Juggling inflation rates: Planning minister first cut interest rate, then Hasina showed ‘development’

Confirming long-held suspicions, the White Paper Commission found evidence of manipulation of Bangladesh’s inflation and GDP growth data by the ousted Awami League government to boost the administration’s image and predict outstanding economic progress.

The manipulation led to the release of fabricated data by the Bangladesh Bureau of Statistics, two members of the White Paper Committee told The Business Standard on condition of anonymity.

They claim that during Sheikh Hasina’s government, the bureau initially prepared inflation data and submitted it to the planning minister, who then ordered the data to be corrected.

Once corrected to the minister’s satisfaction, the data will be sent to Hasina for approval where it will be further revised, they said, adding that the office will only publish data approved by Hasina.

For example, while Hasina was still in office, the provisional GDP growth rate for FY23 was 6.3%. However, the final post-Hasina numbers released on August 31, 2024 showed a growth rate of 5.78%.

Economic data was routinely revised before publication during Hasina’s government. According to White Paper Committee insiders, this manipulation reached its peak during Mustafa Kamal’s tenure as planning minister.

On inflation, the committee said that if the figure was close to or above 10%, planning ministers would refuse to approve the figures.

Before leaving office on August 5, Hasina’s administration released the June inflation rate, which was 9.72%. Accordingly, the interim government reported an inflation rate of 11.66% in July, which decreased slightly to 10.49% in August.

A member of the committee stated that while manipulating GDP growth and inflation rates might not significantly change calculations of national income per capita, an increase in the real inflation rate would likely result in an increase in nominal GDP.

“As long as nominal GDP does not decline, per capita income will remain unchanged,” the member added.

According to the commission’s findings, data manipulation peaked during AHM Mustafa Kamal’s tenure as planning minister from 2014 to 2018.

Kamal was abroad before the fall of Hasina’s government on August 5, while former planning minister MA Mannan (2018-2024) denied allegations of data manipulation.

Mannan told TBS that he never manipulated any data nor did Hasina ever instruct him to do so.

He added that he advised the BBS and the statistics secretary to present accurate data. “Many people expressed skepticism about Bangladesh’s statistics and distrusted government data, so I repeatedly urged them to always provide accurate information.”

Skepticism about BBS data

Skepticism about inflation data and GDP growth data has long been strong among economists in Bangladesh. The discrepancy between government data and forecasts from organizations such as the World Bank and IMF is stark.

For more than two years, research organizations such as the Center for Policy Dialogue and SANEM have provided evidence that the government’s published inflation rates do not reflect actual economic conditions.

However, members of the Awami League government, especially the finance and planning ministers, have consistently denied any allegations of data falsification.

Economists say the manipulation of such key data served to inflate the government’s economic performance for political purposes while concealing government corruption and incompetence.

Fahmida Khatun, executive director of the Center for Policy Dialogue (CPD), said there has long been skepticism about the reliability of inflation and GDP growth rates.

“Even without surveys, economists could easily spot significant discrepancies. Despite reporting high GDP growth data, private sector investment and job creation have not increased, indicating a disconnect,” she said.

She also noticed a similar pattern in poverty statistics. “The previous government claimed to have reduced poverty rates; however, if poverty rates actually fall, inequality should also fall, which has not been observed.”

Committee to provide accurate data

On August 28, the interim government appointed a committee to prepare a White Paper on the state of Bangladesh’s economy.

It is planned that the National White Paper Committee will start publishing validation reports – two chapters per week, starting from October 31.

Debapriya Bhattacharya, chairwoman of the 12-member committee, said at an event yesterday that the first chapter of the white paper would focus on illustrating how various types of data manipulation took place, including inflation, growth rates, national income, household surveys and payment statistics balance.

He further mentioned that when many of them approached government officials for insights on these issues, they expressed their helplessness, detailing how they were forced to manipulate the data.

At the event, former Dhaka House Speaker Sabur Khan expressed concerns about the reliability of the statistics. “Our main concern is data accuracy. Without reliable information, nothing can work effectively.”

A member of the committee stated that since the interim government took office, there was no room for further manipulation of the inflation level.

Current planning adviser Wahiduddin Mahmud has reportedly informed BBS that there is no need to seek prior approval before releasing inflation data.

On August 28, the interim government appointed a committee to prepare a White Paper on the state of Bangladesh’s economy. The 12-person group is headed by Debapriya Bhattacharya, an outstanding specialist at the Center for Political Dialogue (CPD).