Just as fragile investor confidence was beginning to return to Bangladesh after months of political upheaval, the abrupt ouster of central bank governor Ahsan Mansur has injected fresh uncertainty into the country’s economic trajectory.
In the high-stakes world of emerging market finance, credibility is often the hardest currency to mint and the easiest to devalue. By removing Mansur, the new Bangladesh Nationalist Party (BNP) administration led by Tarique Rahman has risked liquidating the very reputational capital that was keeping the economy solvent.
The decision is, at best, a puzzling pivot and, at worst, a classic unforced error that threatens to derail a recovery that was finally gaining traction under the previous interim regime led by Nobel laureate Muhammad Yunus.
Mansur was the primary architect of a macroeconomic pivot that many international observers considered nothing short of a miracle. A seasoned former International Monetary Fund (IMF) economist, Mansur brought a level of technocratic rigor to Bangladesh Bank that had been absent for years.
He inherited a house on fire with dwindling foreign exchange reserves, a banking sector riddled with non-performing loans and a currency under siege. In a few short months, he moved with the surgical precision of an IMF veteran, implementing orthodox monetary policies that emphasized discipline over expediency.
He was the driving force behind the course correction, shifting from the previous era’s reliance on artificial exchange rates and interest rate caps toward a market-driven reality. This stabilization was about signaling as much as numbers.
Mansur’s presence at the helm assured the World Bank, the IMF and foreign investors that Bangladesh was once again an investable country that followed the rules of global finance.
The results of the Yunus-Mansur partnership – and that of former finance adviser Salehuddin Ahmed – were tangible. Under their watch, the interim government managed to halt the taka’s freefall and stabilize foreign exchange reserves, which had been hemorrhaging for years.
By allowing the market to determine value and tightening the money supply to combat rampant inflation, Mansur sent a clear message that the days of politically motivated money-printing were over. This newfound macroeconomic discipline was the cornerstone of the “new Bangladesh” narrative.
For the international community, Mansur was the guarantor of the country’s new reformist credentials. His removal now arguably creates a vacuum of trust. Replacing the official who successfully negotiated the terms of recovery just as the recovery begins to bear fruit defies conventional economic logic.
It suggests that the new Rahman administration may prioritize political loyalty or “new directions” over the steady-handed technocracy that saved the country from the brink of a balance-of-payments crisis.
The official justification from the Rahman government—the need for a “new direction” amid ongoing financial stress—will inevitably ring hollow among international investors.
A change in central bank leadership is typically reserved for moments of failure, not for moments when the governor is being lauded for a successful stabilization program.
The suddenness of the move has prompted observers to ask whether the BNP is reverting to a style of governance where the central bank is treated as an extension of the executive branch rather than an independent regulator.
If Mansur’s departure signifies a return to the era of loose credit and political interference in the banking sector and monetary policy, the macroeconomic turnaround he stewarded could evaporate overnight.
The timing is particularly sensitive as Bangladesh remains in the middle of crucial negotiations for expanded credit facilities and structural adjustment programs.
The profile of the man chosen to succeed him, Mustaqur Rahman, offers a more nuanced, if still cautious, perspective. Unlike Mansur, whose background is academic and institutional, Rahman comes from the world of business and accounting.
As a cost and management accountant (CMA), he brings a different set of tools to the table—tools that focus on micro-level efficiency, transparency and fiscal accountability. Mustaqur Rahman is not a career bureaucrat; he is an entrepreneur who understands the ground-level friction of doing business in Bangladesh.
This background could, in theory, help bridge the gap between the central bank’s high-level policy and the practical needs of the private sector.
His supporters argue that a governor who has signed paychecks and managed balance sheets in the private sector may be better equipped to restore trust in a banking sector currently paralyzed by a lack of liquidity and a surplus of bad debt.
Mustaqur Rahman’s immediate priority has been identified as trust-building, a task that is as much about optics as it is about interest rates. As an entrepreneur turned governor, he has a unique vantage point on the BNP’s deregulation agenda.
If he can leverage his accounting expertise to conduct a thorough, transparent audit of the banking sector’s distressed assets, he may yet win over skeptical investors. The hope is that his pragmatic, business-oriented approach will complement the macroeconomic foundations laid by Mansur, rather than dismantling them.
There is a potential path where Mustaqur Rahman uses his credibility within the domestic business community to flush out the corruption that has long plagued the nation’s financial institutions, providing bottom-up stability to match Mansur’s top-down discipline.
Yet the risk remains that the market will view the appointment as a shift toward cronyism or a softening of hard-won monetary discipline. While Mustaqur Rahman’s entrepreneurial background is an asset for domestic confidence, it does not automatically translate to the international investor confidence that Mansur commanded.
The IMF and rating agencies do not look for entrepreneurial spirit in a central banker; they look for predictable, rule-based adherence to monetary targets. He will have to work twice as hard to prove that he is not merely a political appointee tasked with opening the taps for the new ruling party’s allies.
The transition has been handled with a lack of ceremony that many have described as a disrespectful farewell to Mansur, a move that could alienate the very technocrats the government needs to run the economy.
Ultimately, Mansur’s ouster is a gamble that the Rahman administration did not need to take. The interim regime had already done the heavy lifting of stabilizing the ship; all the new government had to do was stay the course.
By swapping a proven macroeconomic stabilizer for a business-oriented accountant, the government has traded certainty for an experiment. If Rahman succeeds in using his professional expertise to clean up the banks and foster a more business-friendly environment, the change might eventually be vindicated.
But for now, the move looks like a classic case of political instinct overriding economic common sense. In the world of global markets, once you fire the person who saved the economy, you inherit the full burden of the next crisis.
The world is watching to see if Mustaqur Rahman can turn his entrepreneurial success into a regulatory triumph, or if Mansur’s removal will be the moment Bangladesh’s recovery stalls or even reverses.
Faisal Mahmud is a Dhaka-based journalist and analyst
