August 27 2019
I have noted a letter in Stabroek News of Saturday, August 24, 2019 under the heading ‘Some numbers in Minister’s half-year report raise serious questions about data quality’. Expectedly, it is not every letter to which I would respond, normally, as I believe that everyone has a right to air their opinion. However, when there are more than veiled insinuations about the competence of my staff, who are instrumental in compiling the numbers, I must spring into response mode.
Before I get into the core of my response, I wish to comment on the following: ‘Understandably there will always be an acceptable margin of error when dealing with statistics, especially when forecasting is involved. But this is exactly the reason why the timing of the national budget should not be sacrificed for political expediency and optics. To intentionally or unintentionally ignore the consequences of ramming through the budgeting process for political expediency and bragging rights is to gamble with businesses’ investments, the livelihood of workers and the credibility of the data’.
Editor, allow me to put into perspective what is being insinuated here. Under the Constitution, the Annual Budget Estimates must be presented to the National Assembly no later than 90 days into the fiscal year. For Guyana, the fiscal year spans the period January 1-Decem-ber 31. The budgetary estimates as approved by the National Assembly authorize the commitments of expenditures from the first calendar day of the respective fiscal year. The constitutional requirement that gives a grace period up to the 90th day of any year to lay the Budget Estimates in the National Assembly, catered for any unforeseen or unanticipated event. Estimates that are laid in the National Assembly, with regularity, way until the end of March, are effectively relegating approvals for same to the end of April.
I addressed this issue during the presentation of the 2017 Budget – my third budget presentation- on November 28, 2016. There, I noted that up until 1978, all the annual budgets were presented prior to the start of the fiscal year. Post-1978 to 2016, all the budgets were presented after the start of the fiscal year, many of them in late March. For example, the 2012 Budget was presented to the National Assembly on March 30, 2012, just 1 day before the constitutional deadline; the 2013 Budget was presented on March 25, 2013; while the 2014 Budget was presented on March 24, 2014.
Consequently, spending for new programmes, new projects, and the infusion of monies into the economy is constricted until the fifth month of the year, instead of January 1. Under this scenario, the 12-month budgetary cycle is being truncated to 8 months, with deleterious impacts. I ask my learned critics: what could have been so wrong, from a policy and management perspective, to correct this budget presentation anomaly? And I am being lectured that I am ‘ramming through the budgeting process for political expediency and bragging rights …’ So much for talk of efficiency in planning and execution!!
I now turn my attention to specific queries. The writers highlighted the apparent discrepancies in the Balance of Payments (BoP) table, which is prepared under the guidance of the Bank of Guyana. Major variances were highlighted in the various components of the identical BoP table, as presented in the Half-Year 2018 and 2019 Reports, respectively. I have been called out for reporting a Net Current Account balance of -US$578.6 million for the HY 2019 period, instead of the – US$194.2 million, which I had reported previously in the HY 2018 Report, avariance of approximately 200 percent. This example was deemed symptomatic of a series of similar discrepancies.
Editor, I continue to emphasise that if you hold yourself up as a true professional and renowned analyst, you cannot cherry pick an indicator and extoll on its seeming quality and variance over a short space of time, without examining and analyzing the specific components that comprise that indicator. Thus, a cursory glance at the quoted table would instantly reveal that, for the Current Account Balance, the three components that have changed are, firstly, the value of exports, which increased by 0.54% between the two Reports. By the writers’ own pronouncement, this is within the acceptable margin of error.
Secondly, there is the Merchandise Imports, the value of which was increased by US$115 million or 12.4 percent between the two Reports. The writers opine that the two sets of numbers should be the same on both Reports, with minor differences for rounding. It would be true, generally. However, statistics is a dynamic and if any phenomenon occurs subsequent to the publishing of the initial numbers, which result in any fundamental change, such change, which should be accompanied by detailed explanatory notes, must be incorporated and published.
In the instant case, at the time of the compilation of the BoP table for the HY 2018 Report, the entities involved in the compilation of the real sector component of the BoP – Guyana Revenue Authority (GRA), the Bureau of Statistics (BOS) and, the final compiler, Bank of Guyana (BOG) observed unseasonal spikes in the national imports, in certain categories (like Intermediate and Capital Goods) and from a focused Sector (Oil and Gas). One Cardinal Rule of Statistics is that you must compile and compare same with same. You cannot just include a ‘new family’ of imports without a fundamental knowledge of their nature, use and expected longevity in the domestic economy and, especially, when they are of the magnitude that was being observed.
The main compiling Agencies, therefore, required more detailed information, as Guyana adheres to all of the international standards of concepts, definitions and compilation for International Merchandise Trade Statistics, as defined by the United Nations, which declare inter alia that if equipment imported is to be re-exported within a year, it must be excluded from the Trade numbers. So, initially, in the absence of clarification, they were not included in the numbers. However, an eventual Meeting, post-HY 2018, between our main compiling Agencies and Exxon resulted in a clarification from the latter that the types of increased imports, as observed, were indeed imports for the extraction process and would remain in Guyana for the long-haul. It was decided, therefore, that, effective from 2018, all of the Merchandise trade numbers had to be inclusive of these new family of imports and would thus be fully comparable with the numbers for 2019 and beyond.
