Russian economist Sergei Aleksachenko writes on his blog today:
Often, when discussing statistical reports, it is necessary to say that there are lies, great lies, and statistics. Because, for example, connecting in a single line cheese production and cheese products can give the authorities the evidence of the success of [their] import substitution policies. And the fact that this very product does not contain a single drop of animal fat – this is not the statistical part!
But there are also opposite situations where policy makers act in their own interests and deliberately distort the statistical information. For example, the Bank of Russia is doing great and very high-quality work on the balance of payments, the document, which is one of the most important statistical forms for understanding what is happening in the economic relations of the country with the rest of the world, whether or not there is a threat to the stability of the national currency.
Everybody waits impatiently for the publication of this document, he writes, including the Kremlin.
He recounts how President Putin stated at the “Russia Calling” forum in Moscow this week:
“Compared to last year, net capital outflow from Russia for the first three quarters of this year fell, I beg your attention, five times, to 9.6 billion dollars. I remind [you] that in the first three quarters last year, the export of capital amounted to more than $48 billion.”
Who is forcing him to tells these lies, Aleksashenko queries. And at an event where “at least half of the participants” know he is lying, because they’ve read the Central Bank’s report.
What really happened? Between 2015 and 2016, he says, the Central Bank used a variety of different tools to distort the statistics. And more importantly, “…in 2015, the Bank of Russia gave foreign currency loans, but in 2016 they began to demand their repayment.”
To make the math come out right the so-called “experts” at the Central Bank added additional rows to their chart.
The real numbers are actually $37.7 billion capital outflow in the first three quarters of 2015, and $21.4 billion in the same period of 2015. “The difference [between the two] is not five times, but a little less than two.”
And, Aleksashenko continues, “if we compare the performance of capital outflow with the current account balance – this is the result of economic exchange (trade in good, services, wages, interest and dividends, etc.) between Russia and the rest of the world – that is, there is a difference, and this difference is a large [one].”
Traditionally it is believed that the stability of the balance of payments and, consequently, the Russian ruble is based on a stable surplus in the current account balance. This year, that figure began to decline rapidly, from $54.4 billion for the first 9 months of 2015 to $15.6 billion in the same period of 2016.
And if you compare the volume of capital outflows with the current account balance then, in the version of the Russian President, nothing serious is happening: the outflow of capital is less than the surplus of the current account balance. But in the Central Bank’s version, the weakness manifests itself immediately – the outflow of capital is 50% greater than the surplus in the current account balance. This means that the ruble is not in such a comfortable position as it may seem, looking at its dynamics in recent months.
I am far from thinking that the Russian president himself visits the Central Bank’s website and finds the necessary data. Of course, it is done by his assistants. And when they put clearly inadequate information in the text of the president’s speech, I am plagued by two questions: are they doing it deliberately… or are they [economically] illiterate? And… is the president too illiterate?