ISLAMABAD: While the International Monetary Fund (IMF) remains mum over Pakistan’s latest official claim of achieving 4.3% growth, the Asian Development Bank (ADB) has expressed surprise over the high growth rate.
“Pakistan’s recorded growth in the fiscal year that ended in June [this year], which surprised on the high side at 4.1%, is above the Asian Development Outlook (ADO) 2014 forecast of 3.4%,” stated the ADO Supplement 2014 that the Manila-based lending agency released on Friday.
The figure quoted by ADB in its publication is based on information provided by the government in the Economic Survey of Pakistan. The lender will give its own judgment in September this year when it will release the ADO Updated report.
ADB’s comments highlight growing doubt over the credibility of official statistics. The lender had forecast 3.4% growth for fiscal year 2013-14 – close to the IMF’s projection of 3.3%. However, the government surprised independent economists and international lending agencies when it announced that the country achieved 4.1% growth in the previous fiscal.
The government later admitted the actual growth rate was 3.3% and not 4.1% in a policy document submitted to IMF.
When the discrepancy was highlighted, however, the government claimed the 3.3% figure mentioned in the document was a ‘typo’ and an ‘inadvertent oversight’. Instead, it insisted that the growth rate for 2013-14 was 4.3% – higher than the 4.1% growth rate it announced earlier.
In a press release, the government has claimed that a clarification has been issued to the IMF, asking it to consider the growth rate for 2013-14 as 4.3%.
Five days ago, The Express Tribune sent a set of questions to Jeffery Franks – IMF’s Washington-based mission chief for Pakistan – seeking his response to the government’s latest claims. While an aide to Franks acknowledged that she received the questions, the IMF did not respond any further till the filing of this report.
Franks was requested to comment on the official claims of an ‘inadvertent oversight’ and whether IMF staff will entertain any clarification in the Memorandum of Economic and Financial Policies (MEFP) that was approved by the lender’s board and will be the base for disbursement of a future loan tranche. The IMF mission chief was also asked whether its staff has the authority to accept the clarification without calling a board meeting and was there any precedent to amend the MEFP after it has been approved by the board.
Instead of responding to these questions, the IMF’s Resident Mission in Pakistan issued a message on its official Twitter account, IMF_Pakistan: “What a lot of nonsense in Pak press about GDP growth numbers! No one knew for sure 2013/14 growth until PBS publishes. No lying possible.”
“The language used by IMF in the tweet is shocking and indicates that its staff lacks manners while dealing with the press,” said Dr Ashfaque Hasan Khan, a former official of Ministry of Finance. He added that until the lender gave a proper response, the controversy over the growth figure will not end.
According to analysts, the main issue was not whether the country’s growth rate was 3.3% or 4.4%, but rather the credibility of the government. Independent economists, meanwhile, say even 4.3% growth is not sufficient to create jobs for tens of thousands young people entering the market every year.
Pakistan Tehreek-e-Insaf has already announced it will move a privilege motion against the government for concealing facts from Parliament.
Published in The Express Tribune, July 19th, 2014.
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Wait! My head is spinning. Initially, the number reported by Hon. Finance Minister was 4.1%. Then, he reported it as 3.3% to the IMF because it was not really 4.1%, after which he told the rest of us (non-IMF people) that he had incorrectly reported 3.3% to IMF when in fact what he meant was 4.3% (due to a typo in the leading digit). Then he added another erratum, to the effect that the 4.1% originally reported to us (non-IMF people) was also a typo because the correct number is really 4.3%. So, the final correct number is 4.3%. Which we suppose has been reported correctly to the IMF. Or, wait! Is that true or just another typo? The article mentions 4.4% somewhere.
I am so hopelessly confused. I wake up at night with various digits drifting across my vision in my dreams: 3.4, 3.3, 4.3, 4.4, 4.1. Its making me very anxious. Can anyone shed light on this very murky digit soup?
