Speech

Enhanced Data for Better Macro-Policies, STA Capacity Development Conference for Africa

February 2, 2016

Honorable Ministers, Governors, Directors of National Statistical Agencies, and Distinguished Guests:

I want to begin my opening remarks with a quote by former British Prime Minister Sir Winston Churchill who once stated: “The utmost confusion is caused when people argue on different statistical data.”

This speaks to the very crux of today’s conference and applies to the challenges that you are confronted with as policymakers in Africa. You—but also we at the IMF and other stakeholders—need to base our economic decision-making on hard data and analyze those data carefully to extract the best informed common understanding of current economic conditions and likely outcomes. All too often, decision-makers do not have those data at hand, or we believe that we have data which later turn out not to be as reliable as we thought. And how often have we caught ourselves in questioning data because they do not fit the argument we want to make? Very often, it is crisis moments that make us realize that the data and the analysis on which we based our economic decisions were faulty or incomplete. In Africa, as elsewhere, we need to jump ahead of crisis management when it comes to data, and seek to enhance the gathering, processing, dissemination and analysis of data to help us formulate and implement the best possible set of economic and financial policies. This conference aims to shed light on the importance of data for economic decision-making and focus our attention on the relationship between more and better data and the improved economic outcomes that we seek. It also can help us prevent and cope with international economic crises.

With this in mind, this conference aims to focus our attention on three main areas:

• The importance of accurate data for analysis and policy making;

• Regional Integration of statistics and macroeconomic policy making; and

• The linkage between data transparency and policy making.

Why do we think it useful for Africa to focus on these themes, how have IMF partnerships with others contributed to enhancing data for better macro-policies, and what should we hope to learn during this exchange of views today? So let me shed some light on these important questions so as to set the stage for our deliberations today.

Data Accuracy

Accurate macroeconomic and financial data are essential for economic decision-makers. Almost everything that governments and central banks decide is justified by how data are moving, sometimes at a rapid pace. And those decisions are being scrutinized by the public and other stakeholders—including the IMF, investment banks, rating agencies, development partners, and civil society—again, against the underlying data. In Africa, the quality of data collection, processing and dissemination is undergoing a dramatic transformation, building on the accumulation of years of improvement efforts. In addition, new sources of data and collection tools (such as foreign direct investment surveys) and techniques (using tablets and cell phones), as well as improved data compilation methods to apply internationally accepted statistical methodologies, are leading to the availability of more up-to-date and accurate information. Some examples to be discussed at today’s conference would include the updated levels of GDP and growth rates in some of the economies on the continent. In addition, higher frequency indicators on real economic activity and prices are aiding the authorities that are contemplating or implementing inflation-targeting policies. Similarly, the sustainability of fiscal policies, and analyses of financial and international risks, are being reinforced in economies that adopt the latest statistical developments in government finance, financial soundness indicators, and balance of payments and international investment position methods. And while we have for decades focused on traditional macroeconomic and financial statistics, the data revolution of the last few years has confronted all of us with an abundance of new data—BIG DATA—that, while adding to our decision-making base, has also been complicating decisions, just because of the avalanche of information that needs to be digested.

In this context, I want to highlight that it is a worthwhile investment to help countries improve their data as the basis for how they come up with their macroeconomic policy decisions. One example is how the IMF has been working with countries to rebase their national accounts. In the case of Zambia—to name just one country that is also present here today—the IMF assisted in the country adopting the latest methodology—the 2008 SNA—and improving surveys and the coverage of informal activity. As a result, the rebased national accounts for 2010 that were released in March 2014 were about 25 percent higher than measured before, giving policy makers a better picture of the true underlying economy. Such a substantial change in GDP forces policymakers and other stakeholders to revisit the fundamentals of their assessment of a country’s economy; think about the revenue effort, debt sustainability, money demand, the inclusiveness of economic growth—all these economic concepts and the understanding of an economy are fundamentally affected when GDP suddenly is so far different from where it used to be.

Thus, we would like to focus attention in today’s conference on how accurate and reliable the various macroeconomic data sets are and look forward to hearing from national statistical experts, as well as senior policy-makers, on how well the data are serving policy needs. We would also hope to hear about what remains to be done to improve the data needed for policy purposes, and the efforts that have already been set in motion to address those needs. By sharing these perspectives and experiences, this conference aims to set the course for the next round of data improvement efforts to enhance policy formulation, implementation, and monitoring. These data improvements will be encouraged and supported by the IMF, especially our Statistics Department in partnership with donors such as the UK’s Department for International Development (DFID) that has generously provided substantial funding so that we can meet here today.

Regional Integration

A number of regional integration efforts are in progress across the African membership, and the IMF stands ready to support these efforts. Part of our analytical work to embellish optimal currency areas, and the harmonization of fiscal and monetary policies in the context of these efforts, relies on the adoption of common sources and methods to put the data together. Without coordinated statistical initiatives we will not be able compare information within those sub-regions and across countries.

