You can lie with data or illuminate the truth with data. And there's something in between -- half-truths.
A
$14 billion correction in export figures by the central bank is necessary because it addresses one economic half-truth.
But half-truths are unnerving.
The data revision that came on Wednesday through a regular update on the balance of payments raises disturbing questions about the country's economic performance and the policy that revolved around it.
The shocking revelation has sent economists scrambling for answers, but there are more questions than answers as the authorities are almost silent.
What's clear is that the discrepancy in export figures again underscores the importance of accurate macroeconomic data. A lack of statistical accuracy can upend many indicators. The calculation of gross domestic product is one of them.
Such a big discrepancy is "unbelievable", said MK Mujeri, an economist and former director general of the Bangladesh Institute of Development Studies.
Export and import data calculation is a simple task, but big mistakes such as this by officials raise questions over the authenticity of other components of the economy. "Entire GDP estimates should be revisited," said Mujeri.
His stance concurs with the views expressed by other economists.
"If the ratio of this discrepancy has significantly increased over time, then that should necessitate revisiting the growth estimates," said Ashikur Rahman, principal economist at the Policy Research Institute of Bangladesh.
With the disclosure, some other issues came to a head as well.
The statistical revision suggests that Bangladesh Bank and the finance ministry have finally accepted that no significant export earnings are retained abroad as exporters have claimed for years. That means the trade deficit is much larger than originally presumed. That also indicates that the target of reaching $110 billion in exports by 2027 is far from realistic.
"In other words, we should now formulate a more realistic export strategy and identify what exact constraints are hindering our export performance," Ashikur said.
The difference between export figures calculated by the Export Promotion Bureau and Bangladesh Bank persisted for at least 12 years, with the gap crossing $12 billion in fiscal 2022-23.
Economists have long been referring to the puzzle. Finally, the central bank woke up and reconciled the mismatch for the July-April period of fiscal 2023-24. As a result, exports fell 6.8 percent during this period, a sharp contrast with a 3.93 percent growth shown in the EPB's figures released earlier.
What's more, Bangladesh runs the risk of reputational damage abroad. The country's image as a garment powerhouse defined by the sheer volume of shipments will be seriously dented. Clothing exports, which make up about 10 percent of the economy, are an important indicator that sets the country apart from its peers.
SOME ESTIMATES ARE OBSOLETE NOW
It is going to create serious data chaos. Whatever Bangladesh has estimated in the past has now become "mostly irrelevant", said Fahmida Khatun, executive director of the Centre for Policy Dialogue.
The EPB publishes figures based on the data from the customs department. Apparently, for procedural reasons or otherwise, the customs department took into account the same export data more than once in many cases, known as double or triple counting.
As per the EPB data, exports were $47.47 billion in the July-April period of fiscal 2023-24. However, the amount stood at $33.67 billion after the correction, according to data released by the central bank on Wednesday.
But it's not clear for how long such wrong data entry has been going on.
Good policy framing depends on authentic data. Poor quality data gives wrong signals to the policymakers.
"If policymaking is done based on unreliable data, then policies become irrelevant and defunct," Fahmida said. Unfortunately, citizens have been misled about the real economic situation due to such anomalies perpetuated by government organisations, she said.
These errors show the extent of data governance or a lack of it in Bangladesh. Without quality information, informed policy-making is difficult, said MA Razzaque, chairman of the Research and Policy Integration for Development.
The export data mismatch will have an impact on GDP estimates because value addition from exports is included in the GDP calculation. The ratio of value addition is nearly 60 percent. So, the GDP impact will be as much as $6 billion, Razzaque said.
Md Deen Islam, associate professor of economics at Dhaka University, said this correction would lower the GDP growth rate, with exports contributing less to overall economic output, GDP growth rates for the period will need to be revised downward, and future projections for economic growth will need to be adjusted to reflect the more accurate export figures, potentially leading to more conservative growth estimates.
The significant revision could create temporary confusion and mistrust among stakeholders, including businesses, investors and international partners, he said.
