Monday, 24 June 2013 02:02
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The country’s economic performance and the state of public finances are not as glowing as the Government attempts to portray with reputed economists and even the International Monetary Fund contesting the data in the Central Bank report, UNP Legislator Eran Wickremaratne charged in Parliament last week.
Amid protest by Deputy Minister of Finance Dr. Sarath Amunugama, the UNP National List MP said that the integrity of the data used in the report had been called into question, with the GDP number overstated and inflation numbers understated.
“The Government claims GDP growth in 2012 was 6.4% while reputed economists and Institutions estimate it to be lower, i.e. less than 6% in 2012. The Government projects GDP growth to be 7.5% whereas the IMF predicts it to be 6.3% in 2013. The IMF had pointed out that the Government’s methodology for deriving the country’s GDP was unsatisfactory,” he charged.
Quoting former Central Bank Deputy Governor and Economist Dr. Nimal Sandaratne and the IMF, Wickremaratne said the discrepancy arose because of the inappropriate data collection and analysis methodology used by the Government.
“The IMF has pointed out that the Government’s methodology for deriving the country’s GDP was unsatisfactory. The methodology for deriving GDP at constant prices is not satisfactory. Expenditure estimates are available only annually and rely mostly on commodity flow techniques. Whenever possible, estimates are validated and checked with other sources,” the Opposition MP said quoting the IMF.
According to Wickremaratne, the implication of an overstated GDP is that wrong policy prescriptions were pursued.
He said that on the present GDP calculation, the debt to GDP ratio is 79%. But if the GDP growth figure is overstated by 20%, the Debt to GDP ratio may be reaching an alarming 100%.
Wickremaratne said that the fiscal deficit in 2012 was stated to be 6.4% of GDP. However the overall fiscal deficit of the Government was 8.6%. “The Government’s calculation of the deficit had ignored the losses of CEB and CPC, which is about Rs. 150 billion. Furthermore, given that the GDP figure is overstated, the fiscal deficit may be in excess of 10% of GDP,” he said.
Questioning the data further, the UNP MP also questioned Government claims that per capita income had gone up from US$ 2,836 to US$ 2,923 from 2011 to 2012. “The Annual Report states that the average population for 2011 is 20.88 million while the average population for 2012 is 20.26 million, i.e. the population has reduced by 600,000 according to the recent census. Therefore we have to conclude that the per capita income actually has dropped in 2012 over 2011,” he said.
Interjecting during Wickremaratne’s speech, Deputy Minister Amunugama said that while there were criticisms, the Government statistics were now globally accepted as a basis of comparison.
“If you see the world economic outlook, if you look at all the global publications, if you look at rating agencies, they all accept this. So, you cannot just attack only the Sri Lankan statistics. This is the basis of a transaction throughout the globe. So, I just cannot understand the line of attacking this. It is purposeless,” he said. (DB)