The third category of significant change between the two Reports is the absolute increase of imports of non-factor services, from the US$142 million reported in the 2018 Half Year Report to US$415.1 million in the 2019 Half Report. The difference is explained by the payment for construction services, operating lease (equipment rental) and technical, trade-related, and other business services contracted by Esso Exploration. These amounts were listed under “other business services”, as Esso Exploration was the only Oil Operator contracting these services, and were reported in May 2019, nearly a year after the completion of the 2018 Half Year Report.
Private Sector Capital flows, which increased from US$75.4 million to US$481.1 million between the two reporting periods, was due, principally, to Exxon’s investment in Oil & Gas exploration-related activities. This was stated in the 2019 Half Year Report. Again, the actual amount invested by Exxon, for the two reporting periods, was only gleaned via a survey, in 2019, resulting in the changes reflected to the 2018 Half Year data for Foreign Direct Investment.
Editor, to cast aspersions on the skills of the staff of our main institutions is less than acceptable. I am sure that, had the two critics approached the Governor of the Central Bank, the BOG’s Research Department or any of the main entities engaged in the compilation and analyses of our main macro-economic accounts, they would have received a complete explanation. Then again, that approach would have denied them a sensational headline and reportage.
The critics asked whether they could trust that the economy did grow by 4.1 per cent. Again, their selective scrutiny of an economic indicator for a particular year or period, intending to cast doubt and aspersions on data quality, should be called out for what it is. May I remind these critics that, in his last Budget presentation, in 2014, my predecessor, Dr. Ashni Singh, had pronounced, fervently, in the National Assembly, that Guyana had just recorded its longest period of sustained positive growth, from 2006 to 2013. Were those figures acceptable? Were any aspersions cast throughout that period by the writers? None, of which I am aware. I also raise this point, Editor, because those measures, those Estimates, those indicators were compiled and analysed by the same institutions and, in most cases, the very career professionals who have been responsible for putting together the 4.1 percent growth estimate. But if there is an ulterior motive to discredit our institutions, our career staffers then we should not be surprised.
The writers speak of and query the levels of investment in expenditure in Statistics under this present Administration. I should like to remind them that one of the first decisions made by the Cabinet, in 2015, was to provide a permanent headquarters for the country’s Central Statistical Office, after its then 58 years of existence. The previous Administration had never seen this as a priority. At that time, the Bureau was operating from three rented locations. After expenditure of about $200 million, the old Customs and Excise building, on Main Street – which was earmarked for sale to a private sector entity by the PPP/C administration – was made habitable and functional.
The Inter-American Development Bank (IDB) has been a solid partner in supporting the improvement and development of statistical capacity in Guyana. We are approaching the last few months (end March 2020) of a $95 million ‘Enhancing Statistical Capacity Project’, which started immediately after assumption in Office of the Coalition Government.
Guyana, the Bureau of Statistics and the rest of Caricom are also direct beneficiaries of the Project for the Advancement of Statistics in the Caribbean (PRASC), which is funded by the Government of Canada and executed by Statistics Canada. It commenced in 2015 and will conclude in 2022. It is now a close working partner and mentor with our own Bureau. Indeed, I recall that at the inauguration of the Bureau’s present Headquarters, in April 2017, there was a full team from Statistics Canada working with the Bureau’s National Accounts Division. Currently, it has direct inputs and technical support into the current Household Budget Survey and Survey of Living Conditions, and will soon be providing skills transfers into expenditure profiles emanating from the said Surveys and rebasing of the CPI basket.
But Statistics today is not solely about the Central Statistical Office; it is about a System, because no Statistical System today would have meaning unless it can deliver on the monitoring and measurement of the Sustainable Development Goals. This is why the next milestone in the Statistical Calendar will be the functionalization of a National Statistical System with Technical support from the IDB.
For the first time, the Bureau, through investment in its human resources, has been able to mount, since 2017, a continuous national Labour Force Survey (LFS). Along with the LFS, it is simultaneously executing the Household Budget, the Living Conditions Survey, the Multiple Indicator Cluster Survey, and, upon request, will be spearheading an Agricultural Census, reportedly the first since 1952.
In closing, my Ministry expects intense scrutiny and constructive comments and criticisms. I have noted that there is a wide gap between those who work with statistics and those who work in statistics. Some of the former always feel that they have the solutions or are the most strident critics of the system, when they have not worked a single day in statistics.
The upgrading of the quality of statistics requires continuous investment in human resources, which has to commence not with the statistical offices or units but at the University or Tertiary institutions. Maybe, the critics may wish to consider returning to our own University and offer their ‘expertise’ in the training of our young minds in this specialist field.
Winston Jordan, MP
Minister of Finance