"Revisions might lead to questions regarding the credibility and reliability of economic data published by national agencies," he added.
Deen Islam said policymakers may need to reassess their strategies to stimulate economic growth and stabilise the macroeconomic environment as the revised export figures indicate a significant decline.
However, the reconciliation of export data provides a more accurate picture of Bangladesh's economic landscape, which is crucial for effective policy-making and strategic planning, said Deen Islam.
Birupaksha Paul, a professor of economics at the State University of New York, said it was a positive move toward a proper accounting of the balance of payments.
A senior official of the EPB said it does not produce export data. The agency compiles export data based on numbers it receives from the customs wing of the National Board of Revenue and the central bank.
"We only see export data once the goods are shipped. If any consignment is returned, the EPB does not have the chance to find that out," he said, adding that it is monitored by the BB and NBR.
"Still, if we need to correct any data, we will do it," said the official. There is a committee comprising representatives from the EPB, the BB, the NBR and other agencies.
The EPB is yet to release data for the July-June period of FY24 although it usually publishes the figures early every month.
Saiful Islam, executive director of Bangladesh Bank, said from now on, the central bank will base the calculation on the corrected export data.
Asked about the previous mismatch in data between the BB and the EPB, he said there was no problem with the past data. There was a problem with the method of reporting. He did not elaborate.
Despite the big reset, the economy's health remains unchanged. The correction addresses anomalies but does not fundamentally alter the economic landscape.
You can lie with data or illuminate the truth with data. And there’s something in between -- half-truths.
www.thedailystar.net
Startling discrepancy in export earnings has come to light as the authorities have recently wiped out export records worth $23.34 billion.
The Export Promotion Bureau (EPB) initially reported $93.14 billion in exports for the first 10 months of the fiscal year 2023-24 and the same period in 2022-23.
In a surprising twist, the central bank has recently claimed that exports were only $69.80 billion during the period, which is down by $23.34 billion or 25 per cent from the previous figure.
The authorities concerned did not provide any explanation for the discrepancy, while business leaders said it substantiated their longstanding suspicion on intentional ballooning of export figures. The inflated figures misguided the policymakers and affected the businesses eventually.
Economists, however, appreciated the move to accept the reality and disclose the actual data on export earnings. Since exports data are crucial for the balance of payment and foreign currency exchange rate, they welcomed the 'positive' initiative, though it is already late.
The EPB officials kept mum on the massive discrepancy. On the condition of anonymity, some of them admitted that the export data have been erroneous for the past two to three years.
While explaining the issue, some central bank officials said they have so far been depending on the EPB data to estimate export earnings. But the actual earnings were consistently falling short of the desired figures, and the central bank faced questions from local and international agencies in this regard.
Against such a backdrop, the export data were verified and the actual exports were found lower than the reported figures. From now on, the export reports will be prepared with actual data and the revenue board (NBR) and the EPB will use the same figures, they added.
As per the actual export data, the central bank recalculated the balance of payment on Wednesday and saw the financial account turning from a deficit to a surplus. The current account fell in deficit due to the export data fluctuations. Besides, there has been a $5.56 billion deficit in the balance of payment during the July-April period of the fiscal year 2023-24.
According to the EPB, exports were $45.67 billion in the first 10 months of fiscal year 2022-23, but the central bank found the figure to be $36.13 billion, down by $9.54 billion.
Similarly, the EPB claimed $47.47 billion in exports for the first 10 months of 2023-24, while the central bank reported $33.67 billion for the time, showing a $13.80 billion shortfall.
This correspondent visited the office of EPB vice chairman Anwar Hossain on Thursday afternoon, to collect their explanation on the discrepancy. He could not be reached there as multiple staff said he went to the commerce ministry for an emergency meeting.
Attempts to reach him over the phone remained unsuccessful. As no other officials could not be contacted, the official explanation of the EPB has still been missing.
