Home Economics & Policy Widening the confidence interval

Widening the confidence interval

Strengthening Lebanon’s statistical base is a challenging affair

by Jeremy Arbid

For Maral Tutelian, something is missing from the three year old debate about the economic impact of a proposed public sector wage increase: reliable statistics. The director general of the state’s Central Administration of Statistics (CAS) tells Executive, “It’s not a matter of point of view, it’s not a matter of guesstimation. Imagine all these discussions between the workers and the parliamentary committees [and] no one called me. Nobody asked for details.”

Recent, reliable, and comprehensive data and statistics are fundamental for sound economic policymaking, as Minister of Finance Ali Hassan Khalil admitted in October during a meeting with representatives from the International Monetary Fund and the World Bank Group. Yet, true as this may be, the Lebanese state is still a far cry from providing robust and quality numbers. Tutelian insists, however, that CAS is doing its best with what it has, with an eye on further reform.

To do so, the body has partnered with international organizations to up its capacity, both through technical assistance and financial allocations. In September 2013, the EU announced grants for the CAS of €5.5 million ($7 million) for training, capacity building, new surveys and data collection.

But the primary limitation for CAS remains access to a qualified labor pool. A 2012 report published by the Lebanese Economic Association states, “The quality of statistics is hampered by severe technical problems as well as an acute shortage of human and material resources.” Gaps in the legal framework of the nation’s statistical system and an inconsistent allocation of funding also hamper the body’s capabilities, creating a void in the production of indicators that private consultancies have filled.

A troubled past

Like many institutions — indeed much of the country — the onset of the civil war brought chaos to the Lebanese statistical system. Data housed at what was then referred to as the directorate of general statistics within the Ministry of Planning — itself abolished in the late 1970s and consolidated into what is now known as the Council for Reconstruction and Development — was destroyed. “Don’t forget the war affected a lot the inventory of the database,” says Ola Sidani, an economic officer in the prime minister’s office.

Though Lebanon’s statistical system was reestablished through Law 1793 of 1979, creating CAS within the presidency of the council of ministers with subsequent organizing decree 2728 in 1980, the agency did not begin to function effectively again until the mid 1990s. “It was only in 1994 that Prime Minister Rafik Hariri decided to put statistics on track,” Tutelian explains.

For nearly a 20 year period — throughout the civil war until the mid 1990s — Lebanon did not have comprehensive, government produced statistical data, a void filled by private companies and a smattering of other public agencies.

Private sector steps in

While CAS only began producing a consumer price index (CPI) in the late 1990s, the private Consultation and Research Institute (CRI) has been producing CPI for greater Beirut since March 1977, managing director Kamal Hamdan explains.

In 1979, following the reestablishment of a public statistics agency, the government that had lost its statistical database — including its CPI data — reached a deal to purchase the methods and database maintained by the consultancy to jumpstart CAS’ capability in compiling these statistics, which it started doing on a quarterly basis in 1999.

Slowly, CAS has formalized its CPI publication with assistance from the International Monetary Fund, but it is not a standalone product. To compile a CPI, organizations must draw upon a basket of consumption and services that are weighted according to the results of a household budget survey. The more of a certain item a typical family buys, the greater the weight of that item in the CPI basket. Since most households spend more on food than on, say, entertainment, swings in the price of staple foods have a greater impact on the CPI than similar movements in the price of movie tickets.

In collaboration with the World Bank, CAS’ most recent household budget survey was carried out in 2011–2012 “to update the weights and now we have not only a CPI on the national level, but a CPI at the level of the mohafaza [province],” Tutelian explains. The publication of CAS’ household budget survey from 2012 provided the indicators needed to update the weights in the basket of goods for the CPI, adjusting the methodology accordingly.

Human resource gap

Because the framework for the country’s statistical system dates back to the Civil War, reform efforts have become imperative. “When you have a body without staff and human resources, without enough budget, how can you stand up?” Tutelian asks rhetorically. It is upon limitations in the legal framework organizing CAS — now over 30 years old — that the director general focuses her frustration. Sidani agrees, “In general, CAS is now understaffed; the whole system needs revitalization, we need more coordination so as to not have duplications, so as to have reliable numbers and quick access to data.” 

With CAS’ rigid organizational law, Tutelian says, the body cannot meet its human resources needs. While CAS has recently concluded a round of hiring — it selected 24 people to begin working in July who will be joined by another 24 in December — the body still has a shortage of employees, particularly in more specialized categories, such as statisticians and economists.

Even counting the new hires, CAS only has a staff of 110, less than half of what it should be employing. Tutelian is straightforward in describing the manpower shortage at CAS, “By law, I can only have four economists. I have already the four economists and they’re not enough in a statistical institution. I have two social scientists only; I don’t have demographers. At the time in the 1970s this was the institutional structure of all the [administrations], but now we’re in 2014. I need demographers and social scientists and economists in huge numbers.”

This is a problem that CRI, the private sector statistics provider, also faces. There, Hamdan complains, “One of the major elements that make this business costly is our major competitor over this kind of [human resources] — the UN system,” where salaries are usually higher. 

