The oft used proverb “there are three kinds of lies - lies, damned lies and statistics” is a stark reminder that data can and is used to bolster a weak argument, and is frequently used by administrations struggling to cope with poorly performing macroeconomic indicators; in spite of a global consensus that the use of accurate data is critical to enabling a policymaker and/or a prospective private investor to take an informed decision.
That administrations around the world tend to present data in a way that reflects positively on their performance is not in question; however, unlike several Western democracies data manipulation in Pakistan is not limited to data presentation and on occasion includes outright data manipulation.
There are a number of ways to present a flawed picture through the use of data to inadvertently or deliberately mislead a target group: (i) manipulating the baselines given to an axis in a graph with say the x axis not starting from zero (in contrast to the y axis) to show a more favourable performance than is in fact the case; (ii) using uncorrelated data that may lead to an inaccurate perception that a trend exists where it does not; for example on 19 June 2016 the chairman of a parliamentary committee constituted by the Federal Tax Ombudsman on a complaint filed by the Pakistan Apparel Forum noted in a detailed report that the government withheld bona fide refunds enabling it to claim that total tax collections rose by 20 percent – the report was endorsed by the Federal Board of Revenue (FBR) at the draft stage but on the then finance minister Ishaq Dar’s directions it was removed from its website; (iii) focusing on the micro picture, thereby ignoring the macro-picture; an example is the Khan administration’s focus on the current account surplus July-November 2020 (which once contractionary fiscal and monetary policies were abandoned post-Covid19 registered a rise in December 2020 as projected by independent economists) while the rise in the trade deficit was ignored and the resulting low growth rate disregarded; (iv) use of percentages when the baseline is very low that would automatically show a massive improvement; an example is the Khan administration’s insistence that large scale manufacturing (LSM) grew by 7.4 percent July-November 2020 year on year while ignoring the extremely low base of negative 24.8 percent in April-June 2020; and (iv) use of biased words in the graph’s title, axis labels, caption or statements that inappropriately primes the reader – a practice patently evident in statements by the country’s economic decision makers as well as the pie charts released by Pakistan’s survey companies.
Several Pakistani finance ministers have accused their predecessors of gross data manipulation with no concern over possible negative repercussions on the economy. Shaukat Aziz allegedly engaged in blatant and unprofessional manipulation by not bothering to ensure that the components of a macroeconomic indicator were synchronized to lend credence to the manipulated data – a form of manipulation fairly easy to identify by statisticians and/or economists. In 2008 during his month and half long tenure as the Finance Minister, Ishaq Dar (31 March to 13 May) publicly accused Shaukat Aziz of data manipulation, a charge that had repercussions on the terms of the then ongoing talks with the International Monetary Fund (IMF). In his first tenure as the finance minister (2010-13) Dr Hafeez Sheikh expressed his anger at the timing of the release of unfavourable data that compromised his ongoing talks with the IMF and later reduced the weightage of food in the calculation of the consumer price index by 6 which allowed him to claim a marked reduction in inflation. In his third tenure as the finance minister (2013-2017) Dar downgraded the growth rate (Gross Domestic Product) calculated in 2010-11, two years prior to the start of his own tenure as the finance minister, to show the highest growth rate in six years during the first year of his tenure as the country’s finance minister.
All Pakistani administrations, including the incumbent, launch mega as well as smaller projects which are selected not on the basis of their economic (ERR) and internal (IRR) rates of return but on the basis of their political considerations. And take credit for projects that were launched during the tenure of their predecessors – one such project being the Matiari-Lahore transmission project. This is not to argue that social sector projects, which have a longer gestation period relative to infrastructure projects which impacts on their ERR and IRR should be ignored, just to highlight the fact that within the infrastructure/social sector projects it may be appropriate for both federal and provincial governments to begin to undertake a detailed assessment of their rates of return before deciding on a particular project to maximize the usage of scare resources.
The fact that global trade has taken a major hit due to the pandemic is not in question; neither is the fact that Pakistan is not an exception. However, releasing only export figures and not the import figures, recently tweeted by Razzak Dawood, does not present a holistic picture which is necessary to undertake appropriate policy changes. Thus if exports are rising but not by as much as imports, which was the case as shown in subsequently released data, then decisions need to be taken with respect to how the government will plug the widening deficit. Would remittance inflows, which have increased in recent months with the SBP taking credit for easing the use of official channels while critics give greater weight to the pandemic and the cessation of hundi-hawala activities, continue this upward trajectory or as SBP claims in its recent report remittances are likely to decline – a view supported by multilaterals? And would the government need to sustain its policy of getting more loans (bilaterally, multilaterally, equity borrowing through issuance of sukuk/Eurobonds or commercial borrowing from foreign banks) to achieve a minimum required level of foreign exchange reserves?
Prime Minister Imran Khan recently directed his economic team leaders to present the narrative of success to the media (based on their briefing to the cabinet that the country is moving in the right direction) by correctly pointing out that they are more qualified to present the narrative than Shibli Faraz, the Federal Minister for Information. However, their reluctance maybe due to the fact that they are not presenting the complete (macro) picture to the cabinet and do not wish to face embarrassing questions fielded by the beat reporters.
The Prime Minister, while addressing the passing-out parade of Islamabad police last month, stated that accurate data had not been made available to his administration before his tenure began – a surprising claim as there was timely release/uploading of the annual Economic Survey, state of the power sector report, summary of consolidated budgetary operations every quarter, economic data compiled and released by the Pakistan Bureau of Statistics (PBS) and the State Bank of Pakistan (SBP); as well as credible challenges to the veracity of the data released during the tenure of previous administrations available in newspapers and on the net. And perhaps he missed news reports that two of his critical cabinet members - Razzak Dawood Advisor for Commerce and Dr Hafeez Sheikh Minister for Finance - challenged data integrity in 2020 with Sheikh going a step further to urge PBS, under the administrative control of Planning Ministry, to compile and release data promptly. PBS when asked if any changes in methodology and/or date of release are under consideration responded by stating that no one has proposed any changes to its operations.
To conclude, one would hope that Asad Umer as the Minister under whose administrative control PBS operates responds to the serious charges leveled by his cabinet colleagues and makes necessary adjustments in methodology as it is his responsibility to ensure data integrity.
Copyright Business Recorder, 2021
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