Discrepancies in trade data hit new high

ISLAMABAD: The discrepancies in the country’s trade data have further ballooned and witnessed new heights, The News has learnt.

“Two different methods have been used to collect trade data, which initially caused discrepancies — but these differences have since grown even wider,” top official sources told The News last week. The major reason for this difference is that while the PBS records data on the physical movement of goods, the trade figures compiled by SBP are based on the exchange record data, depending on actual payments of foreign exchange.

There are two methods, one is called CIF stands for “Cost, Insurance, and Freight.” It represents the total cost of imported goods, including the price of goods themselves, insurance costs, and shipping costs to the designated port in Pakistan. The FOB (Free on Board) only includes the cost of goods and the cost of loading them onto the transport vessel at the port of origin. The imports reported by banks are a mix of ‘free on board’ (FOB) and ‘cost, insurance & freight’ (CIF) basis.

In order to make these imports comparable with the PBS imports, the cost of freight and insurance is subtracted from both the SBP record and PBS import data.

The variance between the custom record and the exchange record also arises due to the difference in coverage. Specifically, some of the imports that are reported in the customs data are not included in imports reported by banks. Such imports are added to imports based on the exchange record.

The Pakistan Single Window (PSW) also collects the customs data, but data variance has widened in recent months, after which the PBS was asked to reconcile the trade data first and then make it public.

In the past, there was a discrepancy of $3bn to $4 bn, but now it has gone up, raising eyebrows at a time when the country is under the IMF programme. The question arises as to why the FBR, SBP, and PBS remained unable to capture the full data in line with the changing data collection standards and requirements.

Different departments are blaming each other and are shifting the buck to others. Top official sources said that it is the outcome of “reporting error” on the part of the data collection agencies, but ironically, it has widened to an unimaginable extent.