When Ahsan H Mansur assumed the role of governor at Bangladesh Bank in August 2024, he conveyed a sense of urgency to revamp trust in a vulnerable financial sector. Over a year later, his approach has become more tempered, acknowledging both progress in stabilization efforts and disappointment at the setback faced by a crucial reform – granting full legal autonomy to the central bank.
The change in demeanor was noticeable during a recent monetary policy briefing at the central bank, where Mansur reiterated the need for enhanced independence. Simultaneously, officials at Bangladesh Bank expressed discontent within the premises over the government’s decision to not endorse proposed amendments to the Bangladesh Bank Order, the primary legislation governing the central bank.
During the briefing, Mansur openly shared his frustration stating, “It should have been done,” referring to the autonomy proposal. He expressed hopefulness when submitting the proposal and expressed perplexity over its delay, emphasizing its importance for the nation’s welfare and pledging to present it to the incoming government.
The autonomy initiative, initially introduced by Mansur in October of the previous year, aimed at comprehensive changes to fortify legal safeguards for the central bank and align its operations with global standards. The proposal included restructuring the central bank’s board, enhancing leadership authority, and revising appointment and removal procedures for key officials to insulate monetary policy from political influences.
In a letter to Mansur, Finance Adviser Salehuddin Ahmed, a former central bank governor, advised caution, suggesting that making substantial amendments to such a foundational law during an interim government’s term might not be pragmatic. Ahmed proposed that the next elected government should undertake a detailed review and necessary amendments after taking office, following consultations with experts and stakeholders.
As the interim administration neared its end without acting on the proposal, Mansur cautioned that postponing reforms until after elections could pose challenges in their approval. The International Monetary Fund concurred that institutional reforms were imperative but deferred to the next elected government for action.
In response to Ahmed’s letter, officials under the Bangladesh Bank Officers’ Welfare Council staged a protest rally, demanding Ahmed’s resignation for halting the proposal. The council’s president, AKM Masum Billah, accused Ahmed of inconsistency, highlighting his previous support for greater autonomy during his tenure as central bank governor.
The organization urged the upcoming government, post the February 12 election, to swiftly implement central bank autonomy, citing support pledges from major political parties in their election manifestos.
This incident marks a transition in Mansur’s governance style. Initially emphasizing urgent and achievable reforms, he now focuses on maintaining economic stability while awaiting the right political environment to accomplish pending objectives.
Mansur stressed the necessity of legal protection for central banks worldwide, emphasizing the crucial role of central bankers in ensuring long-term economic sustainability amidst political pressures. He warned of potential resurgence of past banking sector vulnerabilities without reinforced safeguards, underlining the significance of autonomy as a permanent defense.
Acknowledging incomplete broader reform efforts, Mansur described reform as an ongoing process rather than a one-time event. Out of the seven proposed laws, only two – the Bank Resolution Act and the Bank Deposit Protection Ordinance – have been enacted, hindering further progress.
Mansur, a former executive director of the Policy Research Institute, assumed office as the 13th governor of Bangladesh Bank on August 14, 2024, for a four-year term. When asked about his continuation in office if his reforms face obstacles in the next government, he remained non-committal, stating, “We will address that situation if it arises.”
