Bangladesh’s garment industry is a major export earner. © Reuters
DHAKA — Doubts over the accuracy of Bangladeshi statistics have cemented further with the recent revelation of big mismatch in export data, deepening the necessity of scrutinizing all of the data provided by the government.
Bangladesh’s central bank in early July published “corrected” export data for the period of July 2023 to April 2024, saying that the actual exports during that period were worth $33.67 billion, although the Export Promotion Bureau had said they were $47.47 billion — a gap of $13.8 billion between the two figures.
The central bank’s monetary policy committee on July 14 discussed the recent revision in the export data, and bank officials said the revision affects data for the last three fiscal years. The revisions suggest that exports have been falling for the past three years. The estimated total exports for fiscal 2024, which ended on June 30, are likely to be around $42 billion, which is $10 billion less than the figure reported by the EPB based on customs data.
The government estimates that at the end of fiscal 2024, the country’s gross domestic product stood at $459 billion.
Now, with the export data around $10 billion lower for the year, the size of Bangladesh’s GDP will fall by over 1.5%, or around $7 billion to $8 billion, and per capita income will go down proportionately, said Ahsan H. Mansur, executive director at the Policy Research Institute of Bangladesh in Dhaka.
This would make negotiations with lenders more difficult at a time when the South Asian nation’s negotiation capacity has already declined, according to Mansur.
“The prime minister [Sheikh Hasina] went to China recently but did not get a loan from there because of the country’s financial weakness,” he said. There is apprehension among bilateral and multilateral donors on whether Bangladesh will be able to pay back its loans, as its reserves have fallen and its balance of payments has gotten weaker, he added.
Due to the fall in GDP, the country’s debt security position will now go down, said Zahid Hussain, a former lead economist at the World Bank’s Dhaka office.
“The debt-GDP ratio will go up now, which will send a new cautionary message to the lenders,” he said, adding that “the space for taking new loans will now shorten.”
He noted that there has been a common perception in Bangladesh for many years that GDP data was inflated. “In Bangladesh, data has been engineered as per the government’s needs,” he said.
Economists and experts have long expressed doubt about the accuracy of both fiscal and other data. Figures on nonperforming loans, bank profits, foreign currency reserves, inflation rates, GDP growth rates, production levels, education enrollments, mortality rates and many other government data have been questioned repeatedly year after year.
Mansur, also a former senior official of the International Monetary Fund, said most of Bangladesh’s financial data are “window-dressed.” He added, “The government has been showing [the nonperforming loan] rate at 11%, which actually is more than 25%.”
“If we look towards our real sector, I assume huge data mismatch is there,” he told Nikkei Asia. “The volume of productions of rice, fish, poultry, etc. the government has been showing are highly inflated, thus a shortfall always remains in the market.”
“The government fails to explain why there is supply shortage, why prices go up irrationally and why import of food grains [are] needed when we claim that we are self-reliant,” he noted.
How was the mismatch in export data found?
The EPB publishes export data collected from the National Board of Revenue (NBR), the central authority for tax administration, while the central bank publishes “receipt value” against the exports made.
The central bank found the mismatch, and the gap between the shipment data and the receipt value was too high during the last two fiscal years. Businesses had also been claiming that they had exported less since war broke out in Ukraine in February 2022. However, the EPB had been showing a significant growth in exports during the last two years.
As Bangladesh’s economy began feeling the global economic slowdown due to the war, leading to a free fall in its foreign currency reserves, the central bank also pointed out that a big sum of export credits had not been coming home every year. Export credits are insurance, guarantee or financing arrangements that enable foreign buyers of exported goods or services to defer payment over a period of time.
In fiscal 2023, the gap between the EPB’s shipment data and the actual receipts by the central bank was $12.08 billion, while the gap was $8.51 billion in fiscal 2022.
The central bank, the EPB and the NBR had a series of meetings a few months back to resolve the gap in the export data and found that the customs department had done double-counting while preparing shipment data “by adjusting multiple entries.”
For example, in the garment industry, a major exporter earner, the value of the raw materials sold from export-processing zones (EPZs) to Bangladesh’s export-oriented factories were also shown in the export data. Bangladesh’s garment factories only can charge for cutting, making and trimming clothes, alongside some local value-addition costs, because the buyers — apparel manufacturers in Europe, the U.S., Japan and elsewhere — supply the raw materials in most cases. However, the customs department has shown shipped products’ full value as export earnings, creating some of the gap between the NBR and central bank data.
Khondaker Golam Moazzem, the research director at the local think tank Centre for Policy Dialogue, questions whether the publication of “corrected” export data is “an attempt to hide trade-based money laundering,” as businesses have not been bringing billions of dollars’ worth of export earnings to Bangladesh.
“Yes, there is problem with data. There was double counting, and exports from EPZ to domestic market have been calculated as export, but that is not such big,” he said.
Moazzem suggested that a thorough investigation of letters of credit plus export forms could help find out how much money did not come back home.
“In countries like Bangladesh, there is big question about GDP estimation, weighing inflation, and also questions are there against export incentives, but we need to lessen these data anomalies,” he noted.
source : asia.nikkei