When Ahsan H Mansur assumed the role of governor at Bangladesh Bank in August 2024, he emphasized the need for reform to restore credibility in the country’s delicate financial system. Now, around 18 months later, his tone has shifted to reflect both progress in stabilization efforts and frustration over a key reform initiative – granting full legal independence to the central bank – facing unexpected obstacles.
During a recent monetary policy briefing at the central bank, Mansur reiterated the importance of enhancing independence. Concurrently, officials within Bangladesh Bank expressed discontent over the government’s decision to reject proposed amendments to the Bangladesh Bank Order, the foundational legislation governing the central bank.
At the briefing, Mansur openly expressed his disappointment, stating that the autonomy proposal, initially put forward by him in October of the previous year, was crucial for national interests. The plan aimed at bolstering legal protections for the central bank, aligning it with international standards. It involved restructuring the central bank’s board, empowering leadership roles, and revising appointment and removal procedures for senior officials to safeguard monetary policy from political interference.
However, Finance Adviser Salehuddin Ahmed, a former central bank governor, advised caution in a letter to Mansur, suggesting that making significant amendments to such a fundamental law during an interim government’s tenure may not be feasible. Ahmed proposed that the next elected government should review and amend the Order as required, emphasizing the need for thorough review and consultations with experts and stakeholders.
As the interim administration approached the end of its term without acting on the proposal, Mansur warned that delaying reform until after elections might complicate the process. The International Monetary Fund also stressed the importance of institutional reforms, indicating that these tasks would be the responsibility of the next elected government.
Responding to Ahmed’s letter, officials under the Bangladesh Bank Officers’ Welfare Council organized a protest rally, demanding the finance adviser’s resignation for shelving the autonomy proposal. The council’s president, AKM Masum Billah, accused Ahmed of inconsistency, alleging that he had previously supported greater autonomy during his tenure as central bank governor.
The organization urged the incoming government, following the February 12 election, to swiftly implement central bank autonomy, citing support from major political parties in their election manifestos.
Mansur’s approach as governor has evolved from urgent reform advocacy to a focus on maintaining economic stability while awaiting the political environment to address pending tasks. Emphasizing the necessity of legal protections for central banks globally, Mansur cautioned against the resurgence of past banking sector vulnerabilities without such safeguards.
Acknowledging that broader reform efforts are ongoing, Mansur highlighted the enactment of two out of seven drafted laws, namely the Bank Resolution Act and the Bank Deposit Protection Ordinance. He expressed optimism about further progress if the remaining laws were enacted.
Mansur, who previously served as the 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 questioned about his future in office if his proposed reforms faced challenges under the next government, Mansur avoided a definitive response, indicating a willingness to address the situation as it arises.
