Change of central bank governor: Reshuffle process not well managed

The sudden change in the position of the governor of Bangladesh Bank, the country’s central bank, has sparked fresh discussion and debate over the financial sector. The appointment of Ahsan H Mansur has been cancelled and Md Mostaqur Rahman appointed governor for four years.

Questions have arisen as to whether the manner and process by which Ahsan H Mansur was removed were consistent with institutional decorum. His removal was not merely a personal matter, it was an institutional one.

Ahsan H Mansur’s contract was due to run until August 2028. The remaining tenure was cancelled through a government notification. On the same day, prior to the publication of that notification, he had said at a press conference, “It would take me two seconds to resign.”

In reality, however, he was not given the opportunity to step down; instead, the administrative route of cancelling his appointment was chosen. Shortly afterwards, the news of Mostaqur Rahman’s appointment as the new governor was spreading. The speed of events naturally suggests that the government had already made its decision.

When a new government assumes office, it may reorganise major administrative and other important posts to facilitate its work and implement its policies and programmes. In that context, the government could have allowed the outgoing governor to leave with due respect before appointing a successor.

It is unfortunate that his departure did not occur in an orderly manner. The governor left the bank amid protests by a section of officials and employees, which can only be seen as a recurrence of mob culture. His appointment was then cancelled and the name of the new governor was announced. Couldn’t this unpleasant situation have been avoided?

It should be remembered that Ahsan H Mansur was appointed to lead Bangladesh Bank at a difficult time following a mass uprising. He faced the formidable challenge of restoring order to a devastated and disorderly financial sector. After taking office, he made several tough but positive decisions. He introduced a market-based exchange rate for the US dollar, increased foreign exchange reserves and disclosed the true picture of non-performing loans.

These steps bred discontent in various quarters. He also risked antagonising powerful groups within the banking sector. During his tenure, investigations were initiated against influential industrial conglomerates, weak banks were merged, and amendments to the Bank Company Act were advanced.

Although Ahsan H Mansur’s reform initiatives were not completed, the direction was clear. Questions have been raised as to whether any party was aggrieved by his reform agenda.

Otherwise, what explains the misconduct and discourteous behaviour of a section of Bangladesh Bank officials and employees towards the outgoing governor? At the very least, it was expected that such an incident would not occur at the outset of a democratic journey following a mass uprising.

Md Mostaqur Rahman, the newly appointed governor, is a businessperson. Appointing a businessperson to the highest position of the central bank for the first time is undoubtedly significant. Many have raised questions about whether this could give rise to any conflict of interest. We will have to wait and see how he rises above such concerns in carrying out his responsibilities.

Bangladesh’s economy has not yet been freed from pressure. At this moment, it is essential to maintain the continuity of reforms, uphold transparency and take a firm, principled policy positions. It is our expectation that the new governor will fulfill these expectations.