US embassy cable - 05DHAKA2069

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