NEW GOVERNOR FOR BANGLADESH BANK

C O N F I D E N T I A L DHAKA 002069

SIPDIS

E.O. 12958: DECL: 05/02/2015
TAGS: EFIN PINR BG
SUBJECT: NEW GOVERNOR FOR BANGLADESH BANK

Classified By: Political Counselor Dundas McCullough; reason 1.4(d)


1. (U) Dr. Salehuddin Ahmed assumed command on May 2 as the
new Governor of the Bangladesh Bank, the central bank of
Bangladesh. Dr. Salehuddin was previously the managing
director of the Palli Karma Sahayak Foundation (PKSF),a
non-profit organization known for its work in micro-finance.
He was appointed for a standard four-year term.


2. (U) Dr. Salehuddin succeeds Dr. Fakhruddin Ahmed, whose
term expired on April 30. Fakhruddin, aged 65, was subject
to mandatory retirement. In a surprise move, the cabinet
rejected a proposal by Finance Minister Saifur Rahman to
raise the retirement age for the Governor to 67, so as to
allow the respected Dr. Fakhruddin to remain in his post.


3. (C) Although the initial reaction among bankers and
economists was favorable, the 56 year old Dr. Salehuddin was
seen by many as a surprise choice; he was not on most
people's short list of prospective candidates. Bankers we
spoke with spoke well of his private sector experience and
noted positively that he had been trained in the Pakistani
civil service. Lack of central bank experience was not a
concern, they said, noting that none of the previous
governors had had prior central bank experience either.


4. (U) Dr. Salehuddin's background is principally in the
development sector. In addition to working with PKSF since
1996, he served a year as Director General of the NGO Affairs
Bureau (1995-1996) and two years as Director General of the
Bangladesh Academy for Rural Development (1993-1995). An
economist by training, he taught at Dhaka University in the
early 70's.


5. (C) Comment: An overconfident Rahman may have
underestimated opposition from some Ministers whose own
banking interests were affected by Fakruddin's efforts to
improve bank regulation, limit the terms of board members of
private sector banks, and privatize the national commercial
banks. Sal3huddin does not have the markings of a maverick.
His government service, including as the head of the
notoriously politicized NGO Affairs Bureau, overlaps neatly
with BNP rule. End comment.
CHAMMAS