@Kaleem Ullah: Correction, sir. During Musharraf's tenure the country was going ahead at a fast face exceeding 6.5 percent. Salams
Editor ET: Nice going. It is high time that the free press with its educated employees took the GOP, and foreign institutions to task for being discourteous and complicit in figure fudging. With an assumed population of between 183 to 190 million, Pakistan needs to give a gargantuan push for providing jobs and economic opportunities to the graduates. The 'trickle down effect' in the economic policy of Nawaz has undeniably failed by giving exemptions and subsidies to the privileged class and curbing the explosive circular debt. The Nandipur Project that was abandoned by PPP has been relaunched by PMLN and is nowadays under direct attack of corruption. So much HAS, IS, and will GO ON in this country that sooner than later it is feared that like Libya, Syria, and Iraq...Afghanistan and Pakistan will become ripe for the 'takings' or NEVER take-off politically and economically. Result: LOST CAUSE. Salams
Which is the most damaging to a country: 1. an under-projected GDP growth rate? 2. an over-projected GDP growth rate? 3. not even knowing what the real no. is? You will find out when you go to borrow development funds. In Case3, the T&C will be derived from beyond the worst-case figures, after which crippling safety factors will be applied. A presentation to financiers is a whole lot different to a presentation to parliament (even where it exists usefully).
People may call me pro-Government... but one question comes as i am one of the follower of Joseph Stiglitz " Do these institutes and their reports have credibility" ?
ET: You deserve to be called stupid by IMF. Please stop publishing such stupid articles. Any sane person can tell you are clutching at straws.
growth rate also includes inflation rate. With growth rate zero and high inflation rate GDP will still grow.
Apparently, you don't seem to understand that the definition of GDP is always inflation adjusted and is stated with reference to constant dollars. No economist will talk of GDP that doesn't take into account the inflation rate.
@Shuaib: Can you please educate us on the differences in calculation (IMF vs government of Pak)?
@globalobserver: growth rate also includes inflation rate. With growth rate zero and high inflation rate GDP will still grow.
@Kaleem Ullah: You forgot the devastating floods and political instability that pakistan encountered during that period. They are much better lot.
ET you deserve this. You deserve to be called stupid by IMF pakistan.. You were asking for it. I have said this before that Mr. Shahbaz Rana is a biased reporter and tries to cook up sensational stuff and controversies against this government, but like IMF pakistan, soon others will start calling you that if this continues... :-)
"According to analysts, the main issue was not whether the country’s growth rate was 3.3% or 4.4%, but rather the credibility of the government."
No serious IMF, ADB or World Bank economist believe any numbers that the Pakistani establishment puts out. It is a well-known fact that Musharraf and Shaukat Aziz cooked the books to artificially inflate the GDP and population growth numbers. Magically, Pakistan's GDP increased from $70B in 2000 to $180B in eight years! This huge increase is possible only if the GDP grew at an annual rate of over 12% over eight years! Musharraf and Aziz were magicians!!
Pakistan has a growth rate of 12 percent but in creating terrorists...
To all the people who say that this is a non-issue thank you for proving that lying, cheating & misleading is an absolute norm in Pakistan and any one raising it as a concern is out to spread anarchy.
@suhaib when an organization takes a loan from a financial institution they sign a document in which all definitions and formulas and methods of calculating these formulas are documented to avoid the confusion you are talking about. So it is very unlikely that the report submitted to IMF by government would've used a different method than mutually agreed, documented and signed.
Might I add that the government may have given a lower estimate to the IMF. It takes 1.5 or 3 months before the official figures are in. Btw tge World Bank congratulated Pakistan on its acheivement but Pakistanis insist on making none existant controversies.
You are creating a controversy where there is none. I have already told you. The IMF measures growth rates differently.
Independent economists, meanwhile, say even 4.3% growth is not sufficient to create jobs for tens of thousands young people entering the market every year.
I think we are happy with PPP rule which never saw it going more than 3.5%. During first 3 years of Musharraf, GDP growth never exceeded 3%, just for ET records. Please stop making issue out of this.