The 13 years that Michel Camdessus spent at the IMF as its Managing Director do not lend themselves to easy generalizations about the work of the institution. It is, however, possible to point to an overarching theme: the steady advance of globalization and the role of the IMF in the process.
The word “globalization” itself gained increasing currency during the Camdessus years, reflecting the accelerating international integration of markets to which it refers. Globalization has been driven by technological change and financial liberalization and sustained by an appreciation among policymakers that an open, liberal, and rules-based international trading and financial system is essential to global economic progress. But globalization brings disruption and risks as well as benefits. One form of disruption is the unemployment and human dislocation that can be associated with structural change in economies. Another is financial crises associated with volatile capital flows: in particular, currencies have proved vulnerable to speculative attack when international investors have sensed policy weakness, as the crises of the 1990s—in the European Monetary System, Mexico, Asia, Russia, and Brazil—all demonstrated. Surges of private international capital played a significantly smaller role in the crises of the earlier part of the IMF’s history, such as the collapse of the Bretton Woods exchange rate system in 1971–73, the oil shocks of 1973–74 and 1978–79, and the debt crisis of the early 1980s.
The work of the IMF during the Camdessus period is perhaps best understood as a progressive process of equipping the institution and its members to harness the benefits of globalization while minimizing its pitfalls. First, the IMF has been working to help all countries enjoy the benefits of globalization. This has been helped by the globalization of the IMF itself—its transformation into a virtually universal institution. The IMF has worked to be relevant to the entire membership, by appropriately adjusting its lending facilities and other operations, including by introducing its concessional facilities—the Structural Adjustment Facility (SAF) and the Enhanced Structural Adjustment Facility (ESAF), which is now the Poverty Reduction and Growth Facility (PRGF)—for the poorest countries. The IMF has also encouraged its members to take advantage of globalization by removing current account payments restrictions and accepting the obligations of Article VIII; by moving toward, and establishing the conditions for, orderly capital account liberalization; and by increasing the flexibility of markets in the domestic economy.
At the same time, the IMF has made no secret of the disruptions and risks associated with globalization. The reference to “high levels of employment” among the purposes of the IMF has pointed directly to the responsibility of the IMF to advise on macroeconomic and structural policies that can help to reduce unemployment, its duration, and its human cost. And, as of ten as it has advocated financial and capital account liberalization, the institution has cautioned against over-hasty, ill-conceived opening measures. As Managing Director, Camdessus was eloquent in warning both that globalization was a constant goad for rectitude in economic policymaking—for policies that would keep at bay financial contagion, as well as direct speculative attack—and that globalization called for policies that promoted equity as well as efficiency.
The impact of globalization on the poor and vulnerable—for bad as well as good—has, in fact, been a constant preoccupation. During Camdessus’s tenure, social safety nets became a much more prominent part of the armory of policies that are recommended by the IMF. And Camdessus frequently called for action to rectify the slow progress in reducing poverty around the world. He repeatedly called for governments to reverse the decline in aid budgets and asked policymakers to reflect on the need to place the human being at the center of economic policies. The need to humanize globalization was a central consideration for the Managing Director. This has stemmed from Camdessus’s vision of human development, rooted in his human and spiritual values, and from his firm conviction that human development is dependent on the quality of economic and social policy. This vision and conviction, in turn, formed the basis of his profound sense of the importance of public service and of the gravity of the IMF’s responsibilities.
It is not easy to single out the influence of an individual on an institution that is run by an Executive Board representing the governments of almost all countries and that favors a collegial and consensual approach to decision making. Perhaps it is clear only to close observers and participants that, on many occasions, the path trodden by the IMF in the past 13 years was one that Camdessus had first to coax the membership to follow; that his boundless energy, firm convictions, and securely grounded optimism were a constant source of inspiration to the IMF, especially its staff, and to many leaders and policymakers in its member countries around the world; that he repeatedly demonstrated the courage needed, when the advice of others had been heard and evaluated, to undertake the most lonely task of leadership—to decide and to act; and also, that if the IMF in the 1990s was in the thick of the process of globalization that was characteristic of the decade—as its promoter, its crisis manager, and as an agent for its humanization—this was in no small part due to the vision and leadership of Michel Camdessus.