Putin’s Inside Information

On April 20, Vladimir Putin, Russia’s president, announced that Russian GDP had grown by the impressive figure of 8% in the first quarter of 2000. What was unusual about this announcement was the fact that Goskomstat, the state agency charged with estimating Russia’s GDP, was not ready to release the actual data for at least several weeks. In other words, the Russian President was making political capital with his inside knowledge about the data.

This may seem trivial — until you realize that President Putin’s behavior would have violated basic policy in almost any developed country. Since the mid-1970s, public officials in the United States have been prohibited from commenting on data until an hour after it has been released to the public — much less comment several weeks before publication.

While the U.S. law was intended to prevent government officials from trading in financial markets with advance knowledge of key economic data, the law also keeps officials from “spinning” the data before its release to the public. The rule helps to preserve the trustworthy and impartial image of the data agencies’ output.

That Russians might violate these rules is perhaps understandable. After all, many laws in today’s Russia sometimes seem to be mere suggestions. But even more surprising is that the IMF’s “blue sheet” daily news summary picked up this story and reported it without comment. This happened despite the fact that data integrity is a key goal of the IMF, and Russia is one of its most important borrowers.

The IMF has encouraged countries to adopt standards for data dissemination (although Russia has not yet made a commitment). Countries are encouraged to gradually adopt best practices — which includes simultaneous dissemination, so that nobody gets a peek at the data beforehand.

The Russians, however, have a long way to go before their data methods are as good as those of, for example, Mexico or Poland — both of which claim that no elected officials have access to GDP data before their release to the public.

We suspect there was no lack of discussion on the matter within the Fund — and within the U.S. Treasury. But there seems to be a general agreement to downplay any funny happenings with Russian numbers. After all, no one in Washington wanted to embarrass Russia’s new leader just before his first summit with the President of the United States.