ECC has no trust in official inflation figures!

The Economic Co-ordination Committee (ECC) of the Cabinet has reportedly expressed no confidence in the official inflation figures, arguing that the figures show a declining trend, however, the impact of this decline was clearly not evident, well-informed sources told Business Recorder. The meeting was presided over by the then finance minister Dr Abdul Hafeez Shaikh (now Advisor to Prime Minister on Finance and Economic Affairs).
Dr Shaikh given his current portfolio can no longer chair the ECC meeting. The sources said the ECC''s perception was that the inflationary impact was not being properly reflected by the statistics and there was an information gap. It was suggested that a monthly write-up on economic situation of the country, also showing comparison with neighbouring countries, should be disseminated for information to masses. Recalling the proceedings of a previous ECC meeting, a view was expressed that foreign investments are not correctly presented to the ECC and the matter needs to be looked into.
It was stated that negative investment of $35.5 million in the "communications sector" during October 2011 has been presented which is alarming. It was desired that the names of the companies should also be reflected under this head. It was also suggested that the Governor State Bank of Pakistan (SBP) in co-ordination with the Board of Investment (BOI) should thoroughly investigate the matter and furnish a report to the ECC.
According to sources, the ECC also directed the Planning Commission that progress of at least 20 important development projects (PSDP 2011-12) should be made part of presentation to the ECC. It was stated that implementation of projects was affected due to slow release of funds by the Finance Division and the major thrust remains on strategic projects as well as those which are near completion.
During further discussion, it was noted that prices of kitchen and grocery items have declined. Notwithstanding the declining trend of inflation, masses are interested in actual reduction of prices of items of their daily use. It was suggested that a committee should be constituted for monitoring the prices of daily use items. It was explained that a National Price Committee, headed by the Finance Secretary, is already functioning and holds monthly meetings in which prices of 28 essential items are monitored while SPI also covers all essential items. The committee has started functioning again as the ECC is not meeting now because of Hafeez Shaikh''s change in portfolio - from Finance Minister to Advisor.
Chairman ECC (the then Finance Minister) observed that format of presentation of key economic indicators, needs to be made more meaningful and simple to understand and suggested that a new format of presentation may be evolved by Finance Secretary. Shedding light on talks with the IMF, it was clarified that these talks were not related to any loan request. Rather, these were the requirement of IMF under Article 4 of its Charter, whereby the Fund is required to evaluate the performance of economies of its members. It was also intimated that Pakistan did not take any loan from the IMF since May 2010. During discussion, initially there was some disagreement between the government and the IMF on performance indicators presented to the Fund by Pakistani financial team. However, the Fund later agreed on most of the points.