Improving Economic Governance ii) The unemployment rate is a politically sensitive number. It has been understated by showing a bigger increase in employment or a smaller increase in the labor force. For example, the LFS of 2020-21 shows a faster growth in employment than the growth of output in the industrial sector. The reported unemployment rate is 6.3 percent, whereas it is close to 7.5 percent. iii) Budget deficit estimates have been understated by including a large negative statis ­tical discrepancy in expenditure or by including revenues which should actually have been shown below the line as financing and so on. iv) The rate of inflation has been understated by assuming, for example, a lower rate of increase in rents and understating the rise in the electricity tariff by not including the fuel adjustment charge. The rate of inflation is reported at 12.1 percent in 2021-22 whereas it is actually closer to 14.5 percent. Similarly, the inflation rate is reported at 23 percent in September 2022 whereas it is closer to 25.5 percent. Overall, there is need for improvement in the quality of statistics prepared and released, especially by the PBS. The work of the PBS is overseen by the Governing Council as per the General Statistics (Reorganization) Act of 2011. The Governing Council was chaired by the Federal Minister for Finance, with six other members and four from the private sector. This created a‘conflict of interest’ as the Finance Minister is the key minister responsible for the performance off the economy. Therefore, he had a vested interest in reporting better economic statistics. This was the case particularly from 2013 to 2018 and more recently in 2021-22, even though the Council meeting is now chaired by the Planning Minister. There is need for amendment of the Act such that one of the four private members acts as Chairman of the Council and ministries are represented at the Secretary level. 18.3 Problems with Accuracy of Projections An annual Plan for every forthcoming year is prepared by the Ministry of Planning. There is a strong tendency for presenting an optimistic picture of the economic prospects as can be seen for two recent years, 2018-19 and 2021-22. A vivid example of the bias in targets is that for the current account deficit in 2021-22 as shown in Table 18.2. The Annual Plan set the target at$2.7 billion. The actual outcome was a huge deficit of$17.4 billion. The problem with very optimistic Annual Plan Targets is that they create a false sense of complacency in economic Ministries and delayed reaction to divergent or worsening of trends. 187