When Lebanon’s central bank announced a stimulus package in January, it was largely welcomed. But for the critics the main concern was inflation — more money in the economy would lead to a hike in prices, effectively negating the effect of the new money altogether. But these critics have been silenced, not by being proven wrong but by the government’s decision to stop collecting data on inflation altogether.
Lebanon doesn’t publish much in the way of professional economic data — there are no regularly published figures for unemployment, jobs created or foreign investment. Since 2008, however, inflation has been a notable exception to this rule: being measured in a professional, systematic way by the Central Administration of Statistics (CAS).
But in January 2013, CAS failed to publish its monthly Consumer Price Index (CPI). The only other time this happened, in January 2011, it was just for one month. This time, CAS has failed to publish CPI for four straight months — and counting. The data show that inflation was at an annualized rate of around 10 percent in the second half of 2012, but since then there has been no way of knowing if it has increased or decreased. Those familiar with the matter dispute whether there are plans to resume publication in the foreseeable future.
“This is scandalous,” said Jad Chaaban, an economist at the American University of Beirut, adding that CPI “was very important for economic planning — even for consumers and employees who need to know how much of a raise they should have at the end of the month.”
Nassib Ghobril, chief economist at Byblos Bank concurred, telling Executive, “There are very big implications: companies use [CPI] for budgeting, salaries and pricing; entire sectors and labor unions use it; and it is used for calculating GDP.” He added that the country already lags behind international standards in terms of the quality of data collected. “We are very frustrated. We already have a weak statistical base, and it’s just gotten weaker.”
The reason for the lack of data speaks volumes about Lebanon’s archaic system of government. Officials both in and close to the government told Executive that the issue is not funding — CAS has the money needed to collect, analyze and publish the data — but rather administrative and political. Two sources close to the issue claim that CAS can’t do its job without authorization from the Prime Minister’s office — basically, the agency is waiting on a signature.
The reason for this reticence to sign is disputed. Samir Daher, advisor for economic affairs and development in the office of caretaker Prime Minister Najib Mikati, did not deny claims that Mikati’s office was responsible for the delay but said the real issue was a disagreement within the government, telling Executive that “it’s a technical dispute that’s taking place. They say that this is the only team that has been trained and I say I want to take a broader view and build an independent institution.” Asked to specify whom the dispute was between, Daher declined.
Speaking of the need for more statisticians and more competitive salaries at CAS, Daher continued, “This is part of a broader attempt to reform; you don’t want to make minor adjustments. We’re trying to revise the law and give more authority to this institution.” It was unclear how stopping CPI publication would give CAS more authority, but Daher added that he was committed to reaching a deal, saying: “If I don’t finish this [before leaving office], then I have partially failed.” Mikati is due to step down, along with his advisors, if his designated successor Tammam Salam can agree on the formation of a new cabinet.
But broader reforms do not help in the here and now. Crucially, the issue is not that CAS has collected but not published inflation data — rather, the lack of authorization from the Prime Minister’s Office has precluded even data collection. That means when authorization resumes, there will be at least a four-month hole in the data. “You can’t go back to January and collect data,” noted Ghobril.
Not only is this a problem for local business and employees, but it also causes headaches for organizations like the International Monetary Fund (IMF), which regularly publishes economic data on Lebanon. The fund also provided advice and technical assistance when the CPI was devised in 2007-2008.
According to Ghobril, the IMF “is very concerned about this suspension. When they were here a few weeks ago, it was a big issue.” Daher took a more reserved view, saying, “The IMF is aware of the issue and understands what is happening.” The IMF declined when asked to comment.
Options for judging inflation without the CPI are limited for policymakers, companies and citizens alike. One other organization, the Beirut-based Consultation & Research Institute (CRI), collects such data. However, their inflation statistics differ in methodology and scope from CAS’s. For January through March 2013, CRI calculates that inflation in the greater Beirut area has hovered around 4.5 percent year-on-year, down from 7.75 percent in October 2012. Compare this to the CAS’s October figure of 11.1 percent, and it is clear that the different methodologies make comparison difficult.
Regardless of the high official figures, Ghobril said there was no justification for ceasing publication. “For an open country that relies on capital inflows and free trade, it’s embarrassing…. Developing a comprehensive statistical base should be a priority of any government; proper policymaking has to be based on credible figures.”