We will look to hear from national and regional policy leaders and other experts on the practical issues of economic integration and convergence activities in Africa, while drawing on some of the lessons learned in Europe where integration and harmonization are well advanced. Both the challenges and successes will contribute to learning that could be applied in new contexts. Again, we also expect to hear from IMF staff on how our efforts have contributed to these aspirations set by the authorities, especially in areas of regional statistical harmonization through legal and institutional instruments, common datasets in line with international standards, as well as the methods used to put the information together and to disseminate the data.

Data Transparency

The third session today will focus on the dissemination of data—to the various users of statistics for their own decision-making. This is foremost the public—the citizens of a country—but stakeholders are many: domestic and international companies, investors, rating agencies, data resellers, academia, the media, development partners and, of course, the IMF—just to name a few. The availability of improved methodologies, new insights into economic linkages and spillovers, and new technologies has also increased the speed with which data are being made available, analyzed, and used. And while in the past the focus on data has often been mainly been national, everything is global nowadays—raising the importance of data transparency even more and prompting the IMF to renew emphasis on data transparency in recent years. In this context, we aim to spark an active discussion on the IMF’s Data Standards Initiatives during the third session today.

Let me share some background with you.

The 2008-09 global financial crisis revealed significant data gaps that prompted the IMF, in cooperation with member countries and other international organizations, to launch a joint multi-year effort to fill data gaps on the basis of 20 recommendations. This G-20 Data Gaps Initiative was endorsed by G-20 Finance Ministers and Central Bank Governors and the IMF’s IMFC in 2009. It has focused on the build-up of risks in the financial sector, cross-border financial linkages, the vulnerability of domestic economies to shocks, and improved communication of official statistics. Since then, following a highly successful international effort that helped reduce data gaps largely as intended, we recently moved to the second phase of the initiative that emphasizes the regular collection of data under existing and new conceptual frameworks and strengthens the link to the IMF’s highest-tier data standard—the SDDS Plus that was introduced in 2014. So far eight countries have joined this demanding data standard, and we are eager to work with other countries to follow suit.

While the SDDS Plus is mainly geared toward advanced and emerging market economies, in May 2015 the IMF introduced the so-called e-GDDS—the enhanced General Data Dissemination System. Some 110 economies—or roughly 60 percent of the IMF’s membership, many of them low- and middle-income countries in Africa—can benefit from this reform to the IMF’s data standards. The e-GDDS was designed to assist countries to improve data transparency, by publishing essential data for the analysis of macroeconomic conditions and policies and leveraging the IMF’s Article IV Consultation discussions to elevate statistical issues to the attention of senior policy-makers. As a result, markets, investors, and the public at large will benefit from the removal of uncertainty on data dissemination, with ready access to key data in15 data categories according to the coverage, periodicity, and timeliness guidelines encouraged in the e-GDDS framework.

The e-GDDS is also well-suited to allow dissemination, at each country’s choosing, of the possibly up to 300 indicators underlying the 17 new Sustainable Development Goals. The full set of indicators is slated to be adopted by the United Nations Statistical Commission in March 2016. The IMF has participated in the Interagency Expert Group and offered its expertise on several indicators of macroeconomic relevance, also with a view to ensuring that countries can effectively compile and monitor the relevant indicators.

Overall, we believe that the roll-out of the e-GDDS will ensure the robust and regular dissemination of data in an efficient way. It will support better and evidence-based economic policy-making and facilitate the assessment of potential economic vulnerabilities and risks. Regular monitoring and reporting by IMF staff will stimulate peer competition and beneficial pressure from stakeholders and markets.

The IMF’s Statistics Department (STA) has begun to provide technical assistance (TA) and training on the e-GDDS to interested countries, in an effort to set up National Summary Data Pages (NSDP), develop and use Advance Release Calendars, and deal with the associated information technology aspects. I am pleased to announce that the first e-GDDS country is Botswana, which we will further delve into in the third session. STA will continue to offer countries assistance in setting up web-based Open Data Platforms for their data dissemination needs to the public and other national and international users and to operationalize the e-GDDS. This is based on a highly successful cooperation with the African Development Bank in some two dozen African countries where work on the ODP has been piloted.

The IMF’s work on the e-GDDS emphasizes that it is not sufficient to produce and compile macroeconomic and financial statistics, but it is essential to also disseminate and use the data for better policy making. Lack of, and weaknesses in, high-quality economic data severely constrain the effectiveness of countries’ economic policies, and the lack of data transparency significantly impacts private sector activity.

Let me also highlight that effective January 2015, all of the IMF Statistics Department’s macroeconomic data covering all economic sectors across a large part of the IMF’s membership was made freely accessible to everybody. As stated by the IMF’s Managing Director at the announcement of this major change in November 2014, “the free data program will help those who draw on our data to make better use of this vital statistical resource—from budget numbers to balance of payments data, debt statistics to critical global indicators.” We have rolled out the free data program with a new online dissemination portal at http://data.imf.org .

