Power struggle rages over Russia’s state statistics

A general view of a building of the Federal State Statistics Service (Rosstat) in Moscow. Russia's economy expanded for the first time in two years in the fourth quarter of 2016, data from the state statistics service showed. (AFP)
Updated 03 April 2017

Power struggle rages over Russia’s state statistics

MOSCOW: Reports that Russia’s Economy Ministry is set to take control of the national statistics agency has sparked fears that indicators crucial to monitoring the country’s economic woes could become skewed.

Data from the Rosstat state statistics agency has been key in measuring the extent of the country’s economic crisis, triggered three years ago by tumbling oil prices and Western sanctions over Ukraine, and is thus key to forecasts about when recovery is possible.
With Russians worried about their shrinking purchasing power and a presidential election due next year, perceptions about the economy and its outlook are touchy topics.
Enter into this volatile mix a switch by Rosstat to new calculation methods that are in line with European standards, which has caused rampant confusion inside the agency that has resulted in it publishing reports late and issuing major corrections to its findings.
Widespread issues over the adoption of the new methodology have prompted the government to prepare to make Rosstat — which currently reports to Prime Minister Dmitry Medvedev — answerable to the Economy Ministry in a bid to exercise more control over it, Russian media has reported.
The prime minister’s current oversight is mostly administrative, while the Economy Ministry is responsible for producing forecasts for the government based on Rosstat data.
Analysts fear that as the presidential polls approach Rosstat could come under pressure to produce statistics that would paint a rosy picture of the economy, much as in the Soviet era when authorities used statistics for propaganda purposes, boasting about exceeding production plans.
“This is a pre-election year and if the main socioeconomic indicators are bad, this would look like a lack of respect for the promises” President Vladimir Putin made during his 2012 campaign, said Igor Nikolayev, an analyst at FBK Grant Thornton, an auditing and consulting group.
“If growth reaches 2 percent, then we will say that the sanctions bothered us but all the indicators are now positive,” he added.
Some of Rosstat’s new calculations have proved encouraging for authorities. The agency revised upward its production indicator and calculated that the economy had contracted by only 2.8 percent in 2015 — instead of the 3.7 percent it had previously estimated.
It also said that the economy contracted by only 0.2 percent last year, instead of the 0.6 percent it had previously measured. These changes in Russia’s indicators have transformed the storyline of the country’s economic crisis. With the new figures, Russia’s government can proudly proclaim that the economy has shown unexpected resistance to the double shock of low oil prices and sanctions thanks to a boost to the industry from the weak ruble and dynamic small businesses.
Last month a low indicator for industrial production that was published behind schedule by Rosstat sent a jolt through the Economy Ministry.
Economy Minister Maxim Oreshkin, who took on the position in November, said Rosstat’s transition to its new methodology had been “very unfortunate” and that he expected its figures to undergo “major revisions” while his ministry prepares to announce its forecasts.
In a 2013 report, the Organization for Economic Co-operation and Development (OECD) group of leading economies praised Rosstat’s “high level of professionalism” while saying the agency should improve its methodology for calculating gross domestic product (GDP) and its compliance with international standards.
Former Deputy Economy Minister Alexei Vedev told TASS news agency that Rosstat’s rocky transition to its new methods was the result of resistance by the agency’s ageing staff and the inability to offer attractive wages to young economists.
Changing the supervision of the agency will not solve the problem, Vedev said.
“Our responsibilities will not change with our status,” the head of Rosstat, Alexander Surinov, told Vedomosti business daily, stressing that Russian legislation guarantees the agency’s “professional independence.”
Analysts, however, are skeptical that Rosstat will be able to steer clear of government influence. “The statistics agency must be as independent as possible,” Nikolayev said.
“I have no doubt that a change in leadership will affect Rosstat’s activities, and this will affect the reliability of statistics.”

SAMA to become Saudi Central Bank, with full independence

Updated 25 November 2020

SAMA to become Saudi Central Bank, with full independence

  • New central bank to be linked directly to king but its president independent of government
  • Bank’s core responsibilities to maintain monetary reserves, boost confidence, trust in financial sector

RIYADH: The Council of Ministers on Tuesday approved a new law which includes changing the name of the Saudi Arabian Monetary Authority (SAMA) to the Saudi Central Bank.

Under the legislation, the new Saudi Central Bank will be linked directly to the monarch and will enjoy full financial and managerial independence.

The Saudi Central Bank Law set out three core objectives for the new institution namely, to maintain cash stability, boost confidence and trust in the financial sector, and support economic growth.

The new legislation states that the central bank is responsible for setting and managing monetary policy and it outlines the relationship between the bank, the government, and other international important organizations and bodies. It also sets a framework to govern the bank’s operations and decisions.

Fadhel Al-Buainain, an economic expert and member of the Shoura Council, said one of the important aspects of the Saudi Central Bank Law was that it was linked directly to the king.

“This enhances its full independence with respect to setting the monetary policy and the bank’s relationship with the government and global organizations,” he added.

The law states that the abbreviation SAMA, which was established in 1952, would remain unchanged due to its historical importance domestically and internationally.

“The fact that the bank will keep the SAMA abbreviation unchanged is important and reflects a wise decision because the abbreviation is widely-known,” Al-Buainain said.

While the SAMA acronym will remain, Hassan Alwatban, an economic consultant, outlined the differences between the monetary authority and the central bank.

For the central bank to perform its duties properly, he said it needed to be fully independent when it came to decision-making, especially decisions related to managing state funds.

Another difference was that the president of the central bank would not be under the state’s authority and their nomination would be made by a legislative authority. The government or state could not appoint or remove the president except by the most supreme judiciary authority.

Thirdly, he added, a government agency could not interfere in the bank’s affairs because the bank enjoyed full monetary power.

Alwatban told Arab News: “Therefore, changing the monetary authority to a central bank is healthy for the national economy.

“The tasks of the Ministry of Finance, which is responsible for financial policies, will be set apart from the tasks of the central bank, which is responsible for setting the monetary policies. Before the change, the tasks of the Ministry of Finance and SAMA overlapped.

“Besides, the Ministry of Finance was in charge of the financial policy and the monetary policy at the same time, a fact that made SAMA focus on serving the banks’ interests more than focusing on serving the interests of citizens,” he added.