Ready-made garments constitute some 84-85 per cent of the country's total exports. Garment exporters have been expressing doubts over the EPB export figures since the middle of the fiscal year 2022-23.
Some exporters said their purchase orders declined significantly amid rising inflation on the onslaught of the Russia-Ukraine war. Some 20-30 per cent of their production capacity remained unused, and it impacted the country’s overall exports adversely.
But the EPB showed a 10 per cent growth in garment exports following the fiscal year 2022-23, contrasting sharply with the NBR that estimated a 4 per cent decline in exports. There was a $8.47 billion discrepancy in export figures of the EPB and the NBR.
For the just concluded fiscal year, the central bank estimated $29.68 billion in exports in the first ten months, while the EPB claimed the amount to be $40.49 billion.
SM Mannan, the president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Prothom Alo that they have long been casting doubts about the EPB export data, and it has been substantiated through the revelations of the central bank and the revenue board.
“The wrong estimates have tarnished our image. The actual exports were inflated through inclusion of other estimates. The stimulus for the export of ready-made garments might have been downsized considering the inflated export figures,” he said.
Asked about the issue, the research director of the Centre for Policy Dialogue (CPD), Khondaker Golam Moazzem, said it shows that there still persists some confusion over data. The central bank initiative, however, is positive, though it is late.
“Alongside flaws in reporting, non-repatriation of export proceeds is another significant reason behind the discrepancy in figures. There is a scope to bring back the export earnings if the calculations are done on the basis of letter of credit (LC),” he added.
On the condition of anonymity, multiple EPB officials admitted that their export data have been erroneous for the past two to three years.
en.prothomalo.com
The World Trade Organization (WTO) in its latest data has unveiled that Bangladesh's export figure is nearly $9 billion less in 2023 than what the country's Export Promotion Bureau reported.
According to the new data released on Thursday (1 August) through the WTO's interactive tool "World Trade Statistics 2023 – Key Insights and Trends", Bangladesh exported $38.4 billion worth of clothing in 2023, making up 7.4% of the global market.
However, this figure is nearly $9 billion less than the $47.4 billion reported by the EPB.
Earlier in May, the country found itself at the centre of a numerical conundrum after the Bangladesh Bank also found discrepancies in the country's export figures – revealing a $10 billion gap over the last nine months of FY24 based on revised numbers from the National Board of Revenue (NBR).
In response to the discrepancies, the EPB has paused the release of export data for three months starting this July to address the inconsistencies.
But, despite facing headwinds in the global markets and grappling with rising production costs due to price hikes of raw materials and energy, Bangladesh remains the world's second-largest clothing exporter after China.
The country's market share has grown from 2.5% in 2005 and 4.2% in 2010 to 7.4% in 2023.
China, while still the largest clothing exporter, saw its share of global exports decline from 36.6% in 2010 to 31.6% in 2023, with exports totaling $165 billion.
In 2023, Vietnam, the third-largest apparel-exporting country, exported $31 billion worth of clothing, reflecting a market share increase to 6.0% from its 2.9% share in 2010.
According to the WTO data, Bangladesh exported apparel worth around $7 billion more than Vietnam in 2023, while in 2018, both countries exported the same amount of clothing – around $32 billion.
Later, in 2020, Bangladesh was pushed back to the third position by Vietnam, however, Bangladesh again secured the second position in the global clothing export market in 2021.
Türkiye became the fourth largest clothing exporting country grabbing a 3.6% global share and exported apparel worth about $19 billion in 2023. It is followed by India, with a 3.0% market share and exported garment items worth $15 billion.
However, the WTO digital data platform also showed that Bangladesh fell to the 55th rank among the largest merchandise exporters in 2023, falling from 49th in 2022.
However, this figure is nearly $9 billion less than the $47.4 billion reported by the EPB
www.tbsnews.net
Following the revelation of a $10 billion export data error, the Bangladesh Bank, Export Promotion Bureau (EPB), and the National Board of Revenue (NBR) are all deflecting responsibility for the error, raising questions about how such a significant mistake could occur.
