Out with the reformist governor, in with the businessman
In the delicate world of central banking, a transition of power is usually planned quietly in order to avoid market jitters. In Bangladesh, it was broadcast on the midday news. Ahsan H Mansur, a former IMF economist brought in to clean up a rotten financial sector, was unceremoniously ousted as governor of Bangladesh Bank. In his place, the newly elected government installed Mostaqur Rahman, a corporate accountant, a fixture of Dhaka’s business chambers and a garment company owner.
At approximately 59 years old, Rahman is the first businessman ever to be appointed as governor of Bangladesh Bank, breaking from the tradition of economists or career bureaucrats in the role. With that, the brief era of the independent governor came to an abrupt end.
For all latest news, follow The Daily Star's Google News channel. Mansur, whose four-year contract was meant to run until August 2028, barely had time to clear his desk. For days, the central bank’s headquarters in Motijheel had been beleaguered by a faction of its own staff -- an agitation Mansur diagnosed as a "conspiracy by a vested quarter to undermine discipline in the financial sector.”
The mechanics of Mansur’s ousting carry a grim irony. He was pushed out by a weaponised faction of central bank employees -- the exact same brand of mob tactics that, in August 2024, prompted the flight of his predecessor, Abdur Rouf Talukder, a pliant bureaucrat appointed in 2022 by the ousted prime minister, Sheikh Hasina. Talukder’s departure played out on a different scale, however.
Such internal revolts are rarely spontaneous; they provide the perfect pretext for a political acquisition. By the time Mansur packed his bags, having learned of his own ouster from TV bulletins, the finance ministry had already fast-tracked his successor.
Replacing a battle-tested macroeconomist with a business insider raises glaring questions about regulatory capture.
“The central bank is not merely a financial policymaking institution; it is the regulator and supervisor of all banks. When someone from a business background is placed in such a critical role, the risk of a conflict of interest cannot be dismissed,” Selim Raihan, a professor of economics at Dhaka University, wrote on Facebook, reacting to the appointment of the new governor.
“A businessman’s natural tendency may be to prioritise market and corporate interests, whereas the primary responsibilities of the central bank are to control inflation, ensure financial stability, and take a firm stance against weak banks,” he wrote.
Mansur’s mandate, granted by the 2024 interim government, was to administer bitter medicine: tackling runaway inflation, preserving dwindling foreign reserves, and confronting the mountain of non-performing loans accumulated by politically connected tycoons during the Sheikh Hasina years. That required stepping on powerful toes.
Mostaqur Rahman, conversely, hails from the very ecosystem the central bank is supposed to police, bringing a CV heavy with leadership stints at the powerful garment manufacturers’ association (BGMEA) and the Dhaka Chamber of Commerce.
Rahman, the managing director of Hera Sweaters Limited, chaired the BGMEA’s standing committee on -- of all things -- Bangladesh Bank, according to his LinkedIn profile. As if to banish any lingering illusions of impartiality, Rahman recently sat on the ruling Bangladesh Nationalist Party’s election steering committee.
The new administration is understandably in a hurry, eager to dispense with fiscal austerity, stimulate growth and raise social welfare spending. Amir Khosru Mahmud Chowdhury, the new finance minister, justified the sacking. “The new government has many programmes and priorities, and this change is part of that,” said Chowdhury when asked by reporters to comment on the decision. Adding a warning for other technocratic holdovers across the state apparatus, he said: "Changes are happening not just at Bangladesh Bank, but in many places, and more will happen."
The summary replacement of a central bank governor halfway through the tenure sends a bad signal to international lenders. Bangladesh is currently navigating a crucial IMF lending programme, and multilateral lenders place a high premium on central bank independence. By discarding a credible reformer in favour of a business-friendly accountant, the new government has forcefully asserted its authority over the perceived independence of the central bank.
Whether this new appointment will fulfil those expectations or set back the momentum of reform remains to be seen.
“Are we returning to the old state of affairs where the interests of influential groups take precedence over the independence of the central bank? The government should promptly clarify how this decision aligns with its commitment to reforming the banking sector,” Selim Raihan wrote.
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