01/05/2010 (4:21 pm)
Statistics Agencies Need ECB-Like Independence, ISTAT Head Says
National statistic agencies should have the same autonomy as central banks to avoid any attempts by government to influence economic data, said Enrico Giovannini, chairman of the Italy’s national statistics institute.
“Both the legal and financial independence of statistics should be guaranteed, as is the case for central banks,” Giovannini, 52, said in an interview. “Otherwise, there may always be ways to choke a statistics institute, such as cutting its funding, something which can’t happen with a central bank.”
For more than a quarter-century, independent central banks have been able to take painful and politically unpopular measures such as raising interest rates to restrain inflation. In the euro region, the European Central Bank and national central banks are banned by law to take or seek instructions from governments of the EU member states.
Officials in the government of Prime Minister Silvio Berlusconi have repeatedly asked data agencies to stop spreading bad economic news and have questioned Istat’s methodology. In a June 24 speech, before Giovannini’s appointment, Finance Minister Giulio Tremonti criticized the Rome-based institute’s methods for measuring unemployment, saying the survey overestimated joblessness.
Giovannini was chief statistician for the Organization for Economic Cooperation and Development for eight years before taking over the Italian agency in July. He said that Italy should consider legislating the independence of the statistics agency as part of a debate on constitutional reforms.
Revisions of Greek economic data in October that showed the economy had been in recession for more than a year, rather than expanding as initially reported, demonstrate the urgency for statistics agencies to be autonomous, he said.
“The current practices are apparently not sufficient and need to be strengthened further,” Giovannini said. The “institutionalization of statistics should be aimed not so much at increasing technical reliability, but in raising the integrity and independence from political pressures.”
The credibility of Greece’s data had been previously questioned after revisions to budget deficit numbers. The European Commission in 2004 launched an investigation into Greece’s deficit after a revision of data revealed that, contrary to previous indications, the shortfall had exceeded the EU’s 3 percent of output ceiling ever since the country switched to the euro.
“The Greek case is unfortunately a repeat of what happened in 2004, when deficit and debt figures were questioned to the point that the European Commission established a code of good practice for official data,” Giovannini said. “This took place again despite the efforts put in place then by the EU’s statistics office Eurostat to monitor the Greek data.”
Greece’s credibility was further damaged by the government revising forecasts. Within weeks of the October elections, Prime Minister George Papandreou’s new government, said the 2009 budget deficit would be an EU-high of 12.7 percent of economic output, about twice the outgoing government’s prediction. The revision contributed to Standard & Poor’s, Moody’s Investors Service and Fitch Ratings cutting the country’s creditworthiness, which sent Greek bonds and stocks tumbling this month.
Giovannini replaced Luigi Biggeri as Istat chairman in July.