IMF Partnerships to Promote Enhanced Data for Better Policies

But let me come back to the daunting challenges on the data front that many developing countries in Africa are facing. The IMF has been a major player in the global efforts to assist developing countries in the statistical area. Based on a thorough assessment of needs, the IMF has provided considerable and well-targeted technical assistance and training on statistics to many countries; this now accounts for more than half of the STA’s activities. The numbers are impressive: in the IMF’s fiscal year that ended in April 2015, STA sent 667 TA missions to countries around the world and organized 111 training events reaching thousands of country participants. About half of this TA on statistical issues is benefiting low-income countries, many in Africa. We have also stepped up our specific support to fragile states, with the number of TA missions to this diverse group of countries slated to double between FY2014 to FY2016—a sign of these countries’ enormous challenges on the data side.

As in the case of Zambia, we have many other success stories of our capacity development that have resulted in new data sets, longer time series, higher frequency data, or just better data—consistent with internationally accepted statistical methods.

The IMF’s capacity development has traditionally focused on “bread-and-butter” statistics, such as national accounts, prices, government finance statistics, monetary and financial sector statistics and a full range of external sector statistics. This is where we have a strong comparative advantage. The IMF is known as a leader and standard setter in the methodological area, having authored and co-authored with international partners some two dozen Manuals and Guides, such as recently the new Balance of Payments Manual Compilation Guide or the new 2014 Government Finance Statistics Manual.

But lately the IMF has also stepped up its emphasis on providing TA and training on data dissemination, the development of open data platforms, and new statistical domains, such as high-frequency indicators needed for monetary policy implementation, source data to improve national accounts, and real sector price statistics, sectoral accounts, and balance sheet analysis to help detect economic vulnerabilities and risks. These are areas that countries have indicated to us they would like to see covered in our global capacity building efforts as well.

In all of these undertakings, the Statistics Department—like other IMF departments—has benefited from the generous support of our partners that help finance our capacity development; countries such as Japan, the UK, Switzerland, the Netherlands, Belgium have made this possible, together with the Bill and Melinda Gates foundation, the Center of Economics and Finance in Kuwait, and the many partners supporting the IMF’s nine Regional Technical Assistance Centers around the globe that all offer a multitude of TA and training in the core statistical fields.

Special Thanks to DFID

Let me take a moment to express our special thanks to the DFID. This goes beyond DFID’s generous financial support to bring all of us together here today in Accra. As many of you are directly aware, the IMF partnered with DFID support on an Enhanced Data Dissemination Initiative (EDDI), a five-year project that ended in March 2015. EDDI supported 165 STA technical assistance (TA) missions and 28 workshops on behalf of the 25 participating African countries. The TA and training was delivered through modules structured around groups of countries with similar needs in the four main areas of macroeconomic statistics: monetary and financial statistics, government finance statistics, balance of payments statistics, and real sector statistics (comprising national accounts and prices). The EDDI received DFID’s highest evaluation rating and was very highly regarded by the recipient countries, with particular emphasis on relevance (consistent with country objectives and priorities), impact (results achieved), and sustainability (results will remain after project ends). The project yielded numerous results, with more comprehensive, timely, and higher-quality data in many countries.

As a follow-up to this work, DFID is supporting EDDI Phase 2 that began in May 2015 and focuses on continuing and expanding the project to 44 countries (including in the Middle East and Central Asia), providing support to fragile states and contributing positively to the IMF’s surveillance and lending operations in those areas. The project’s emphasis on the compilation and dissemination of a broad range of macroeconomic statistics will be conducive to promoting economic governance and transparency and, ultimately, supporting the achievement of economic stability and sustainable growth. For example, the envisaged strengthening of government finance statistics in a selected group of countries will promote fiscal transparency and reduce fiscal risks, as more and better information on the government’s underlying fiscal and debt positions becomes available. Improvements in national accounts and price data will help policy makers in defining their macroeconomic policy stance, such as through the availability of better price statistics for the design and implementation of monetary policy. Finally, stronger external sector statistics will help improve countries’ assessment of their vulnerability to exogenous external shocks and facilitate coming up with the appropriate policy response.

In conclusion, what do we hope to achieve at today’s conference?

We are here to listen and learn. The IMF wants to hear what you have to say about the role of data in your policy decisions. I am sure we all will learn from each other on the challenges and opportunities that are faced by national agencies that gather and present macroeconomic and financial statistics, including national statistical agencies, central banks, and ministries of finance. We also aspire to learn from successful experiences and explore new ideas to enhance those data. I can promise you that the IMF will continue to support those efforts, including through our work to develop and refine internationally accepted statistical standards that give policy makers useful data frameworks. We also will continue to provide the TA and training to sustain your efforts in these areas.

Jim Barksdale, former Netscape CEO, once said: “If we have data, let’s look at data. If all we have are opinions, let’s go with mine.” If we want to avoid basing our decisions on guesses and opinions, we need the best possible data to aid our understanding of economic developments and to help us formulate the sets of policies that will lead to greater prosperity for our citizens. One could summarize this by saying “We Need Really Good Data to Attain Real Results”. Thank you for joining us in this conversation during today’s conference and we look forward to our continuing engagement together to make this happen.

Thank you very much.