Recently some top economists have drawn our attention to the likely tampering of GDP data by Statistics Mauritius (SM), namely by its reclassification of part of the foreign income of Global Business Companies (GBCs) from National to Domestic Income. This involves a transfer between two items of the balance of payments (bop), namely from primary income to services. For example, GBCs earning foreign investment income, such as interest, dividends and capital gains, are included under primary income by the Bank of Mauritius (BoM) in compiling the bop. However, SM makes a doubtful adjustment to treat a substantial amount of GBC primary income as foreign income earned from services. By definition, GBC foreign primary income is not included in GDP, whereas GBC foreign services income is part of GDP.
Announced in June 2022 by SM, this GBC adjustment by SM has risen from Rs33bn in 2018 to Rs 85bn in 2023, representing 7% of GDP in 2018 and 13% in 2023. An adjustment of this magnitude to GBC primary income should have been carried in the bop, but BoM has refrained from doing so even in the latest bop data released in March 24.
This GBC adjustment boosts GDP, but results in negative primary income of the remaining GBCs, of the order of minus Rs10 bn annually, contrary to previous trends and to normal expectations. Both SM and BoM have so far remained silent on this issue, which can only reinforce suspicions of concocted GDP figures
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There is further evidence of glaring discrepancies in recent statistical data, that point to GDP overestimation. SM and BoM released the latest national accounts and bop estimates at end March 24. Imports, f.o.b., for 2023 are estimated by SM at Rs258 bn, or inexplicably lower by Rs9 bn than BoM’s figure of Rs267 bn. Other things equal, a lower figure for imports obviously raises GDP, and in this case by 1.3% in 2023.
In March 24, BoM revised its bop data for 2022, and increased GBC primary income by Rs 27 bn, so that it would no longer stand negative at Rs13 bn after SM’s GBC adjustment, but turn to a positive Rs14 bn. BoM is thereby attempting its best to correct for the incongruity of a negative adjusted GBC primary income. However, adjusted GBC primary income remains negative in 2023, and even in the SM 2024 forecast. More upward revisions to GBC primary income in the bop for 2024 are to be expected to help boost GDP.
Somewhat out of the blue, this significant 2022 bop revision in March 24 even surprised SM, which is yet to modify 2022 GDP data accordingly. For the upward revision in primary income not to affect the current account deficit, BoM conveniently reduced secondary income for 2022 by the same amount, to a net debit of Rs44 bn. However, SM shows secondary income for 2022 as a negative Rs19 bn in its latest national accounts estimates.
The IMF has proposed to conduct a technical assistance mission on bop compilation issues, but it would appear that the Mauritian authorities are not giving it high priority. Until then, confusing data disparities and fishy statistical artifices will remain the order of the day , not to mention the penchant for over-inflating the investment figures, especially for the second half of 2023 and 2024. The estimates of the investment rate for 2023 and 2024 are overblown at 6.2 % and 6.6% respectively, compared to 4.1% in 2021 and 3.9% in 2022 and an average rate of just 4.4% over the period 2014-2022. With such a corrupted economic dashboard, we could be driving the country into a wall or a hole to meet with a fatal accident.
