Flawed Economic Picture? (IBON Updates)

FLAWED DEFICIT FIGURES PROVE UNRELIABILITY OF GOV’T DATA TO SHOW TRUE ECONOMIC PICTURE

Government recently revealed once again how its economic data cannot be trusted to provide a true picture of the country’s economic situation. The country’s trade deficit figures for the past three years were reported to be significantly underdeclared after government said it made major revisions to imports and exports data.

For 2004, the trade deficit was revised to $4.3 billion from the $713 million figure earlier reported by the National Statistics Office (NSO). The 2003 and 2002 trade deficit figures were likewise revised to more than $4 billion. For these three years, the cumulative trade deficit was understated by over $10 billion.

According to independent think-tank IBON Foundation, this only spells more bad news for the country’s balance of payments (BOP) position. For a dollar-dependent economy, a bigger trade deficit means fewer dollars to pay for the country’s imports and debt payment.

Economists said the revisions raised further doubts about the reliability of Philippine economic data after previous major revisions. Trade deficit data for 2000-2001 had earlier been revised.

That Philippine economic data is not reliable should not be surprising given how the Arroyo administration is using revised methodologies to conceal harsh realities about the economy. For example, the National Statistical Coordination Board (NSCB) has reduced the poverty threshold several times to decrease the number of poor Filipinos and obscure the true extent of poverty in the country. The NSO has also redefined unemployment to reduce the count of unemployed workers.

Further, the Department of Finance has removed intra-government borrowings as a part of the outstanding public sector deficit (OPSD) to reduce public debt figures, while the Bangko Sentral ng Pilipinas (BSP) has added a 20% “raising factor” to hike overseas Filipinos’ remittance estimates and improve balance of payments accounts.

These changes not only make the identification of trends difficult by making current data incompatible with previous years’ estimates. More significantly, they serve to conceal government’s failed policies that have worsened the country’s economic situation. (end)