The Ghana Statistical Service (GSS) is admitting putting up erroneous data after NPP Vice Presidential aspirant criticised government’s handling of the economy describing it as undisciplined, reckless and incompetent.
The admission by the GSS was contained in a formal response to Bawumia's criticisms at a press conference organized Thursday.
Dr. Mahamudu Bawumia queried government’s claim that in 2009 overall non-oil GDP growth was 2.2% whereas Agricultural sector was pegged at 7.2%, industry, 4.5% and Services sector 5.6%.
Dr. Bawumia would have expected a higher growth in non-oil GDP growth based on the values recorded by the three sectors.
He said erroneous data jeopardizes the impact that an IMF bail-out would have in resolving Ghana’s sinking credibility and messy fiscal record.
In his own words at the Central University College where the Distinguished Speakers series was held last Tuesday, Bawumia said the IMF "anchor will not hold” if data was faulty.
But GSS has explained that there “was an error during the transmission of the data onto its website”.
The Service says “the correct figure is 4.8% and not 2.2%”.GSS assured that the corrected data was what was passed on to the IMF hence there could no credibility problems.
The Service's reaction adds up to the number of established institutions that have had to do some explaining since the controversial lecture by the former deputy governor of the Bank of Ghana.
AfDB has had to clarify that Ghana was not on a list of suspended countries who have defaulted in paying its indebtedness to the bank.
AfDB maintains that it was an “administrative error” that had its website placing Ghana along with Somali, Djibouti, Sudan and two others as countries to be suspended for defaulting.
The Ghana Statistical Service nonetheless faulted Bawumia’s analysis of food price inflation.
Bawumia had sought to drum up inconsistencies in food price inflation data collected on the same item by two state institutions – GSS and Ministry of Food and Agriculture (MoFA).
Comparing yam price inflation data, he noted that MoFA puts “price inflation from 0.6% in January to 8.4% by December 2014, GSS on the other hand estimated a decline in yam price inflation from 3.4% in January to -1.8% by December 2014”
But the GSS says the seeming discrepancy was because the methodologies adopted by the two state organs were different.
Bawumia was criticized by the GSS for failing to crosscheck with relevant bodies.
Read full statement
The Ghana Statistical Service (GSS) has read the lecture delivered by Dr. Mahamudu Bawumia, on the "IMF bailout: will the anchor hold?" where he casts doubts on the credibility and reliability of the GDP and inflation data compiled by the GSS.
The GSS would like to address the issues raised by Dr. Bawumia regarding inflation and GDP.
On the issue of GDP Growth rates for 2009, Dr. Bawumia queried why the overall 2009 non-oil GDP growth rate was 2.2 percent, whereas agriculture sector grew by 7.2 percent, industry by 4.5 percent and services by 5.6 percent.
GSS wishes to state that there was an error during the transmission of the data unto its website. The correct figure is 4.8 percent and not the 2.2 percent which has subsequently been identified and corrected. The Institute for Fiscal Studies (IFS) raised a similar concern in January 2015 and they were provided with the above explanation and the correct figure. It may interest the public to note that the 2009 GDP growth rate of 4.8% was the figure provided to the IMF in January 2015.
Another issue raised was on Net Indirect Taxes. Dr. Bawumia questioned why real growth rate for indirect taxes are equal to the real growth rate at basic prices for all the years since 2009. It must be stated that the method for computing net indirect taxes in constant prices has been revised to align with, the recommended treatment outlined in the 2008 System of National Accounts (SNA 2008) and this is consistent with GSS' revisions policy.
The recommendation in the 2008 SNA is to use a related quantity indicator to derive a volume series for taxes. Ideally, indirect taxes should not contribute substantially to GDP growth. Total net indirect taxes are therefore extrapolated by growth rates obtained at basic prices which are acceptable approximations. However, slight differences between the growth rates in GDP at basic prices and growth rates in net indirect taxes might be admissible.
Dr. Bawumia also queried the disparity between the GSS and MoF indirect taxes at constant 2006 prices. The difference between the Net Indirect Taxes at constant 2006 prices attributed to MoF and that of GSS has to do with the reference periods. The figures attributed to MoF was for quarter * two of 2014 whilst that of GSS relates to quarter three of 2014.
