FDI data exaggerated by $5.7 billion over four years

The Bangladesh Bank (BB) overstated net foreign direct investment (FDI) figures by $5.7 billion between fiscal years 2019-20 and 2022-23. This discrepancy emerged after BB revised the data in line with the International Monetary Fund's (IMF) BPM6 guidelines, according to BB spokeswoman Husne Ara Shikha. "We corrected the data based on IMF observations, which led to a significant reduction in reported FDI inflows," Shikha said.  

Previously, export and foreign exchange reserve data were also overreported and later corrected following IMF feedback. During the four fiscal years, Bangladesh actually received $5.86 billion in net FDI, contrary to the previously reported $11.56 billion.  

The adjustment primarily stemmed from deducting companies' losses from reinvested earnings, as mandated by the IMF's methodology. These losses had not been accounted for in earlier calculations. Shikha noted that technical constraints prevented data corrections before fiscal 2019-20. The FDI data for fiscal 2023-24, however, adhered to BPM6 guidelines, with net FDI inflows recorded at $1.46 billion, an 8.75% year-on-year decline.  

Accurate economic data is crucial for informed policymaking, said Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development and a former BB chief economist. He suggested that previous FDI figures may have been overstated for political purposes. "This misrepresentation led to flawed policy decisions, which need to be revisited in light of the revised data," he said.  

Fahmida Khatun, executive director of the Centre for Policy Dialogue and BB board member, emphasized that proper methodology was not followed in economic data calculations. She highlighted that inaccurate data sends misleading signals, resulting in misguided policies.  

"The revised FDI data reveals that we have consistently struggled to attract foreign investment," Khatun said, adding that despite reported growth in FDI, exports, and GDP, a lack of job creation had already cast doubt on the data. The updated figures are a wake-up call, reflecting the need for Bangladesh to take more effective steps to draw foreign investors.