Ahsan Mansur's exit: A decent departure was the least we expected – A sad day for us

Ahsan Mansur and I are of the same vintage at Dhaka College and Dhaka University - Economics Dept and we both were residents of Surjya Sen Hall. I have known him as an unassuming brilliant student and a reputed economist and a person of integrity.

His sudden and unexpected departure reminded me of my nearly similar experience at Bangladesh Bank (which I will not delve into) twenty years back.

Rightly or wrongly then, I felt I was wrongly targeted, for taking decisions which I thought, in my naivety were right. I did not consider that beyond my own experience, there was the other reality which is as important.

I totally misjudged that politics is a different reality and in fact, that is indeed, the real world. Is what happened at the central bank history repeating itself?

Faced with a complex existential situation, such that our economy was in some respects one cannot be called to question for taking steps to rectify the economic mess manifested by the downward spiral of our reserves and the catastrophic situation in the banking and finance sector.

I for one, would be absolutely sure that this was the right thing to do.

Right? No, wrong! The right thing to do is what is politically expedient.

As one who was involved in all this mainly as an observer, watching, from the safety of my home, a batch-mate taking on a Herculean task, I wanted to remain involved.

So, I critiqued the moves Bangladesh Bank, under Ahsan's stewardship,. I gave my opinion; sometimes agreeing at others vehemently disagreeing and at times offering advice. All this in the spirit of someone trying to help. But when, to be honest, I ask myself, what would I have done in his place?

That is when I realize that I may 'want' to do the same but would I have the 'steel' to take the next logical step. That is what separates the 'men' from the 'boys' (sorry for the gender bias in the phrase). My experience perhaps sobered me sufficiently.

So, the first mega issue for the Governor was stabilizing the economy. And this is indeed the essence or the reason d'etre of a central bank. To break this down further;

1.Manage inflation 2. Leverage monetary policy to support a sustainable GDP growth 3. Maintain a policy framework for intervention to enable a stable exchange rate.

Our dwindling reserves, remittances going down to a potential trickle, international debtors being put on hold, the exchange rate on a free fall; this is what the Governor Ahsan stepped into and by his deft and astute handling of the fragile economic environment, stabilized the exchange rate, boosted the remittance flows and increased the reserves to a satisfactory position.

His Monetary Policy was measured and in a way definitive and effective.

Next, the banking industry. I will say without hesitation, what has been done in the last 18 months is one word, phenomenal. After the first three this is the fourth vital objectives of the central bank;

4. Regulate credit and ensure banking system stability.  And steps were taken unhesitatingly to stabilise the sector.

The banks which were really the dead-weights and were pulling down the sector (Banks and NBFI) with their mismanagement and total lack of governance, which reduced them to a skeleton, were largely identified. The industry now has a general idea of the level of NPL, shortfall in required provisions and the individual and sectoral Capital 'in-Adequacy' rectifying this is, of course, a step by step a long term task.

This is not to say there were no missteps. First one that comes to mind was the so-called "Policy Support" which allowed defaulted debtors to seek financing through the thoroughly abused "rescheduling scheme".

I guess the other criticism I have is the total disregard for senior former bankers from the country in any of the reform activity. He relied mostly on NRBs who were from my experience, although needed for a well rounded team, are not sufficiently informed or experienced on the local complexities.

But all said and done, I would conclude by saying that he took bold and courageous decisions and was perhaps one of the most successful governors of the central bank. His legacy will be hard to match for his successors.

The country needed his experience and expertise to resolve the complex issues we will face in the coming days. The Monetary Policy, Reserves, Liquidity, Banking sector volatility, NPLs and fundamentally, regaining international trust in our financial sector will challenge the incumbency. 

I started by saying that it is sad day for me, I must say, if the government wanted Governor Ahsan to leave, and there is no question about their absolute right to this action, it could have been done maintaining the dignity of the position. Is that too much to ask for? I am sad, not for him, but for us.

Muhammad A Rumee Ali is former deputy governor of Bangladesh Bank.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.