Day 6: Open Letter to the Governors

Thirty years of reform proposals. The same pattern every year. The only rational explanation is game theory.

The World Bank’s approval culture is a Nash equilibrium. Every actor — the task team leader, the Country Director, the MTI Practice Manager, the Board, the borrowing government, the IMF — is playing a dominant strategy given the payoff structure they face. The task team leader is promoted for approvals, not outcomes. The Country Director needs MTI goodwill for the next posting. The Board co-approves every loan and cannot scrutinise outcomes without implicating its own prior judgements. The IMF deployed $170 billion in COVID emergency financing under a governance framework the IEO described as a checklist and collected full repayment regardless of outcome. No single actor has the individual incentive to defect. Within-system reforms do not change the equilibrium. They are absorbed by it.

Today’s open letter to the Governors identifies three structural parameters that sustain the equilibrium: the sovereign guarantee that decouples the institution’s payoff from development outcomes; the Board co-approval architecture that prevents independent oversight; and the MTI career pipeline that enforces the approval culture through reputation effects across 30-year careers. The game theory analysis published today documents precisely which reforms change these parameters — and which do not. Only the Governors can change the payoff structure. It will not change from within.

This is also the final letter in the Spring Meetings 2026 series — six letters in six days to the IMF Managing Director, the IEO, the IFC CEO, the World Bank President, the Executive Boards, and today, the Governors. The series draws on 3,507 IEG-evaluated projects and two decades of country-level evidence.