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IMF, explained.
Divvying up the top positions ensures that big countries each have “their own” international financial institutions and a significant say in how these are run (Ted Aljibe/AFP via Getty Images)
The appointment of a new Asian Development Bank president highlights the need for a shift to competitive and transparent selection of senior management everywhere.
Top jobs must go to the best candidates. International financial institutions should be no differentTop jobs must go to the best candidates. International financial institutions should be no different
About the author
Robert Wihtol
Robert Wihtol is Adjunct Faculty at the Asian Institute of Management and former Asian Development Bank Country Director for China and Director General for East Asia.
The board of governors at the Asian Development Bank yesterday appointed Masato Kanda as the bank’s 11th president. The appointment was no surprise and followed a well-established pattern. Ever since the ADB was set up in 1966, the bank’s president has been from Japan, which, along with the United States, is its largest shareholder.
Public speculation about Kanda’s candidacy started immediately after the announcement on 9 September that his predecessor Masatsugu Asakawa would retire, and the Japanese government nominated him the next day. No other countries put forward candidates, so Kanda’s appointment this week was a shoo-in.
To put the ADB’s selection process in context, we should remember that the nationalities of the heads of the major international financial institutions are part of a web of tacit deals to “divvy up” the top jobs among key shareholders. In addition to the chief executives, senior managers at the next tier are often also appointed based mainly on nationality.
The major international financial institutions include the International Monetary Fund, the World Bank, the three regional development banks (African, Asian and Inter-American), the European Bank for Reconstruction and Development, and the more recently established Asian Infrastructure Investment Bank and New Development Bank, also known as the BRICS bank.
When the IMF and World Bank were established in 1944, the founders agreed that the former would be headed by a European and the latter by an American. The deal has held for 80 years, albeit with minor concessions to emerging economies. In 2019, Kristalina Georgieva, a Bulgarian national, was appointed as managing director of the IMF, the first time an Eastern European and a national of an emerging economy was selected for the job. In 2024 she was confirmed for a second term.
The international financial institutions champion diversity, but have been mostly headed mainly by men.
At the World Bank, American politics have openly come into play. In 2012, the administration of president Barack Obama nominated Jim Yong Kim, an American national of Korean origin, to head the World Bank. And in September 2016, the Obama administration nominated Kim for a second time, nine months before his term was due to expire and despite the fact that his leadership had been heavily criticised. Coming just before the US presidential elections, the move was seen by many as being designed to prevent Donald Trump, if elected, from appointing his own candidate.
However, in 2019, two years into the Trump administration and only a year-and-a-half into Kim’s second term, Kim abruptly resigned for a job in the private sector. Speculation was rife that the United States had told him to step down. Kim was replaced by David Malpass, a US Treasury official with a track record of criticising multilateral institutions.
Once Joe Biden assumed office, with John Kerry as his climate tsar, Malpass’ politics became a problem. In an interview in 2023, he refused to confirm that fossil fuels were driving the climate crisis, which drew condemnation from the White House. Malpass resigned a few months later, mid-term, and was replaced by Ajay Banga, a naturalised US citizen of Indian origin who had previously headed Mastercard.
Masato Kanda, in April, speaking to the media as Japan’s vice minister of finance for international affairs (JIJI Press/AFP via Getty Images)
In the regional banks, leadership changes have been less choppy, with varying arrangements to rotate the top jobs among major shareholders. The EBRD has been headed by Europeans, the African Development Bank by African nationals and the Inter-American Bank by Latin Americans, with the exception of a US national nominated by the Trump administration in 2020, who was voted out by the bank’s board of governors after only two years in office.
Leadership transitions in the ADB have been stable, although in the early 2000s China was rumoured to be lining up a candidate to break Japan’s monopoly on the top job. However, once the New Development Bank was established in 2015 and the AIIB in 2016, pressure for change at the ADB dissipated. The NDB rotates its presidency among the founding members and is currently headed by Dilma Rousseff, a former president of Brazil, and has also been led by an Indian national. The AIIB, where China is the major shareholder, is managed by Jin Liqun, a Chinese former vice minister of finance.
The international financial institutions champion diversity, but have been mostly headed mainly by men. After 66 years of male leadership, the IMF was the first to break the glass ceiling, appointing Christine Lagarde as managing director in 2011. The EBRD designated Odile Renaud-Basso as president in 2020, and the NDB appointed Rousseff in 2023. Neither the World Bank nor the three regional development banks have ever elected a female chief executive.
The current nationality-based system of divvying up the top positions ensures that the United States, Europe, Japan, China, Africa, Latin America and the BRICS group each have “their own” international financial institutions and a significant say in how these are run. On the upside, the growing voice of the emerging economies in the international financial institutions has fuelled a shift away from the Western-dominated “Washington consensus” towards more borrower-driven policies.
But there is a significant downside. Without competitive selection, the system provides no guarantee that the top jobs will go to the most capable candidates. With major shareholders intent on defending their own turf, nationality and politics have prevailed with transparency and merit taking a back seat.
Cutting the Gordian knot of nationality-based appointments will require forward-looking leadership from the shareholders at international financial institutions. Key countries would need to set aside their political concerns and encourage merit-based selection. Recent moves to break the glass ceiling are a step in the right direction, but much more is needed.
The challenge is tough but not insurmountable. The Organisation for Economic Cooperation and Development selects its chief executive through an open competition that might serve as a useful model.
The international financial institutions have a global mission. Ensuring that their management teams are selected through transparent competition stands to benefit everyone.
