Does Ahsan H Mansur not deserve a respectful farewell?

All of a sudden, on Wednesday afternoon, the BNP-led new government cancelled the contract of Ahsan H Mansur as governor of the Bangladesh Bank and, at the same time, appointed Md Mostaqur Rahman, a businessman from the garment industry, as the new governor.

The news came as a shock to many. However, it seemed to be a pre-planned event because over the past few days, officials of the central bank, especially the Bangladesh Bank Officers’ Welfare Council, a forum representing a section of officials, had been preparing the ground for the new government.

In Bangladesh, it is not new that when a new party comes to power, it brings its loyalists into major positions in the country.

Industry insiders, however, expected that the BNP-led government would not change the governor of the central bank in such haste, as the country’s banking sector is in an ailing state, and Mansur had taken bold measures to address the problems.

Now the question is how the BNP-led government has said goodbye to Mansur, whose reform initiatives were appreciated by different quarters.

The cancellation of the contract took place just two days after Mansur met with Finance Minister Amir Khosru Mahmud Chowdhury at his office. Mansur, a former economist at the IMF, briefed the media that the new government will continue the ongoing reform programmes in the banking sector and said the minister was “very positive” about the measures.

After the news broke first on some televisions, he appeared totally unaware.

However, Ahsan H Mansur told journalists on the Bangladesh Bank premises that he knew nothing about the new appointment or the cancellation of his contract. He did not even resign, he told journalists.

Then the question came, was that really necessary? Can’t the government inform Mansur about its intent to get a new chief for the central bank? Was that needed to give all in the financial sector a surprise by removing Mansur? Why was he humiliated?

The government could have asked him to resign instead of cancelling his tenure outright—that would have been more respectful. The reforms he had undertaken could have been carried forward to a certain stage before his removal.

During the 18 months of the interim government, his reform efforts were widely known. He also played a significant role in improving the external sector. The Awami League government had reduced the country’s readily usable foreign exchange reserves to below $20 billion. It stood at $30 billion early this week—a recovery in which Ahsan H Mansur played a major role.

One of the key reasons behind the increase in reserves was that he did not provide dollars from the reserves for government entities.

Instead, he asked government entities to collect forex from the market. It worked. The fall in reserves, which created a widespread concern, could be prevented.

He repaid a large amount of foreign loans. During his tenure, remittances hit record highs one after another. Stability returned to the dollar market, and exchange rate volatility eased.

He brought out the true picture of the country’s financial sector. Loans that had not been classified as defaulted during the Awami League period were identified as non-performing under his leadership. As a result, the default loan ratio rose to 36 percent.

During the interim government’s tenure, he took the initiative to amend the Bangladesh Bank Order to ensure the central bank’s autonomy, but ultimately could not succeed amid resistance from the bureaucracy. He also made strong efforts to reform the Bank Company Act, though that too was not achieved owing to resistance from sponsors of banks and businesses.

He initiated the country’s first bank merger process. However, he faced widespread criticism for bringing two banks—EXIM Bank and SIBL—into the merger process.

Although Mansur’s reform initiatives received praise, his remarks sometimes created unease in the financial sector and even among depositors. At the very beginning, he had said that 10 banks were on the verge of collapse, a statement that triggered pressure on banks as deposit withdrawals surged. Several other remarks also created difficulties for stakeholders in the sector.

However, his intent to clean the mess in the financial sector and establish good governance was clear. He has set a path and made things easy for the new government, which should have appreciated. Instead, he has been ousted without any notice, given an undignified exit. This has set a bad precedent, which was unexpected.