provisional, a term not used in its ordinary connotation but signifying Provisional Actuals, indicating a position between revised estimates (RE) and the Final figure. They are thus better than REs given in annual budget statements (ABS).
The State Bank annual report for FY 06 has used this WS information, in its analytical portion, without any qualification, not indicating the Provisional nature of the data, as is clearly marked on the WS statements. This makes them look like the Final figures. For analyzing the federal budget, the report does not make use of WS information but ABS based RE. There is a significant difference between the two sets of figures. For instance, Total Federal Expenditure during FY 06, according to RE, is Rs1,196.4 billion whereas the WS unmentioned figure is Rs.!,079.6 billion, a difference of 10.8 per cent. In RE Revenue Expenditure and Development Expenditure have been placed at Rs1,072.0 billion and Rs53.4 billion as against Rs.853.5 billion ;and Rs.226.1 billion respectively in WS.
As regards financing, Revenue Receipt (net) is RE is Rs721. 3 billion when WS shows it as Rs.714.4 billion. External Resources in RE stand at Rs235.9 billion as compared with Rs148.9 billion in WS. Similar differences may be noted in provincial finance.
The most striking difference is in the figure of bank borrowing or deficit financing. Bank borrowing by the federal government has been shown as Rs66.8 billion in RE whereas WS puts it at Rs111.9 billion. At the same time WS shows the apparently unlikely retirement of bank borrowing to the tune of Rs.40.9 billion yielding the net overall figure of Rs70.9 billion which tallies with the Monetary Survey. RE for provincial governments is not given in the Report.
WS indicates accretion of Rs.2.7 billion under saving schemes whereas the table on national saving schemes in the report shows a reduction, or outflow of Rs.5.8 billion, from Rs.940.0 billion to Rs.934.2 billion.
The availability of fiscal data has improved, but surprisingly data on production remains a problem. This makes even sectoral analyses very difficult. The State Bank annual report, FY 06, which was released on December 2, 2006, five months after the year was out, brings home serious difficulties in this regard. For instance, the data on agricultural crops used in the report is provisional and is the same that was given in the Economic Survey, FY 06 released in June 06.
The following observations in the Report underline the resultant difficulty. ââ¬ÅDespite unexpectedly weak harvests of some key crops (cotton, sugarcane and wheat) the impact of the October 2005 earthquake, a tight monetary policy and an unprecedented rise in oil prices, real GDP remained strong at 6.6 per cent.ââ¬ÅUnfortunately, these expectations received a jolt early into the year, with disappointing Kharif harvests for cotton and sugarcane, more than offsetting the impact of strong rice and maize harvests. However, despite this set back, there was still a possibility that the FY 06 agricultural growth could be achieved, if the wheat was substantially above the target.ââ¬Â ââ¬ÅThe first of these is clearly evident in the unexpected below target harvests of cotton and wheat, both of which saw damage from untimely rains and unfavourable temperatures.ââ¬Â ââ¬ÅProvisional estimates suggest that the wheat harvest fell by 1.4 per cent in FY 06 in contrast to a remarkable 10.8 per cent increase in FY 05ââ¬Â¦.
However, decline in yield is a function of (1) delayed sowing of wheat crop due to the late crushing of sugarcane and extended cotton picking and (2) adverse weather conditions during the period of formation and maturity of grain.ââ¬Â ââ¬ÅIf data on large scale manufacturing up to June 06, released by Federal Bureau of Statistics, is incorporated, the GDP growth may be revised upward to 6.8 per cent for FY 06.ââ¬Â ââ¬ÅThe provisional numbers for FY, based on the data up to March, 06, indicate that the industrial growth stood at 5.9 per cent YOY substantially lower than the 11.4 per cent YOY growth recorded during the preceding year.ââ¬Â ââ¬ÅThe estimated date for the full fiscal year FY 06 for mining and quarrying sector show the 4.2 per cent growth for FY 06 compared with 3.8 per cent growth based on July-March FY 06.ââ¬Â
Inordinate delay in data on agricultural and industrial production is hard to understand. This, in any case, serves no useful purpose. On the other hand, it only undermines the credibility of official statistics. How can food inflation, for that matter overall inflation, one of the most pressing problems of universal interest, be studied and understood, much less effectively handled, without reliable data depicting the actual output of food crops?
Authorities would be well advised to take statistics produced by them more seriously and ensure their reliability and availability with the least time lag so that they may serve their basic purposes. These statistics are signals and can evoke rational response from the stakeholders only if they enlighten and do not confuse them.
http://www.dawn.com/2007/01/15/ebr2.htm
