Inflation figure jugglery: First planning minister, then Hasina cut the rate to show 'development'

Confirming the long-held suspicion, the White Paper Committee has found evidence of data manipulations on inflation and GDP growth in Bangladesh by the ousted Awami League government to bolster the administration's image and project outstanding economic progress.

The manipulations led to 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 the reign of Sheikh Hasina, the bureau would initially prepare inflation data and submit it to the planning minister who would then order adjustment of the figures, 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 the bureau would only publish figures approved by Hasina.

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

Economic data was routinely adjusted before release during the Hasina regime. This manipulation peaked during the tenure of Mustafa Kamal as planning minister, according to White Paper Committee insiders.

Regarding inflation, if the figure approached or exceeded 10%, the planning ministers would refuse to approve the figures, the committee found. 

Before stepping down on 5 August, the Hasina administration released the inflation rate for June, which stood at 9.72%. Following this, the interim government reported an inflation rate of 11.66% for July, which slightly decreased to 10.49% in August.

A member of the committee said while the manipulation of GDP growth and inflation rates may not significantly alter per capita national income calculations, an increase in the actual inflation rate would likely result in a rise in nominal GDP. 

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

According to the committee's findings, data manipulation peaked during the tenure of AHM Mustafa Kamal as planning minister from 2014 to 2018.

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

Mannan told TBS that he never tampered with any data, nor did Hasina ever direct him to do so.

He added that he advised the BBS and the statistics secretary to present accurate data. "Many people expressed scepticism about Bangladesh's statistics and didn't trust government data, therefore, I have repeatedly urged them to always present accurate information."

Scepticism over BBS data

Scepticism surrounding inflation data and GDP growth figures has long been strong among economists in Bangladesh. The disparity between government figures and forecasts from organisations like the World Bank and IMF has been stark. 

For over two years, research organisations such as the Center for Policy Dialogue and SANEM provided evidence that the government's published inflation rates did not align with the actual economic conditions. 

However, those in the Awami League government, particularly finance and planning ministers, consistently denied any accusations of data tampering.

Economists said the manipulation of such crucial data served to inflate the government's economic achievements for political gain, while obscuring government corruption and incompetence.

Fahmida Khatun, executive director of Centre for Policy Dialogue (CPD), said there has been long-standing scepticism regarding the credibility of inflation and GDP growth rates. 

"Even without conducting surveys, economists could easily spot significant discrepancies. Despite high GDP growth figures being reported, private sector investment and job creation have not increased, indicating a disconnect," she said.

She also noted a similar pattern in poverty statistics. "The previous government claimed success in reducing poverty rates; however, if poverty rates were genuinely decreasing, inequality should also be diminishing, which has not been observed."

Committee to provide accurate data

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

The National White Paper Committee is scheduled to begin releasing validation reports – two chapters each week, starting 31 October. 

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 various types of data manipulation occurred, including inflation, growth rates, national income, household surveys, and balance of payments statistics.

He further mentioned that when they sought insights from government officials regarding these issues, many expressed their helplessness, detailing how they were coerced into manipulating data.

Also at the event, former Dhaka Chamber president Sabur Khan expressed concerns about the reliability of statistics. "Our primary concern is the accuracy of the data. Without trustworthy information, nothing can operate effectively."

A member of the committee said that since the interim government assumed office, there have been no further manipulations of the inflation rate. 

Current planning adviser Wahiduddin Mahmud has reportedly informed the BBS that there is no need for prior approval before publishing inflation data.

The interim government on 28 August formed the committee to prepare a White Paper on the state of Bangladesh economy. The 12-member is headed by Debapriya Bhattacharya, distinguished fellow at the Centre for Policy Dialogue (CPD).