Inflation is a politically sensitive indicator, calculated by the Pakistan Bureau of Statistics (PBS), which has prompted routine challenge by members of the opposition as well as independent economists voicing concerns over data integrity – a view endorsed by the International Monetary Fund (IMF) in its 10 October 2024 loan approval documents subsequent to formal Board approval of the 7 billion-dollar Extended Fund Facility (EFF) programme.

Under the section titled Policy Discussions, the Fund noted “major shortcomings” that “remain in the source data available for sectors accounting for around a third of Gross Domestic Product… (and emphasized) issues with the granularity and reliability of the Government Finance Statistics (GFS)” – an observation that accounted for the Fund extending a technical assistance (TA) designed to improve GFS, including formulating a new Producer Price index (PPI).

The conditions agreed between the Fund and the government contained in the Memorandum of Economic and Financial Policies, note that the TA would assist the authorities to “review current data sources and compilation processes and provide guidance on how to improve fiscal reporting in accordance with international standards (as detailed in GSM 2014).”

GSM 2014 is a voluminous 450-page document prepared by Fund staff - the third edition of this Manual - which “describes a specialized macroeconomic statistical framework, GFS framework, designed to support fiscal analysis. The Manual (i) provides the economic and statistical reporting principles to be used in compiling the statistics; (ii) describes guidelines for presenting fiscal statistics within an analytic framework that includes appropriate balancing items; and (iii) is harmonized with other macroeconomic statistical guidelines.”

So how is PPI defined in GSM 2014?........

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