CB statistics under fire

• UNP MP Dr. Harsha de Silva backs Daily FT columnist on per capita income data, claimsfigures too inflated and Govt. trying to mislead people and global stakeholders; CB getting more politicised

By Uditha Jayasinghe

Firing another salvo at the Central Bank, UNP MP and economist Dr. Harsha De Silva yesterday alleged “creative accounting” in calculating per capita income statistics to show a higher figure and inflated economic growth.

Dr. de Silva told media that the Government was misleading international organisations and fellow Sri Lankans by calculating the per capita income of the country so that it would show an unrealistically high figure.

UNP MP and Economist Dr. Harsha de Silva shows off the Monday 16 April’s Daily FT’s ‘Economics Matters’ column of W.A. Wijewardena at yesterday’s media briefing – Pic by Upul Abayasekara

Quoting from the article published on Monday in the Daily FT by columnist and former Deputy Governor of the Central Bank W.A Wijewardena who noted, “It (country’s statistical bureau) has used the exchange rate of 113 per dollar to convert the rupee value of per capita GDP into dollars in 2010 and the rate of 110.54 in 2011. This has resulted in a phenomenal increase in per capita GDP from US$ 2400 in 2010 to US$ 2836 in 2011.”

Wijewardena goes onto say in the next paragraph that the Census and Statistics Department cannot be faulted for this but rather the Central Bank has the responsibility to ensure that the data is put in the right context in the annual report.   

“The Government is portraying the per capita income as evidence of the country’s economic development but in reality, it is calculated using creative accounting,” he said, adding that this was a result of the Central Bank losing its independence and becoming increasingly politicised.

He pointed out the Central Bank’s involvement in IIFA and Commonwealth Games bid as examples of this bias.   

The MP endorsed the view of Wijeywardena and insisted that the Government had denied the people a “simple honest explanation” in the annual report.  

CB statistics...

Dr. de Silva emphasised that the Government had also not taken into consideration the rapid deterioration of the rupee in November by 3 per cent, which grew to a whopping 14 per cent in February.

“Projected per capita income till 2015 expects the rupee to be between 118 and 123 per dollar but that is completely unrealistic given the current economic conditions. The Central Bank is completely ignoring its ethical responsibilities,” the UNP MP alleged.

He pointed out that as a result of this oversight, the per capita income of Sri Lanka will likely show a decline in 2013 as the inflated numbers cannot be sustained. The Government was also critics for misleading international organisations and foreign investors by what he termed as “inaccurate” data.

The latest salvo comes in the wake of weekend reports detailing the implausibility of Cost of Living statistics. The private sector has also expressed concern over the optimistic targets on foreign direct investment and other aspects in the Central Bank’s projections for 2012 that were revealed in January.