In his recent research paper titled “How Much Should We Trust the Dictator’s GDP Growth Estimates?“, Dr Luis R Martinez exposed the extent to which autocratic governments exaggerate economic growth. He studied the overstatement of GDP growth in autocratic regimes by comparing the self-reported GDP figures to the night-time lights (NTL) recorded by satellites from outer space. He found that autocracies overstate their yearly GDP growth by approximately 35 percent.
Modern autocrats tend to depend on their so-called economic accomplishments as a way to legitimise their hold on power. Martinez argued that, although the incentive to overstate economic performance is shared by governments of all kinds, manipulation of official statistics can easily be done in autocratic regimes due to the absence of institutional checks and balances. This is exactly what happened during the long authoritarian rule of recently ousted Prime Minister Sheikh Hasina.
Many statistics like GDP growth, inflation rate, population, per capita income, agricultural production and consumption, export earnings, foreign exchange reserves, etc. were falsified at various times during the 15-plus years of Sheikh Hasina regime. The credibility of the GDP growth calculation shown every year was questioned by many economists and local and international organisations. Export and remittance growth did not correlate with GDP growth; private investment did not correlate with the growth shown in the industrial sector. During the Covid pandemic, the blatant manipulation of GDP was exposed. Even though the transport sector, hotel-restaurants and small industries suffered due to the pandemic, the data presented by the Bangladesh Bureau of Statistics (BBS) showed significant growth in these sectors.
For example, from July 2020 to June 2021, BBS showed a value addition of about Tk 24,000 crore or more than 10 percent despite various restrictions on public transport throughout the year. After reviewing the data of the first nine months of FY2020-21, BBS gave a provisional estimate of 5.43 percent GDP growth. In the next three months, due to Covid, the economic activity was sluggish, but the final data showed a GDP growth rate of 6.94 percent, which raised the question about its credibility.
BBS inflation statistics also did not match the reality. Even when the prices of all things were high in the international market and people were suffering from increased prices of essentials in the domestic market, BBS showed a decrease in inflation. According to the bureau, in January 2022, food inflation rates for urban and rural areas were 4.85 percent and 5.94 percent, respectively. However, according to the South Asian Network on Economic Modeling (SANEM), in January 2022, food inflation in urban and rural areas stood at 11.36 percent and 11.21 percent, respectively—double the rates claimed by BBS.
That these data manipulations were done systematically is evident from a recent investigative report by Bonik Barta. According to the report, former Finance Minister AHM Mustafa Kamal was the mastermind behind these fabricated statistics. Under his leadership, an influential syndicate of five to six people within the BBS used to manipulate critical data, including GDP growth and inflation rates. They used to exaggerate the statistics on growth and industrial output. About the calculation of GDP, a former secretary of the statistics department said, “GDP growth rate is decided first. Later, the accounts are reconciled by ‘back calculation.'”
To manipulate the Consumer Price Index (CPI), various non-essential items like wardrobes, laptops, and chairs—which are rarely purchased—were included in the inflation basket. Thus, by increasing the number of non-essential items in the inflation basket from 420 to 749, the impact of rising prices for essential goods was diluted, resulting in artificially low inflation figures.
The practice of statistical manipulation was not limited to Kamal’s period at the planning ministry, nor was BBS the only institution doing it. Many other key state institutions were also doing the same, which shows how systemic the data manipulation was. For example, big discrepancies between the data of Bangladesh Bank and Export Promotion Bureau (EPB) were reported several times in the media, but were not corrected. At one point, when the International Monetary Fund (IMF) also raised questions on the matter, the government admitted that the EPB showed about $14 billion more than the actual value of exports in the first 10 months of FY2023-24. And in the previous 10 fiscal years, $65 billion worth of additional export was shown.
According to a report by The Daily Star, there are huge discrepancies in the data of revenue collection and expenditure among government agencies. For example, during the July-April period of FY2023-24, the gap in revenue collection figures between the finance ministry and National Board of Revenue (NBR) stood at around Tk 11,451 crore, while the difference between the Implementation Monitoring and Evaluation Division (IMED) and the finance ministry in terms of ADP spending stood at Tk 41,136 crore in the first 10 months of FY23.
The Hasina government also falsified food production figures. It used to claim that Bangladesh is self-sufficient in food. However, according to the food grains report of the United Nations Food and Agriculture Organization (FAO), Bangladesh had to import more than 10 million tonnes of food grains annually in recent years. Data from the Bangladesh Bank also showed that the country imports food products worth about $5 billion to $7 billion every year. Due to overestimation of food crop production in the country, shortages of various food items were created every year, resulting in abnormal increases in food prices.
Accurate data and statistics are essential for effective planning and policy formulation. If decisions are made based on fabricated statistics, it can cause a major disaster for the country’s economy in the long run. For example, if the population is estimated less than the actual number to show higher per capita income, the demand for consumer goods of all kinds, including food grains, cannot be accurately estimated. As a result, even though there is a surplus of products according to the government data, there will be a deficit in reality, which will cause price hikes.
One of the reasons why the country’s economy fell into a big crisis during the previous regime is the manipulation of statistics like GDP growth, agricultural production, inflation, unemployment, import, export, revenue income, etc. In order to solve this crisis, all such statistics must be corrected immediately, otherwise the decisions made by the interim government will be wrong. The incumbent government should establish an independent data commission and audit all the existing statistics on a priority basis. Moreover, the data collection and evaluation system should be reformed in such a way that it is not possible to falsify statistics for political purposes in the future.
Kallol Mustafa is an engineer and writer who focuses on power, energy, environment and development economics. He can be reached at [email protected].
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