Sources within the involved parties told TBS that the disparity arose because the NBR's customs department recorded multiple entries for the same export shipments.
Officials from the Bangladesh Bank and the EPB blamed it on the revenue authorities, saying their export data publications depend on information provided by the NBR. Meanwhile, NBR officials have refrained from directly addressing these questions, and no official has been willing to disclose their identity.
"The gap in export data has arisen due to double counting," a senior NBR official told TBS, on condition of anonymity.
The official also hinted that the issue could be linked to the software utilised by the NBR for storing export-related data.
State Minister for Commerce Ahasanul Islam Titu also said, "This issue stems from multiple counts by the NBR, which they have acknowledged. This has also been revealed through their own assessments."
Mentioning that the NBR is taking corrective measures, he said, "Until now, we [EPB] have relied on secondary data. Moving forward, we will scrutinise the data meticulously. We will not publish any data otherwise. Such mistakes won't be repeated.
"The EPB, which operates under the Ministry of Commerce, has been duly instructed in this matter."
Officials from the central bank also placed the responsibility on the NBR. A senior executive at the Bangladesh Bank said since the NBR is the primary source of export data, it holds complete accountability for the mismatch in data entries causing a deficit in the financial account.
However, another senior NBR official refused to accept full responsibility for the statistical gap.
Speaking to TBS yesterday, he explained, "Often, samples sent, discounted items, or rejected goods are not excluded from export figures. This is beyond the control of customs, as NBR discloses this information upon export.
"Besides, products sold by Export Processing Zones (EPZs) within the country are classified as exports as well."
Another officer from NBR's customs department said, "There is a shortage of manpower in NBR's customs, with over 80% of our workforce primarily focusing on imported goods. It is challenging to thoroughly monitor exported items."
Unlike imports, exports lack a direct revenue connection. Money laundering activities could potentially be facilitated through export channels, he added.
Regardless of the reasons behind this discrepancy, the massive miscalculation in export data will significantly impact the country's macroeconomic calculations, said analysts, implying that the credibility of data released by various Bangladeshi government agencies will now face scrutiny on the global stage.
Just a procedural error, or something bigger?
Dr Ahsan H Mansur, executive director of the Policy Research Institute (PRI), told TBS, "The entire process requires serious scrutiny. Is this simply a procedural error, or is there something more to it? It is essential to investigate whether anyone has exploited this situation."
He said, "A committee should be formed to determine whether exporters exploited incentive benefits or money laundering were involved in this mistake."
Attempts to reach NBR Chairman Abu Hena Md Rahmatul Muneem for comment were unsuccessful.
The NBR has not provided any official explanation to the media regarding this matter yet.
BB and EPB to use same customs code
On 26 June, in a meeting chaired by Deputy Governor of Bangladesh Bank Md Habibur Rahman and attended by relevant parties, it was decided that all entities will use the uniform Customs Procedure Code (CPC) provided by NBR to accurately represent export figures.
It was noted that the Bangladesh Bank adheres to the Customs Procedure Codes (CPC) prescribed by the International Monetary Fund (IMF), which do not align with those of the EPB.
Furthermore, it was agreed that the EPB will revise the export data for the fiscal years 2022-23 and 2023-24 based on the updated information from the NBR. They will also coordinate with Bangladesh Bank's statistics department before publishing the revised export data.
EPB in trouble over release of revised data
A senior EPB official told TBS, "We have been instructed to release revised data for the past two fiscal years. We will prepare it upon receiving the updated information from the NBR, but this process will take at least a month."
The official expressed concern about potential scrutiny, stating, "If we disclose the revised data, we will face questions regarding its accuracy. People will question why and on what basis the previously published statistics have been changed."
"We will follow the directives of the Ministry of Commerce," he added.
Central bank official hinted that the issue could be linked to the software utilised by the NBR for storing export-related data
www.tbsnews.net
Tariqul Alam
