Bangladesh Bank (BB) faced questions from local and international agencies in this regard. Against such a backdrop, the export data were verified and the actual exports were found lower than the reported figures. Central bank officials said they have so far been depending on the EPB data to estimate export earnings. But the actual earnings were consistently falling short of the desired figures. EPB processes the export data after receiving it from the customs department. The customs department sends the data based on the shipping bills of merchandise, the official of the EPB said.
Bangladesh Bank prepares the balance of payments (BoP), which reflects a nation's transactions with the rest of the world, regularly based on data gathered from scheduled banks, the EPB, the NBR and other agencies. It has been suspected that the data mismatch had been caused by the absence of technological skills or a deliberate reporting of inflated data.
According to the Export Promotion Bureau (EPB), exports were $45.67 billion in the first 10 months of the last fiscal year, 2022-23, but Bangladesh bank (BB) found the figure to be $36.13 billion, down by $9.54 billion.
On the other hand, EPB showed a 10 per cent growth in garment exports following the fiscal year 2022-23, contrasting sharply with the National Board of Revenue (NBR) that estimated a 4 per cent decline in exports. There was a $8.47 billion discrepancy in export figures of the EPB and the NBR.
TheNew WTO data shows $9b mismatch in Bangladesh's 2023 clothing export figures as the figure is nearly $9 billion less than the $47.4 billion reported by the EPB. This news on the basis ofthe new data released on 1 August through the WTO's interactive tool "World Trade Statistics 2023 - Key Insights and Trends". Ready-made garments constitute some 84-85 per cent of the country's total exports. Garment exporters have been expressing doubts over the EPB export figures since the middle of the fiscal year 2022-23.
Exporters repeatedly said their export orders declined significantly amid rising inflation on the onslaught of the Russia-Ukraine war. Some 20-30 per cent of their production capacity remained unused, and it impacted the country's overall exports adversely.
Such a discrepancy in export earnings has come to light as the authorities have recently wiped out export records worth $23.34 billion.The correction in export data had a countervailing effect on the financial account. It transformed the previously reported $9.25 billion financial account deficit in July-March FY24 to $653 million surplus!
From now on, the export reports will be prepared with actual data and the revenue board (NBR) and the EPB will use the same figures, BB official said.
As per the actual export data, the central bank recalculated the balance of payment and saw the financial account turning from a deficit to a surplus. The current account fell in deficit due to the export data fluctuations. Besides, there has been a $5.56 billion deficit in the balance of payment during the July-April period of the fiscal year 2023-24.Analysts have even termed it as one of the biggest shocks in the financial sector of Bangladesh in recent times.
BB discovered six types of statistical wrongdoing that inflated export data, a development that led to a multibillion-dollar correction. The anomalies include errors in customs data, miscalculations of the value of fabrics, samples for buyers being included as final products with export value, double-counting of sales by EPZ-based firms, not adjusting the difference between the LC (Letter of Credit) value and actual export proceeds, and not adjusting losses from stock-lot sales, discounts and commissions. The dataset did not give a true picture of the country's exports.
Anomalies range from serial duplication errors to miscalculations of the value of fabrics to repeated miscounts of sample items as exports.On many occasions, sample items shipped abroad for buyers were counted as exports, which means a certain value was assigned to those items with no export value. The central bank said exportby companies inside the Export Processing Zones (EPZs) to outside companies were counted twice -- first during shipment from the EPZs to local firms and second during shipment from the ports by the exporters.
Moreover, last year nearly $1.7 billion worth of local imports by the factories inside the export processing zones (EPZ) from textile industries in outside of EPZ were taken into account by the EPB while computing Bangladesh's sales in the global markets. However, the central bank does not include the amount in the final export data.
As per documents, actual proceeds usually fall below the initial value mentioned in the letters of credit. The EPB did not adjust the discrepancy later.Stock-lots is a major setback for exporters. It occurs while the buyers refuses to accept the consignments after production or after shipment is made. The exporter find no other alternative to offer huge discounts to the existing buyers or sell to other buyers. Losses stemming from stock-lot sales, discounts and commissions were not adjusted by the EPB either, according to the BB.
Interestingly, the customs department sends the figures on the volume of exported goods reportedly in the local currency, and the EPB converts them into US dollars, the official said.BB found multiple entries, equivalent to 20 percent of the total dataset. The ratio of multiple entries to total exports in the previous months was 14 percent.Alongside flaws in reporting, non-repatriation of export proceeds is another significant reason behind the discrepancy in figures.
However, a lot of changes may take place after products leave the country. For example, sometimes goods are not exported at all, but the data is still considered by the customs department and is sent to the EPB.The BB said multiple entries of shipments by customs officials at the NBR were the main reason.The difference between export figures has been persisting for at least 12 years, with the gap crossing $12 billion in fiscal 2022-23.
The statistical revision, while it was necessary, raised questions about the country's economic performance and the policy that revolved around it.the projected data on GDP growth, investment, export, import, and foreign exchange reserves has no relation with reality.
The Bangladesh Bureau of Statistics (BBS) has projected GDP growth at 5.8 percent for FY24. In making this calculation, they projected a 5.63 percent growth in the real exports of goods and services.Following the correction, economic growth may be about one percentage point lower than the government's preliminary estimate.Thus the 5.8 percent GDP growth could be 4.8 percent due to the shortfall in actual export growth relative to the export growth projected, other things equal, Hussain said.According to an initial calculation, Bangladesh's GDP size could shrink by 2 per cent, which amounts to $9 billion or over Tk 1 trillion, with the dollar rate being Tk 115.If the GDP size shrinks, the per capita income will also come down.
After anomalies of data for many years, representatives from the EPB, the Bangladesh Bank, the National Board of Revenue (NBR), the Bangladesh Bureau of Statistics, and the Bangladesh Trade and Tariff Commission in a meeting decided to introduce a platform to publish real-time data on the country's sales in global markets in order to ensure data accuracy and make policies evidence-based.Under the planned platform, the NBR will supply the daily export data to the EPB, and the BB will compute it on the basis of the real-time exchange rate.
Data should be based on global standards. In order to do so, the International Monetary Fund can be involved in this process. If the IMF sends a statistical mission, it can help the government manage data better.
The United Nations Comtrade database aggregates detailed global annual and monthly trade statistics by product and trading partner for use by governments, academia, research institutes, and enterprises.
Transparency and accountability are crucial for maintaining trust in economic data and policymaking. Enhancing transparency involves public disclosure of data and methodologies. Unfortunately, various government institutions are still reluctant to share data with the public. Correct and regularly updated data is vital not only for the government to make appropriate policies but also for independent experts and citizens to understand the nation's economic realities.
The writer is former Non-Government Adviser, Bangladesh Competition Commission, Legal Economist & CEO, Bangla Chemical
