Juggling with inflation figures: Minister of Planning first lowered interest rates, then Hasina showed ‘development’

Confirming long-held suspicions, the White Paper Committee has found evidence of data manipulation on inflation and GDP growth in Bangladesh by the ousted Awami League government to boost the government’s image and project stellar economic progress.

The manipulations led to the release of fabricated figures by the Bangladesh Bureau of Statistics, two members of the White Paper Committee told The Business Standard on condition of anonymity.

During Sheikh Hasina’s rule, the agency would initially prepare inflation data and submit it to the Planning Minister, who would then order the figures to be adjusted, they said.

Once revised to the minister’s satisfaction, the data would be sent for Hasina’s approval where it would be further adjusted, they said, adding that the agency would only publish figures approved by Hasina.

For example, while Hasina was still in power, the preliminary GDP growth rate for FY23 was reported at 6.3%. However, the final post-Hasina figure, released on August 31, 2024, showed a growth rate of 5.78%, they said.

During the Hasina regime, economic data was routinely adjusted before release. According to White Paper Committee insiders, this manipulation reached a peak during Mustafa Kamal’s tenure as Planning Minister.

As for inflation, if the figure were to approach or exceed 10%, planning ministers would refuse to approve the figures, the committee found.

Before the Hasina government resigned on August 5, it published the inflation rate for June, which stood at 9.72%. After this, the interim government reported an inflation rate of 11.66% for July, which fell slightly to 10.49% in August.

A member of the committee said that while the manipulation of GDP growth and inflation rates may not significantly change national income per capita calculations, an increase in the real inflation rate would likely result in an increase in the nominal gdp.

“As long as nominal GDP does not decline, per capita income will remain unaffected,” the member added.

According to the commission’s findings, data manipulation peaked during AHM Mustafa Kamal’s tenure as Planning Minister from 2014 to 2018.

Kamal had been abroad since before the fall of Hasina’s government on August 5, while former Planning Minister MA Mannan (2018-2024) has denied allegations of data manipulation.

Mannan told TBS that he never tampered with data, and Hasina never instructed him to do so.

He added that he advised the BBS and the statistics secretary to present accurate data. “Many people were skeptical about Bangladesh’s statistics and did not trust the government’s data. That is why I have repeatedly urged that we always present accurate information.”

Skepticism about BBS data

Skepticism around inflation data and GDP growth rates has long been high among economists in Bangladesh. The difference between government figures and forecasts from organizations such as the World Bank and the IMF is large.

For more than two years, research organizations such as the Center for Policy Dialogue and SANEM have provided evidence that government-published inflation figures were not in line with actual economic conditions.

However, those in the Awami League government, especially the finance and planning ministers, consistently denied all allegations of data tampering.

Economists said the manipulation of such crucial data led to the government’s economic performance being inflated for political gain, while government corruption and incompetence was obscured.

Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD), said there has long been skepticism about the credibility of inflation and GDP growth rates.

“Even without conducting surveys, economists could easily find significant differences. Despite reporting high GDP growth rates, private sector investment and job creation have not increased, indicating a decoupling,” she said.

She also noticed a similar pattern in poverty statistics. “The previous government claimed success in reducing poverty rates; however, if poverty rates were to truly decline, inequality should also decline, which has not been observed.”

Commission to provide accurate data

The interim government formed the committee on August 28 to prepare a White Paper on the state of Bangladesh’s economy.

The National White Paper Commission will begin releasing validation reports from October 31 – two chapters per week.

Debapriya Bhattacharya, head of the 12-member committee, said at an event yesterday that the first chapter of the white paper will focus on illustrating how different types of data manipulation took place, including inflation, growth rates, national income, household surveys and balance sheets. of payment statistics.

He further mentioned that when they sought insights from government officials on these issues, many expressed their helplessness and detailed how they were forced to manipulate data.

Also speaking at the event, Sabur Khan, former president of the Dhaka Chamber, expressed concerns about the reliability of the statistics. “Our main concern is the accuracy of the data. Without reliable information, nothing can function effectively.”

A member of the committee said that there has been no further manipulation of the inflation rate since the interim government took office.

Current planning consultant Wahiduddin Mahmud has reportedly informed the BBS that no prior approval is required before publishing inflation data.

The interim government formed the committee on August 28 to prepare a White Paper on the state of Bangladesh’s economy. The twelve members are led by Debapriya Bhattacharya, a distinguished fellow at the Center for Policy Dialogue (CPD).