Towards reform

In an effort to get better at gathering numbers, the Lebanese government has enlisted the assistance of international donors. Part of this is the €5.5 million ($7 million) grant from the EU. Of this cash, €1.1 million ($1.4 million) is earmarked for training and capacity building, €3.5 million ($4.4 million) will be used to conduct a new living conditions survey and the remaining €900,000 ($1.1 million) is to carry out the Lebanese component of the Mediterranean Households International Migration Study (MED-HIMS) that aims to measure migration, remittances and related attitudes.

Others have previously committed funds for various projects. According to Tutelian, Lebanon began developing a national statistical master plan (SMP) in the 2000s to “help in setting out a medium term strategy for creating the necessary capacity to produce reliable data for policy and decisionmaking.” According to the World Bank’s website, the project was initiated in 2005 with technical assistance totaling $500,000. “It wasn’t endorsed. It was disseminated to the public on October 22, 2008, in the Grand Serail under the patronage and the presence of the prime minister with all the EU ambassadors in Lebanon, in front of all the UN agencies, public and private sectors — and we’d worked for more than two years with the World Bank,” Tutelian says.

In 2011, reform of the statistical system was back on the table, with a $129,000 grant provided by the Trust Fund for Statistical Capacity Building, a multi-donor trust fund administered by the World Bank. The objectives were similar: reform the statistical law, review and update the 2008 SMP, design an implementation plan and restructure CAS. According to Sidani, the World Bank is scheduled to visit Lebanon this month to meet with a committee of stakeholders — including CAS, the Ministry of Finance, the Ministry of Economy and Trade, OMSAR, Banque du Liban and the Ministry of Justice — to discuss the implementation of the plan.

Implementing the plan will be a crucial step towards modernizing the statistical system in Lebanon, improving coordination between the various line ministries to produce their own data for greater ease in compiling the statistical output at CAS. “The coordination mechanism may need some fine tuning; we cannot say there is no coordination because the law gives the mandate for all ministries and agencies to coordinate with CAS,” Sidani says.

Reforming the statistical system might also strengthen the flow of data from ministries towards compilation at CAS. It will have more direct effects towards empowering CAS to improve data provision — a needed priority according to a consultation mission by the IMF earlier this year: “Adequate funding and high level support for CAS, along with enhanced cooperation with other agencies, will help improve statistics.”

Modernizing the legal framework of CAS will also be affected following the implementation of the SMP. “The most important constraint is the lack of flexibility that we [CAS] have … it’s a problem,” says Tutelian, referring to constraints in the legal framework of the organization.

Finding funds

CAS had requested authorization from the prime minister to carry out a new census of buildings, dwellings and establishments — a housing survey used to indicate, in part, the household budget survey used in the CPI, and last conducted in 2004 — which would cost $4.3 million. Finance Minister Khalil’s statement in October indicated support for the work of statistical output of which CAS sorely needs, but the minister has remained committed, at least in this case, to not approving this amount as extrabudgetary spending, so CAS will have to reconsider its options next year.

Indeed CAS’ situation fits into a broader discussion on national budget reform, because CAS, as well as the other public administrations, has to use 2005 as a reference for submitting its annual budget. As Tutelian explains, “Nine years ago your needs were different; IT needs were different, scheduling was different, your working plan was different. In 2005 you spent what you’re spending now, your needs have changed, the products around you have changed.” This hinders CAS’ capabilities where it has to pinch pennies to continue its current services and rely on international agencies to piece together money for staff training, expertise and new studies.

Implementing the SMP will have a more targeted effect in coordinating the work of CAS with public entities. In the first five months of 2013 CAS did not collect CPI data.

In its report, the IMF wrote, “The CPI was not compiled during January–May last year, reflecting disputes with the prime minister’s office over funding for CAS. Funding to CAS and data compilation resumed last summer under strong Fund pressure.” An explanation for the stoppage has not yet been fully articulated; Sidani could not comment on the matter while Tutelian stated “I really — until now — I don’t know what was the cause, the real cause of the stoppage”.

[pullquote]CAS also suffers from delays in receiving data from other public administrations[/pullquote]

Working together

CAS also suffers from delays in receiving data from other public administrations — it’s not all ministries Tutelian insists — that have their own policies in producing and sharing data. Implementing the SMP would align these policies. Referring again to the IMF report provides some further perspective on the subject: “Technical staff — at CAS and other institutions — underscored the inadequate cooperation from other institutions in providing timely inputs; and thought that policymakers need a better appreciation of the importance of reliable statistics.”

For Hamdan, the private sector statistician, the problem also lies in who is using the data on offer. “There is a gap. But the shortage is in the qualifications of the human resources that should use this data that is available. The public bodies lack the managerial and the analysis capabilities that can use huge amounts of data.”

Despite these two challenges, Tutelian insists CAS’ work is both necessary and relevant, pointing to an example now nearly 10 years old. In 2005, Tutelian says, the minister of health saw CAS figures indicating that 51 percent of the Lebanese population didn’t have healthcare coverage — “So 51 percent of your population are left to their destiny, and [the minister] took the decision. It was based on CAS figures. The coverage of the services of the Ministry of Health was increased going from this indicator.” CAS hopes to be more helpful in the future, provided reform efforts finally start to garner momentum. She dismisses the guesswork and political maneuvering that guide decision making today. “Policies should be based on statistics,” she says.

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Jeremy Arbid

Jeremy is Executive's former economics and policy editor.

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