Reason Behind BB Governor Got D Grade

In the latest edition of Global Finance magazine's annual "Central Banker Report Card" for 2023, Bangladesh Bank Governor Abdur Rouf Talukder has been assigned a D grade, signaling concerns over his performance. The grading, conducted by the New York-based magazine, evaluates central bank governors from around the world.

Abdur Rauf Talukder's low grade stems from a series of economic challenges faced by Bangladesh during the review period. While the country initially met its post-Covid GDP growth target of 5.6%, inflation exceeded the 5% target by 0.6%, and the value of the taka remained stable in the first half of the assessment period. However, by mid-2022, the taka faced a significant devaluation of 9.5%. The shortage of dollars onshore posed difficulties for importers, and the Ukraine conflict led to surging energy and food costs, resulting in rampant inflation. The central bank's foreign exchange reserves were also depleted, necessitating a call for support from the International Monetary Fund (IMF).

Global Finance magazine pointed out that the structural weaknesses in Bangladesh's economy, combined with the government's substantial control over the central bank, made the country vulnerable to external shocks like the 2022 inflation surge.

Bangladesh shares its D grade with Zimbabwe and Suriname, highlighting the challenges faced by these nations. In contrast, central bank governors from India, Vietnam, and Switzerland received A+ grades for their outstanding performances.

Shaktikanta Das, the governor of the Reserve Bank of India, was praised for achieving solid GDP growth and effectively controlling inflation through a series of repo rate hikes. Vietnam's State Bank and Switzerland's National Bank were also commended for their skillful management of inflation and interest rates.

Governor Nandalal Weerasinghe of Sri Lanka received an A- grade for leading the country out of bankruptcy and hyperinflation.

Despite the challenges faced by central banks worldwide, the report emphasized the importance of factors such as tight inflation control, protection of local currency exchange rates, and the consolidation of foreign exchange reserves in evaluating the performance of central bank governors.

In Bangladesh's case, the weakening economic structure and significant government control over the central bank were cited as major contributing factors to the D grade received by Governor Talukder.