We wish to state that MoF provides the nominal indirect taxes which are used by GSS to compute the net indirect taxes at constant prices. The table cited by Dr. Bawumia on net indirect taxes in his lecture are both estimates from GSS. While column two of the table refers to estimates for quarter three, the third column refers to quarter two estimates. In the third quarter of 2014, the method for estimating indirect taxes was revised based on the recommended treatment of net indirect taxes (as stated above) and that accounted for the differences in the two estimates.
We would now like to address issues relating to inflation as raised by Dr. Bawumia.
With regard to the difference in food prices quoted by MOFA and GSS, we wish to state that GSS produces inflation rates for food (which include nonalcoholic beverages) and non-food. MOFA, on the other hand, compiles information on average food prices only. In addition, GSS' food basket contains 82 food items while MOFA collects information on 24 food items, which excludes non-alcoholic beverages. Therefore, the food basket of GSS cannot be compared to that of MOFA. Furthermore, GSS collects prices from fixed outlets in 42 selected market centres across the country for the computation of the weighted CPI and inflation with 2012 as the base year.
In all, 267 items consisting of both food and non-food items are collected in these market centres. Field officers visit these market centres once a month, specifically the first week of the month, to collect prices of items
available in the market on the day of the visit. The market centres from which the prices are collected have been classified by locality, rural or urban. In the case of rural markets, the field officers visit the markets centres on market days, while in the case of urban markets; the field officers can visit and collect the prices any day of the week.
The CPI measures changes in the cost of a representative basket of goods and services and it involves weighting together price changes for different categories of goods and services with an appropriate share that reflect the budgets of the household's expenditure of the items. An increase in the price of items whose weights are small will not have much impact on the overall inflation rate.
The Ministry of Food and Agriculture, on the other hand, collects average prices of 24 food items from the 10 Regional capitals and five other market centres, namely Techiman, Obuasi, Ejura, Mankessim and Tema.
It appears that prices and inflation rates (which are changes in the general price levels) were being used interchangeably in the lecture. To the best of our knowledge, MOFA does not compute consumer price indices or inflation as stated in the lecture and the figures cannot be traced to MOFA. What does Dr. Bawumia seek to achieve by comparing the supposed 'inflation data' from MOFA to that of GSS?
If Dr. Bawumia had taken some time to check the facts from GSS or MOFA, he would have known that the coverage and the methodologies used by the two institutions differ and do not have a direct correspondence. Thus, statistically they are incomparable. We wish to urge interested individuals and institutions to contact the Ministry of Agriculture or GSS to seek clarification if they have any difficulty. We, however, appreciate Dr. Bawumia's interest in the production of official statistics in Ghana and wish to inform interested individuals and institutions to contact GSS for a better understanding of the methodologies adopted in the computation of the CPI, inflation rates and other economic and social indicators.
In more specific terms, we find it difficult to reconcile Dr. Bawumia's own figures on page 57 of his presentation where he indicated that GSS estimated a marginal decline in the rate of food prices, from 7.1% in January 2014 to 6.8% in December 2014. However, on page 61 of his lecture paper, he indicated that food inflation computed by GSS declined from 5.7% in January 2014 to 2.8% by December 2014. This disparity is difficult for us to understand especially so when the latter figures (5.7% and 2.8%) cannot be traced to GSS, even though the former are actual GSS food inflation figures.
The Ghana Statistical Service (GSS) has been producing Consumer Price Indices (CPI) and inflation for the country since 1965. In computing these indices, GSS is always guided by internationally acceptable standards, methodologies and best practices.
In conclusion, we wish to state that the GSS is mindful of the need to produce and disseminate credible and verifiable data to enhance the formulation and implementation of relevant policies and this is exactly what we strive to do. In the discharge of our duties, we are guided by our core values and ethics as well as the UN Fundamental Principles of Official Statistics and the African Charter of Statistics. The GSS is prepared to offer further clarifications to any individual or group of persons on the work we do, especially on issues relating to inflation and GDP.
Thank you for your attention.