Cause and Effect in European Politics and Law

Trust to Bulgaria is within the statistical error

Ralitsa Kovacheva, June 11, 2010

The first news, that came after EU finance ministers agreed on new auditing powers of the European statistical office Eurostat, was that a mission will be sent to Bulgaria soon. The reason is that the Commission has concerns about the quality of Bulgarian statistical data.

So far, despite the serious fiscal problems in some Member States, Greece was the only one with discredited statistics. On June 8th, however, the European Economic and Monetary Affairs Commissioner Olli Rehn said:

“'We have had some concerns as regards the statistical performance of Bulgaria and we are considering sending a mission shortly”

Of course, the Commissioner specified, that firstly the European Parliament has to comment on the amendments and then these have to be finally approved by the Council.

The Ecofin's statement makes it clear, that strengthening the rules is necessary for the statistical data used under the EU's excessive deficit procedure. The aim is “to improve the quality and reliability of statistical data used to determine government deficit and debt figures”. Of course, the Greek case is noted as an argument for the amendments. Which provides for “strengthening the role of Eurostat when verifying the quality of data in cases where significant risks or problems with respect to the quality of the data have been clearly identified”.

The Brussels correspondent of the Bulgarian daily “Dnevnik” Irina Novakova cited Rehn's spokesman Amadeu Altafaj saying that it would be a joint mission of the European Commission and Eurostat. Its purpose will be to check the quality of Bulgarian fiscal statistics and data on which the government bases its forecasts, so it will include both the National Institute of Statistics and the Ministry of Finance.

Until now, the European Commission and the Council have commented several times that the Bulgarian government is using very optimistic forecasts. “The main risk stems from the underlying macroeconomic scenario, which is based on slightly favourable growth assumptions for the programme period”, was one of the conclusions of the Council regarding the updated Convergence Programme of the Bulgarian government.

More oil in the fire was poured by the problem with the budget deficit for 2009, which appeared out of the dark and which the government had to "admit" literally at the last minute. Then, again, economists have recommended the government to adopt the European methods of reporting fiscal deficits (the budget to be accounted on an accrual basis rather than just cash-based).

According to the official statement of the Bulgarian Finance Ministry, it was “neither surprised nor alarmed” by the planned EU mission. “The mission, announced by Commissioner Olli Rehn, has been expected by the Ministry of Finance since May, when in the preparation of the 2009 interim fiscal notifications for our country and the 2010 estimates a problem emerged with liabilities of the state, not identified as of the beginning of March, under annexes and supplements to contracts with private companies. As a result, the deficit of our country under the ESA 95 standard was adjusted from 1.9 % of GDP (according to the Convergence Program) to 3.7 % of GDP.”

Brussels is also worried about the political independence of national statistics. In the framework of the task-force, chaired by EU president Herman Van Rompuy, EU finance ministers have agreed to ensure the independence of national statistical offices for data provision, free from political influence. Because, obviously, such is not excluded.

In early 2008, the then-Bulgarian government unexpectedly sacked the head of the National Institute of Statistic Stoyan Tsvetkov. The argument was that the Statistics had been late in the provision of data to the cabinet and, on top of it, it used to give the data to the media first. Accidentally or not, the dismissal was preceded by a series of bad news about rising inflation. And the government’s requirement all the information to pass firstly through the Council of Ministers raised reasonable doubts about the independence of the statistical institute.

These events, against the background of the decision for a peer review of the budgets of the 27 EU countries, once again raises the question of trust - Brussels' trust in Sofia, which was almost fully exhausted and the current government boasted several times that it had been restored; trust among member states, especially in the eurozone, which are planning to collect money in a common rescue fund; trust among the EU institutions that they will not block each others' decisions in order to gain political dividends. And very important: citizens' trust in their own governments, at a time when it is necessary painful decisions to be taken for which public support is vital.

Now is not the time for governments to “scent” the statistics in order to survive until the next election campaign. Now is the time to tell the truth. Otherwise, the only thing that will be left for statistics to measure will be politicians' ratings.