What does the reconciliation of export income data mean for the economy?

On July 3, the Bangladesh Bank (BB) released data of the Balance of Payments (BoP) for July-April period of fiscal year 2023-24. It used reconciled export data, which showed the country's exports were nearly $14 billion below the figure reported earlier by the Export Promotion Bureau (EPB).

It showed that exports fell 6.8 percent during the July-April period although the EPB initially reported 3.93 percent growth.

The Daily Star spoke to Centre for Policy Dialogue Executive Director Fahmida Khatun about this issue. The excerpts of the interview are below:

DS: What is your reaction to the reconciliation of export figures by the Bangladesh Bank?

Fahmida: As the discrepancy between the export shipment and the realised value continued to increase over the years, it was necessary that this concern should be duly attended. Due to time lag and disputes, there could be some differences between the export value data from the Bangladesh Bank and the EPB.

However, the mismatch in export value in the FY24was too high, which cannot be explained by only these reasons.

There could be other reasons. For example, the export proceeds could have been brought in through informal channels and remittances. Or only a portion of the export proceeds were brought since there is an expectation of the devaluation of the local currency, the taka. The uncertainty before the national elections this year could also have been a reason for capital flight.

But now, the Bangladesh Bank has done data reconciliation of the export income from various sources such as EPB and National Board of Revenue (NBR) and found that the NBR has been making multiple entries of export income, which led to a discrepancy of export value data.

The reconciliation of the data between the two important government bodies may have improved the financial account situation, but this change has several implications in terms of the estimation of other economic indicators and consequent policymaking.

DS: Will there be any change in other estimates, particularly GDP and economic growth, if previous export data is corrected?

Fahmida: The data reconciliation means that the amount of exports has declined for the July-April period and the previous periods. Earlier estimations showed export growth for the period of July-April. But as per the new estimation, export growth for July-April is 6.8 percent in the negative. This is a large amount, and it will have an impact on all economic indicators.

Export income is an important component of our forex reserve. With reduced exports, the forex reserve will be much lower than now. Besides, the GDP will also be much lower, which means growth could be lower too. So, GDP and economic growth will have to be recalculated. Sadly, since this wrong practice has been in place for several years, the authenticity all past data is under question.

DS: Is it going to create any chaos? What would be the implications for policy framing?

Fahmida: Indeed, it is going to create serious data chaos. Whatever we have estimated in the past has now become mostly irrelevant. Because export is an important economic indicator. One does not know for how long such wrong data entry has been going on. Good policy framing depends on authentic data.

Poor quality data gives wrong signals to policymakers. So, if policymaking is done based on unreliable data, then policies become irrelevant and defunct. Unfortunately, citizens have been misled about the real economic situation due to such anomalies of the responsible government organisations.