Against the backdrop of the International Monetary Fund (IMF) raising questions about the autonomy of the Bangladesh Bank and making several recommendations in this regard, former governor of the central bank Dr Salehuddin Ahmed is against the idea of not keeping government officials on the central bank board. He has reasons for his belief. Jebun Nesa Alo of The Business Standard speaks to the former governor on such issues.
The board of the Bangladesh Bank has three high-ranking government officials as members. The IMF has alleged that they get a chance to influence the central bank's decision-making process. The international money-lender says this has ruined the autonomy of the Bangladesh Bank and it has recommended removing the three.
I am not in favour of completely excluding these government officials. If any decision is made by excluding the National Board of Revenue (NBR), the Finance Division, and the Banking Division, they might later ask why a decision was made without informing them.
During my time, we would take their opinion. But they would not create obstacles in the decision-making process. They never said they came from such and such institutions. If this does not happen, then there is no influencing. Rather, this was done so that they will know about the decisions and give their feedback. This does not make them representatives [of those institutions].
This means, whatever opinion they give are not the opinions of the ministry. They will not make any decisions. They can say whether a decision is good or bad. For instance, the NBR may say whether a decision will be detrimental to revenue collection.
The IMF says these representatives of government agencies interfere with the governor's power to make decisions. The governor cannot make decisions alone. How do you view this?
The IMF says a lot of things. But not everything is right a hundred percent of the time. The governor presides over the meetings of the central bank's governing council. He makes the decisions. His decisions are not voted on. Even if there is an option to vote, it is rarely used.
In this case, the bank's board members can be increased from seven to more. If needed, two or three independent members can be kept. But this depends entirely on the government and their political commitment.
Are you suggesting appointing independent members?
If political leaders want to take a good, independent board member, they can. Through this, the government can have checks and balances. However, this does not happen in Bangladesh. Nowhere in the world is the central bank run without political inputs. The US government also has a lot of influence over their central bank. There, the governor has to manage those.
During my time, the government also had influence. Banks and financial institutions would make recommendations. But those were not orders. The government can highlight the good and the bad, and make recommendations. These have to be managed. The government gives autonomy, but it also has to be earned.
If I do well, why would the finance department give any advice? As I have seen, the central bank has been quiet about innovations in recent times. As a result, the finance department asks it to do this and that.
I do not think it is logical to involve any other body to form the governing body of the Bangladesh Bank. The government can form a search committee and make appointments through them. However, the past record of search committees in Bangladesh is not good.