Editorial

The wrong storm

The prime minister has been candid about how long it is likely to take to repair the economy.

Editorial September 08, 2013

The prime minister has been candid about how long it is likely to take to repair the economy. DESIGN: ASAD SALEEM

One can almost always trust the Pakistani media to focus on the wrong issue. The case of August’s inflation numbers is no different. Most of the coverage has focused on the fact that inflation, measured through the Consumer Price Index (CPI), has inched upwards for three months in a row and is steadily getting closer to reaching double digits again. We agree that high inflation numbers are worrying but also acknowledge that when the government is in the process of removing subsidies that kept prices artificially low, inflation is naturally expected to rise.

So, the uptick in inflation is not as worrying as the fact that the government has become very good at manipulating economic data. The CPI is one of the most important statistics produced by the government, since it is used as a component for so much economic analysis, by both the government and the private sector. Anytime somebody has to adjust figures for inflation, they have to use the CPI. And the government appears to have blatantly begun interfering in how the Pakistan Bureau of Statistics performs its calculations.

For instance, in the case of August’s inflation numbers, the government has decided not to reflect the increase in electricity tariffs in the energy component of the CPI, a decision that is without justification. It makes the country’s measure of inflation inaccurate and thus, is quite likely to overstate the number for economic growth, making the economy look better than it actually is. In effect, the true state of the economy is being concealed. We find it baffling that a government in its first year in office — with a sizeable mandate to fix an ailing economy — would resort to such trickery to boost its performance numbers. The prime minister has been candid about how long it is likely to take to repair the economy. So, why is his administration trying to make this year’s numbers look artificially better? Is that not what got the economy into a mess in the first place?

Published in The Express Tribune, September 9^th, 2013.

Like Opinion & Editorial on Facebook, follow @ETOpEd on Twitter to receive all updates on all our daily pieces.