Day 6: Open Letter to the Governors

Open Letter · Spring Meetings 2026 · Day 6 · April 19, 2026

An Open Letter to the Governors of the World Bank and the International Monetary Fund

To the Finance Ministers and Central Bank Governors of 190 Countries: On the Reform Agenda, the Institutional Equilibrium That Prevents It, and the Role of Shareholders in Breaking It

Dear Governors,

The Spring Meetings have concluded. Finance ministers and central bank governors from 190 countries convened in Washington this week to discuss the global growth outlook, debt sustainability, and private sector mobilisation. These are consequential matters. This letter concerns a parallel agenda that received less formal attention: the question of whether the accountability architecture of the World Bank and the IMF is adequate to the challenges both institutions face — and why thirty years of reform attempts have failed to change it.

You are the ultimate shareholders of these institutions. The Articles of Agreement vest in you the authority to shape the governance frameworks within which management and the Boards operate. That authority is rarely exercised directly on operational matters — nor should it be. But the structural questions this letter raises are precisely the kind that require shareholder direction, because they concern the incentive architecture within which management itself operates. And management, as this letter explains, cannot change that architecture from within.

What the Evidence Shows

The World Bank rates every completed project. Of $119.8 billion committed to Sub-Saharan Africa since 2015, 74 percent went to projects rated below Satisfactory by IEG. In fragile and conflict-affected states globally, of $58.2 billion committed to evaluated projects since 2015, 71 percent went to projects rated below Satisfactory. The Satisfactory rate fell from 88 percent in the 1970s to 26 percent by 2010–14. It has partially recovered to 41 percent. That is still six projects in ten failing. The Wappenhans Report named this approval culture in 1992. It has not been resolved.

The IMF has been lending for 81 years without a project-level rating system. The COVID emergency was the largest and fastest deployment in the institution’s history. The governance framework was a checklist — the institution’s own evaluators said so. The IMF’s Legal Department documented near-universal losses across 50 recipient countries. Nigeria — the largest single Sub-Saharan African recipient at $3.4 billion — had its Accountant General convicted. The repayment was collected in full. The Boards of both institutions approved these operations and are accountable for none of them. The Zedillo Commission recommended in 2009 that the World Bank move to a non-resident Board. Nothing changed.

Why Reform Has Not Worked: The Institutional Equilibrium

This week, alongside the open letter series, this platform published two analytical papers that explain why the evidence has been visible for thirty years and the pattern has not changed. The explanation is not institutional incompetence. It is institutional equilibrium.

The Nash Equilibrium

The World Bank’s approval culture is a Nash equilibrium. Each 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 government signs the Letter of Development Policy because the Bank’s economists helped draft the reform agenda it endorses. The IMF collects repayment regardless of whether the programme worked. No single actor has the individual incentive to defect. This is why Wappenhans (1992), the CDF (1999), Results Measurement (2002), Zedillo (2009), and the PSW (2017) all failed to change the pattern. Every one of them operated within the existing payoff structure rather than changing it.

The equilibrium is maintained by three structural parameters. First: the sovereign guarantee and preferred creditor status that decouple both institutions’ financial payoffs from development outcomes. A project that succeeds and a project that fails generate identical financial returns to the institution — the loan is repaid in both cases. Second: the Board co-approval architecture that prevents independent oversight — a Board that co-authors every operation cannot independently scrutinise its failure without implicating its own prior endorsement. Third: the career pipeline of the Macroeconomics, Trade and Investment Global Practice, which routes economists through every node of institutional authority and enforces the approval culture through reputation effects across 30-year careers.

There is a fourth structural parameter that this week’s analysis identified for the first time in formal game-theoretic terms. The IMF and the World Bank are not competing over the macro-fiscal mandate. They are in a cooperative equilibrium that serves the interests of the macroeconomist tribe that controls both. IMF and World Bank economists completed the same PhD programmes, publish in the same journals, and rotate between institutions. The Finance Ministries that should be the arbiters of this duplication are its most structurally captured victims — they need the financing from both institutions and cannot alienate either. The result: $750 million to $1.1 billion per year in administrative duplication, contradictory advice to the same Finance Ministers in the same week, and thirty-five years of coordination frameworks that have changed nothing at field level.

The game theory analysis — published today at mdbreform.com/game-theory-institutional-equilibrium/ — is precise about what this means for reform: interventions that operate within the existing payoff structure will be absorbed by the equilibrium. The pattern will continue. The only reforms that change the equilibrium are those that change one or more of the three structural parameters. Those reforms require external intervention by shareholders. They cannot emerge from within the institution.

