The Bangladesh Bank overstated the net foreign direct investment data by $5.7 billion between fiscal 2019-20 and 2022-23.
The data anomaly came to the fore after the BB revised the data from fiscal 2019-20 as per the BPM6 guideline of the International Monetary Fund, said BB spokeswoman Husne Ara Shikha.
“We corrected the data as there was an observation from the IMF on the previous data. The FDI inflow came down drastically due to the data correction,” she said.
Previously, the data for exports and foreign exchange reserves were overreported and had to be corrected following IMF observations.
In the four fiscal years, Bangladesh actually received $5.86 billion as net FDI. But the BB previously showed $11.56 billion.
The FDI data deflated as the companies’ losses from reinvested earnings were deducted following IMF methodology, which reflects international best practices. The company’s loss was not factored in before.
It was not possible to correct the data before fiscal 2019-20 due to technical reasons, Shikha added.
However, the FDI data for fiscal 2023-24 was released as per BPM6 guidelines.
The net FDI inflows in the last fiscal year were $1.46 billion, down 8.75 percent year-on-year, central bank data showed.
Accurate data is essential for taking the right policy measures, said Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development.
“The FDI data might have been overstated for political reasons — we harmed ourselves by doubling the FDI data.”
The previous policy measures will have to be revisited in light of the new FDI data, said Mujeri, also a former chief economist of the BB.
“Now I can say that we took wrong policy measures based on false data,” he said, adding that correct economic data and information are imperative now for restructuring the economy.
Proper methodology was not followed for calculating economic data, said Fahmida Khatun, executive director of the Centre for Policy Dialogue.
“But we were able to understand the actual scenario of the economy despite the wrong economic data, like FDI data. Wrong data gives wrong signal and wrong signal led to wrong policy measures,” said Khatun, also a director of the BB board.
There was no employment despite FDI growth, export growth and GDP growth so that there were doubts about the data.
“FDI was already low in Bangladesh but now it has decreased even more, which is very concerning. The corrected FDI data reflects that we are simply failing to attract foreign investors to the country,” Khatun added.
Daily Star