World Bank does not verify growth
For last few years, the World Bank has not been endorsing GDP growth figures approved by government of Pakistan and is publishing its own separate numbers. photo: file
Contrary to the claims made by Prime Minister Imran Khan and his cabinet ministers, the World Bank has not verified the 5.6% provisional economic growth rate for Pakistan for the previous fiscal year.
Pakistani authorities are misstating the facts by repeatedly claiming that the World Bank has endorsed the provisional gross domestic product (GDP) growth number of 5.37% on the basis of old methodology and 5.6% on the basis of new methodology.
PM Khan in his televised address on Tuesday said that the World Bank had verified the 5.6% GDP growth number for fiscal year 2021-22.
“The World Bank does not directly comment on any member government’s published statistics, nor has the prerogative to verify them,” said a spokeswoman for the World Bank while responding to a question whether it has validated Pakistan’s revised GDP growth figures or not.
Questions had been sent to the World Bank after a similar claim was made by Information Minister Fawad Chaudhry last month.
The spokeswoman stated that “the World Bank indeed provided technical assistance on reviewing the methodology for the important rebasing exercise.”
The same position has been communicated by Planning Minister Asad Umar to the prime minister and his cabinet colleagues.
Umar said that the Washington-based lender endorsed the methodology applied to rebase the economy from the year 2005-06 to 2015-16. The government approved the rebasing of economy in January this year.
However, instead of telling the truth to the people, the government has started making claims that the 5.6% GDP growth figure has actually been verified by the World Bank.
Even the governing council of Pakistan Bureau of Statistics (PBS) has not yet formally endorsed the rebasing of economy.
The World Bank spokeswoman said that as part of regular biannual publications, the lender would update Pakistan’s growth estimates using the newly available data for FY21 and beyond.
The new World Bank report is expected to be released in late April.
For the last few years, the World Bank has not been endorsing the GDP growth figures approved by the government of Pakistan and is publishing its own separate numbers.
The working paper of the National Accounts Committee that approved the rebasing of economy also mentioned the fact that the World Bank only reviewed the methodology.
“In order to make the rebasing methodology in line with international standards, methodology of rebasing of national accounts was reviewed by World Bank experts (through remote connection) during November 9, 2021 to December 9, 2021,” said the working paper.
It added that the World Bank remarked that “overall the World Bank team is of the view that the compilation methods used in the rebasing exercise are well aligned with the 2008 SNA recommendations”.
The government incorporated some of the industry-specific suggestions of the World Bank into the new base results.
The government last month promulgated an ordinance to plug a legal lacuna that was obstructing the convening of governing council meeting and the endorsement of new base year of the economy.
On February 21, President Arif Alvi approved the General Statistics (Re-organisation) (Amendment) Ordinance, 2022 to make the planning minister ex-officio chairman of the governing council, provided that the subject is not allocated to the member of the cabinet.
The prime minister may also nominate a minister as the chairman of the governing council. Planning Commission deputy chairman has been made vice chairman of the council.
Earlier, finance minister was the chairman of the governor council when the PBS was under the finance minister. The Pakistan Tehreek-e-Insaf (PTI) government abolished the Statistics Division and placed the PBS under the Ministry of Planning.
The rebasing exercise of the government broadened the coverage to emerging sectors. As a result, the real GDP increased by Rs3.1 trillion against the base of 2005-06.
The share of agriculture was slightly adjusted downwards, however, the proportion of services increased and the share of industry went up marginally.
The claim that the World Bank verified the GDP growth number was not the only misstatement made by the premier. He also claimed that the FBR collected Rs6 trillion in taxes.
As a matter of fact, the FBR has so far collected Rs3.8 trillion while the target for the current fiscal year is Rs6.1 trillion.
The prime minister on Wednesday congratulated the FBR for achieving around Rs442 billion tax collection target for February, ignoring reports that the FBR resorted to delaying taxpayer refunds to cross the benchmark by a narrow margin of about Rs2 billion.
The FBR paid Rs8.2 billion, or 35%, less refunds in February after the tax department saw that it was going to miss the monthly target for the third consecutive month.
According to the provisional results, the FBR paid Rs15.3 billion in tax refunds in February 2022, against Rs23.5 billion in the same month a year ago. It helped the tax machinery to show Rs443.5 billion collection in February, hardly Rs1.5 billion higher than the target.
The FBR has also not yet officially revised the target to Rs6.1 trillion, though the government has already adjusted it in line with an agreement with the IMF.
The revision in target would immediately deny FBR’s claim of exceeding the eight-month target by a margin of Rs268 billion.
Published in The Express Tribune, March 3rd, 2022.
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