History repeats itself, first as tragedy, second as farce, the German philosopher Karl Marx said. What unfolded yesterday at the Bangladesh Bank headquarters was nothing short of history repeating itself in just about 18 months -- as tragedy.

Ahsan H Mansur, the key person in steadying the economy that had been brought down to its knees by years of mismanagement and corruption, was unceremoniously removed from the post of the governor.

“I have not resigned, nor have I been removed. I saw it in the media, so I am going home,” he told reporters as he left the BB headquarters around 2pm circumnavigating a mob.

About an hour later, the financial institutions division of the finance ministry issued a gazette notification cancelling the remainder of his four-year tenure that began on August 13, 2024.

His replacement is Md. Mostaqur Rahman, the managing director and chief executive officer of a modest sweater factory in Narayanganj that had defaulted on its loan amounting to Tk 89.02 crore and had to reschedule it just a couple of months ago by paying a 2 percent down payment for 10 years.

An accountant by education, he is neither an economist nor a banker -- one of the prerequisites for holding the post of a central bank governor -- and he has never held a position in the banking or finance industry.

The appointment becomes even more preposterous when one realises that to become the managing director of a bank, one needs to have a solid educational background, decades of banking experience and at least three years of experience as an additional or deputy MD, as per the BB’s own regulations.

The new BB governor, who is part of the ruling party’s inner circle as demonstrated by his inclusion in the BNP’s election monitoring committee, would not qualify to helm a bank by central bank rules, let alone take the reins of the entire banking sector.

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Ahsan H Mansur leaving Bangladesh Bank around 2:00pm yesterday. Photo: Courtesy of nTV

This is oddly reminiscent of the Awami League years, when central bank governor appointments were made on political considerations to be pliant to the wishes of the top leadership.

Even then, there was a method to the madness: their last two governors were finance secretaries, and before that, a development economist.

This is the first time in Bangladesh’s history that a businessperson has become the central bank governor.

In fact, there is hardly any precedence anywhere in the world, as the post requires razor focus on public interest, i.e. balancing inflation and employment rate, and not on profit maximisation as businesspeople are wont to.

Inevitably, this has led to widespread lancinating fears that the banking sector could once again become susceptible to systematic looting, as witnessed during the Sheikh Hasina years.

Using a web of schemes, about $17 billion was siphoned from the country’s financial system in the 15 years before the AL government was deposed in a mass uprising, according to Mansur.

The central bank, as well as a host of banks and their boards, were captured by people affiliated with the then-ruling party.

The banks then issued thousands of crores in loans to companies, some of them fictional, that would never be paid back and sidestep the punitive measures by the authorities. Much of that money was then transferred out of the country illegally.

At such a dilapidated state, Mansur, an economist who worked at the International Monetary Fund for 27 years, took charge as the central bank governor and went about steadying the ship.

When he took the reins, the country’s gross foreign exchange reserves stood at $20.5 billion.

To preserve the dollar stockpile, the AL government restricted imports, racked up $3.2 billion of dues of just the power and energy sector among others, and barred multinational companies from repatriating their profits for years.

In the past 18 months, not only were all foreign liabilities cleared, but profit repatriation was resumed and import restrictions were lifted. And yet, reserves propped up to a healthy $30 billion.

The currency was allowed to float, and yet, the taka did not go on a freefall, as was predicted, thanks to Mansur’s years of experience as a monetary economist. The taka has now stabilised in the neighbourhood of Tk 122 against the dollar.

Mis-invoicing, the tool of choice for money laundering, has come down dramatically, while expatriate Bangladeshis continued to send remittances through the official channel, buoyed by the confidence in Mansur’s handling of the monetary affairs.

Inflation, which has been grazing double-digit levels for the best part of the past three years, has come down to 8 percent because of his deft manoeuvring of the financial system.

The banking sector, whose bad loans hit one-third of total outstanding assets, is getting its life back, while the ravaged Islamic banks’ balance sheets are being cleared up.

What is more impressive is that he made headway in retrieving money laundered out of Bangladesh.

And thanks to the personal credibility he brings to the table, the country managed to unlock instalments under the IMF’s loan programme despite not meeting the Washington-based multilateral lender’s requirements.

What Mansur accomplished in the past 18 months is simply extraordinary.

But, the economic recovery is fragile. Given the war risks mounting in the Middle East, LNG prices can escalate, and with it, Bangladesh’s foreign exchange reserves could fast deplete. If that happens, inflation would take a hit, the taka would appreciate and macroeconomic stability would be undone.

When the presence of an experienced hand like Mansur’s was needed to navigate the looming choppy waters, we are saddled with an untested person.

This segues to the issue of the IMF loan programme: would the multilateral lender be comfortable with an inexperienced person handling the monetary policy? If the IMF pulls back from the programme, how badly would Bangladesh’s credit rating be impacted, and with it, the availability and the cost of international borrowing for the country?

In short, it would set the economy back by decades. If that happens, it would be nothing short of a tragedy -- for Bangladesh.