Govt data in economy contradicts reality
Individual sector credit growth has been sluggish, capital machinery imports declined, and commercial production grew slower in the outgoing fiscal year than a year ago.
The rate of the implementation of the Annual Development Programme (ADP) was at 49.09 % in the July-April period of FY21, the lowest in a decade.
From the figures, one may conclude that the economy of Bangladesh is not successful this fiscal year compared to the previous year. Nevertheless, the figures made open public by the Financing Division paint a numerous photo. It showed the market fared very well in FY21 than in FY20!
In the Medium Term Macroeconomic Policy Statement (MTMPS) for the fiscal year 2021-22 to 2023-24, the Division projects 6.1 per cent economic growth for FY21, up from 5.2 % in FY20.
And regardless of the slowing rate of the private sector credit growth and the falling import of capital machinery, the MTMPS maintains that both open public and private purchase grew in FY21 when compared to a year previous as a share of gross domestic merchandise (GDP).
The claims have drawn flak from economists and private think-tanks since Finance Minister AHM Mustafa Kamal tabled the national budget for another fiscal year on June 3.
The Centre for Insurance policy Dialogue (CPD) questioned the GDP growth estimates found in the MTMPS. The South Asian Network on Economic Modelling (Sanem) expressed doubts about the historically high non-public investment data.
"Info deficit is degenerating into info anarchy," stated Debapriya Bhattacharya, convener of the Citizen's Platform for SDGs, Bangladesh, in Sunday.
"This sort of data anarchy contributes to distorted analysis that brings about bad policy options. And it causes unmet requirements of the persons, and over time, it is the political leaders who'll face the consequences."
This is not the first time questions have already been raised about the major macroeconomic data.
In April 2018, the World Lender questioned the 7.65 per cent economical growth estimate of the Bangladesh Bureau of Statistics (BBS) for FY18, raising doubts over claims of robust expansion of the manufacturing sector and domestic require.
Citing the figures of GDP growth, every capita income found in the MTMPS, the financing minister's budget speech, the BBS and the 8th Five-Year Plan, Bhattacharya explained per capita cash flow was bigger in the provisional info of the financing ministry than that of the Eighth Five-Year Plan.
The Financing Division puts the per capita income at $2,064 for FY20, which is 2 % greater than the BBS estimate.
Bhattacharya said the per capita cash flow for FY21 was displayed at $2,170 found in the 8th Five Year Plan, that was projected prior to the pandemic arrived. Nevertheless, the number used in the budget file, the MTMPS and the BBS was $2,227.
"How can the statistics of the pre-pandemic period come to be lower than those found in the Covid-19 period?" said the distinguished fellow of the Centre for Insurance policy Dialogue (CPD).
The same was on repeat in the projected per capita income info for FY22, where the provisional finance ministry estimate is bigger than the 8FYP figure, said Bhattacharya.
It generally does not end there.
According to Bhattacharya, FY21 would be the worst calendar year in the latest period for the market. But GDP growth, exclusive and public expenditure were demonstrated to be bigger in FY21 than in FY20.
"I have a profound doubt about it."
The MTMPS said that the private and public investment would increase to 24.2 % of GDP found in FY21 from 23.6 % in FY20.
Public investment is normally estimated to grow to 8.2 per cent of GDP in FY21 from 8.1 % a year ago.
"Public and private expense aren't corroborated by the expense correlates. The indicators of many government agencies usually do not also support them," Bhattacharya said.
The economist said the 6.1 per cent GDP growth projection did not consider the next wave of coronavirus.
Citing MTMPS, the Execution Monitoring and Evaluation Division, Bangladesh Bank and BBS data, he said ADP execution was 74.9 per cent in the complete fiscal year of 2019-20, and it had been 49.09 % during the July-April amount of the current fiscal.
The private sector credit grew 8.6 % in FY20. It slowed to 8.3 % in the first 10 months of FY21.
"Almost all of the indicators are showing that previous fiscal year was better than the current fiscal year, and the finances is stating the opposite," Bhattacharya said.
Projections of the international organisations have also been estimated prior to the second wave. On the other hand, all primary forecasts are constantly below the countrywide estimate, he added.
He said there is no reference to the new poor and aged poor in the proposed budget.
The 8th Five-Year Strategy estimated that the rate of poverty rose to 23 per cent in the current fiscal year, from 18.6 per cent a year ago. This was not really mentioned in the spending plan.
The program said the poverty rate would stand at 23 % in FY21 and would come down to 17 per cent in 2024.
The budget speech said the poverty rate will be brought right down to 12.3 per cent in 2024.
The surveys by the CPD, the Sanem and the Brac Institute of Governance and Advancement and the energy and Participation Research Centre showed that the ratio of the poor ranged from 35 per cent to 43 per cent because of the monetary slowdown, Bhattacharya said.
Sanem Executive Director Selim Raihan said the individual investment had been displayed at a historically advanced. However the incremental capital-productivity ratio have been falling slowly but surely in the FY20 and FY21.
"At the same time when businesses suffered losses and were trying to recover, the private expenditure is shown higher amazingly," he explained.
"It is seriously inconsistent," he said, citing Sanem's Business Self-assurance survey, which discovered that 55 % of organizations were trying to make a comeback from the pandemic induced losses.
"Wrong data will lead to a significant disconnect with surface reality and policy-building. This will cause half-hearted policy."
Due to this fact, the stimulus deals will not be properly targeted, and public protection schemes won't expand, said Raihan, also a professor of economics at the University of Dhaka.