Five Structural Parameter Changes

The following five measures are not policy recommendations. They are structural parameter changes — each one directly targeting one of the three equilibrium parameters identified above. None requires amending the Articles of Agreement. None requires a capital increase. Each requires a decision by shareholders that the current framework is insufficient and that change is overdue.

One — Break the Board Co-Approval Architecture Direct the World Bank Board to implement the Zedillo Commission’s 2009 recommendation: move to a non-resident Board that approves policy and strategy and delegates project approval to management. A non-resident Board can scrutinise outcomes without having co-authored the inputs. This changes the Board’s dominant strategy from “ratify to avoid implication” to “scrutinise because we are not implicated.” Every comparable multilateral already operates this way. The estimated cost of the World Bank’s resident Board is $100 million per year. The AIIB manages with a non-resident Board at approximately $5 million. The Zedillo Commission identified this structural parameter in 2009. It has not been addressed in 17 years because the Board itself has a dominant strategy to preserve its own institutional position. Only you can change it.

Two — Give the IMF a Feedback Mechanism Require the IMF to establish an independent project-level rating system for individual country programmes, produced by the IEO and published regardless of management’s agreement, before the next round of emergency financing is approved. The IMF has no IEG equivalent. It is the only major multilateral lender with no programme-level evaluation database. This is not a coincidence — it is a structural feature of an institution whose payoff does not depend on outcomes. The COVID emergency documented what the absence of feedback costs. That ends when you require it to end.

Three — Change the Career Incentive Architecture Require the World Bank to link the performance assessments, promotion decisions, and compensation of task team leaders, practice managers, and country directors to the development outcomes of the projects they approve — not the volume or speed of approvals. Specifically: disclose the professional background of all Country Directors at appointment; require that no country have more than two consecutive economist-track Country Directors; and ensure that Country Director promotion decisions reference IEG outcome ratings from the prior portfolio, not only client satisfaction and disbursement volume. This directly targets the MTI career pipeline as an equilibrium enforcement mechanism. The empirical paper published today at mdbreform.com/mti-power-architecture/ documents the mechanism across 60+ Country Director tenures in eight countries.

Four — Require Independent Governance Reviews Before Commitment Require independent governance reviews of all PRG and PSW operations — across the full World Bank Group — before commitment rather than after project closure. The Nigeria power sector case documents what happens when a development institution deploys equity, insurance, and a sovereign guarantee in the same transaction while advising the host government on the policy framework governing all of them, without a structural mechanism for managing the advisory-creditor conflict. That review should happen before the money is committed.

Five — Change the Foundational Structural Parameter Consider provisions for partial loan principal adjustment where World Bank Group operations produce documented sector-level damage to the borrowing country exceeding a defined threshold. The current architecture places all financial consequences of project failure on the borrower. The institution earns its spread regardless of outcome. Introducing financial exposure at the principal level — even modest and conditional — would be the most significant structural reform to the incentive architecture of development lending since the establishment of IDA. The sovereign guarantee that makes both institutions’ AAA ratings possible also makes their approval cultures inevitable. The reform that most directly targets that parameter is the reform both institutions will most fiercely resist. That resistance is the evidence it targets the right structural parameter.

The communiqué from this week’s meetings will record progress on private sector mobilisation, debt sustainability, and climate finance. These are genuine priorities. The analysis published this week — six open letters, two analytical papers, and a dataset of 3,507 evaluated projects — documents that the delivery architecture requires equal attention, and that strengthening it is a precondition for the other priorities being achieved at the scale both institutions are committed to.

The populations these institutions serve — in fragile states across Africa, Asia, and Latin America — are the ultimate beneficiaries of stronger accountability. The case for reform is not an argument against these institutions. It is an argument that they can and should perform better, and that the structural changes required to achieve that improvement are within your authority to advance. The equilibrium will not change itself. It will change when you change the payoff structure that sustains it.

Respectfully,

Parminder Brar

Founder, mdbreform.com

Former World Bank Country Manager and Lead Governance Specialist

April 19, 2026

The game theory analysis: Why the System Does Not Learn →

The MTI power architecture analysis: Institutional Power Architecture and Portfolio Distortion →

The full Spring Meetings series: Spring Meetings 2026 →

All six open letters: Open Letters Index →

The full analysis: Analysis Index →

The underlying data: IEG Master Database →

This letter concludes the Spring Meetings 2026 open letter series published at mdbreform.com between April 13 and April 19, 2026. The series addressed: the IMF Managing Director on the Nigeria COVID RFI; the IEO on the absence of project ratings; the IFC on the Nigeria Power Sector case; the World Bank President on the FCV delivery record; the Executive Boards of both institutions on governance accountability; and the Governors of both institutions on the reform agenda and the institutional equilibrium that prevents it. All underlying analysis is available at mdbreform.com/notes/ and the data at mdbreform.com/data/.

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