Economic statistics increasingly make headlines in Malta. A country can only evaluate its progress correctly if the debate focuses on hard evidence rather than perceptions.

Unfortunately, the search for sensationalism and summary information quite often results in a superficial analysis of economic statistics at best, or biased conclusions at worst. The devil lies in the details.

A positive headline could at times mask negative underlying economic developments. For example, a drop in the unemployment rate could be attributable to job creation (which is positive), or people stopping to actively look for a job (which is negative).

Likewise, low inflation as measured by the Harmonised Index of Consumer Prices could reflect the containment of cost pressures (which is positive), or a slump in hotel prices (which is negative). These are just two examples to highlight that what matters most is the story behind the numbers, and not the numbers per se. While the role of the National Statistics Office is primarily that of compiling statistics to meet mandatory requirements such as the compilation of GDP and public finance statistics, it is equally important that the reader is presented with sufficient additional information to enable a sensible interpretation of the figures. This gives an equally important role to other local authorities, which issue publications on the Maltese economy, to provide additional explanations, in a timely manner. This is particularly important since unfortunately, to date, in Malta there are no privately-funded economic think-tanks which can offer further interpretations of economic statistics and thus act as a counterbalance to the views offered by public authorities.

The country seems to lack appetite for economic transparency, for disseminating information among private agents. How can one evaluate whether a decision is economically justified or otherwise if the hard facts are unknown? Would a company’s board members approve an investment if the costs and benefits were not presented?

For example, the Maltese government has for the years spent money on the Isle of MTV event, but how can taxpayers be reassured that they are getting value for money if the cost of the deal and the estimated returns are not publicly known? On a similar line, the IMF, in its consultation report for Malta in July 2013, advised that because of forthcoming changes in statistical methodologies “the release of new estimates should be preceded by a thorough analysis of their impact on the external sector accounts and other macroeconomic indicators, including GDP”.

However, as at the time of writing, no such analysis has been made publicly available. So how can analysts form an informed outlook for the future deficit and debt to GDP ratios, if there is no indication of the magnitude of the possible change in the GDP level? Likewise, year after year the finance minister presents tables with targets to show how the deficit will narrow in future years, but at the same time does not provide information on the policies which need to be implemented beyond the next year.

The demand for greater economic transparency is justified because there is a link between economic transparency and economic growth. The following extract from a speech by the deputy managing director of the IMF in 2005, provides a logical framework for transparency: “In most societies, many powers are delegated to public authorities. Some assurance must then be provided to the delegators – that is, society at large – that this transfer of power is not only effective, but also not abused. Transparency ensures that information is available that can be used to measure the authorities’ performance and to guard against any possible misuse of power. In that sense, transparency serves to achieve accountability, which means that authorities can be held responsible for their actions.

“Without transparency and accountability, trust will be lacking between a government and those whom it governs. The result would be social instability and an environment that is less than conducive to economic growth.”