Sunday, February 18, 2018

Flying blind

The offices of the Central Statistical Office (CSO) on Independence Square are closed, shuttered by OSHA. The building has been deemed unsafe for occupation. The final ignominy! Over the years the CSO has been shunted from pillar to post in various dilapidated buildings around Port of Spain, even as other ministries and departments now occupy opulent offices in the Waterfront Complex and elsewhere. A visit to the CSO’s website finds similar dilapidation. The site is badly designed. The data series published there date back several years. Even the monthly Retail Prices Index shown there dates back to 2012. The 2011 Population Census Report is nowhere to be found on the website. There is no Household Budgetary Survey report, no labour market information, no measures of inequality and poverty; even the crime and other social statistics are badly out of date. Maybe the government has access to these reports, but if so, we also should have access.

The treatment of the CSO and its staff is but a reflection of the contempt our politicians and policymakers have for accurate, reliable, timely data as the necessary foundation for sound policymaking. As I said in a seminar hosted by the CSO in 2007 our policymakers prefer to select projects and make policy by voops, vaps and vikey-vie. One searches in vain for the data analysis underlying the policy decisions made. Whether it is the Tarouba stadium, the construction of HDC houses, the Government buildings in Port of Spain, the university campus in Debe or the highway to Point Fortin, it seems that it is more important to make announcements of how many ‘billions’ the project will cost than to provide the economic justification for the money to be spent. Bigger is better. More expenditure is better.

In developed countries, the statistical agency announces in advance the publication of key economic data, released to all at the same time and published immediately on the relevant website. Printed copies of reports are rare as it is much easier for the user to just download the data series. GDP estimates, unemployment, inflation, consumer confidence, manufacturing output and so on are produced shortly after the end of the period and then revised subsequently if necessary. Once the data are produced analysts get to work making sense of what is happening, building models and making forecasts. Timely data are the foundation of good policy and it is impossible to make good policy without it.

Here, our trade data are now woefully late. The Central Bank and CSO began joint publication of the Balance of Payments in the 1980s when I was responsible for research at the Central Bank because we were dissatisfied with the timeliness of these critical data. We do know what the foreign exchange reserves are monthly, even weekly, but we don’t know in a timely fashion what is shaping and impacting the overall balance of payments. How then is the Central Bank to properly determine exchange rate policy? The unemployment data are quite simply wrong, or wrongly defined. The data are almost certainly reflecting significant underemployment. And we know it, because nobody believes they are correct. The Bank’s accommodative monetary policy would be inconsistent with unemployment numbers which suggest near full employment. Clearly the Central Bank does not believe them. If we believed the unemployment numbers we would be scaling back CEPEP and URP. There is also something wrong with our inflation data which evinces high month to month variability, blamed ridiculously on the spike in the price of some vegetable or other! Core inflation is a more reliable indicator, but it is clear that the weighting and/or the methodology for the calculation of the Retail Prices Index needs urgent review.

In the 1980s Quarterly GDP series was produced based on the Bank’s own data collection. This has continued to today while the CSO’s National Income and Expenditure reports have become fewer, more outdated and more inconsistent. Ministerial pronouncements are made about increased investment in the economy, but these pronouncements do not tell us what is the rate of investment and whether the rate of investment is adequate to produce the target rate of growth of real GDP. It is enough to quote the ‘billions’! What is the country’s target rate of growth anyway?

The seminar in 2007 was an aspect of a consultancy by Swedish statisticians who made comprehensive recommendations for a new Statistics Act. Six years later, the report and recommendations have been buried and the decline of the CSO, which started in the 1970s continues unabated. In characteristic diplomatic language, the IMF stated in its latest consultation report: “Although data is broadly adequate for surveillance, it urgently needs to be improved to provide a firmer basis for policy making. Progress has been limited in addressing methodological weaknesses with the CPI (Consumer Price Index) and the GDP deflator. ... a recent (study) confirms the large overestimation of the inflation. Plans to create an independent statistical entity are welcome, but there is a need in the interim to better resource and staff the existing entity to improve the quality and availability of data. The authorities agreed that better statistics are urgently needed.”

We need a new Statistics Act. We also need a governance structure for the CSO with an independent board comprised of competent statisticians, social scientists and users of data such as businessmen, bankers and marketing and advertising people. The CSO needs to have a permanent home of a standard suitable to its largely professional staff, and a website and database services appropriate to a sophisticated and intelligent people. We continue to fly blind, making it up as we go along, spending the people’s money recklessly, and avoiding serious analytical scrutiny of our projects and policies. The state of the Central Statistical Office is the true marker of the state of our development as a nation.

—Dr Terrence Farrell is a former deputy Central Bank Governor and former chief executive of One Caribbean Media Ltd, parent company of the Trinidad Express Newspapers.