Michel Camdessus, the Managing Director of the IMF, announced on November 9 that he will resign his position in early 2000 after the IMF Executive Board has named a successor. (The text of Press Release 99/52 announcing Camdessus’s plans to resign and including his letter to the IMF Executive Board is available on the IMF’s website: www.imf.org.)
Camdessus, who was first appointed to his position in January 1987, said in a statement to the Board that he considered it was “the right moment to pass the baton.” The IMF, he said, had “advanced in many fields. We have just established a demanding but exciting work program, and the World Economic Outlook allows us to anticipate favorable trends for the world economy. So I see it as my duty now to suggest that you take advantage of these favorable circumstances to select my replacement and to use these few months to help my successor become familiar with this superb but complex institution.”
The IMF’s seventh Managing Director, Camdessus was appointed to an unprecedented third term in January 1997. Prior to coming to the IMF, he had served successively as Director of the French Treasury (1982-84) and Governor of the Bank of France (1984-87), as well as Chairman of the Paris Club and of the Monetary Committee of the European Economic Community. He was named Alternate Governor of the IMF for France in 1983 and Governor of the IMF in 1984.
Period of transformation
Camdessus has been Managing Director during a period of momentous change for the international monetary and financial system. When he took office in January 1987, total quotas amounted to SDR 89.9 billion (about $125 billion), compared with SDR 212 billion (nearly $300 billion) today, and membership was 142 countries, compared with 182 now. A marked increase in IMF membership came after the breakup of the former U.S.S.R., as the Baltic countries, Russia, and the other countries of the former Soviet Union became members and the IMF took on new responsibilities in assisting these countries to face the challenges of the transition to a market economy.
From the beginning of his tenure, Camdessus gave a strong emphasis to the social aspects of economic adjustment and growth. One of his first public actions, in June 1987, was to propose a tripling of the size of the Structural Adjustment Facility, which had been set up in March 1986 to provide assistance to the poorest developing countries. This led to the establishment of the Enhanced Structural Adjustment Facility (ESAF), designed to foster growth and strengthen the balance of payments of low-income developing countries. In August 1988, the Compensatory and Contingency Financing Facility (CCFF) was set up to provide broader protection against adverse changes in external economic conditions than had been available under the Compensatory Financing Facility that the CCFF replaced. In a further measure on behalf of the low-income countries, in September 1996 a joint IMF-World Bank initiative for the heavily indebted poor countries (HIPC Initiative) was announced.
Response to crisis
In recent years, the IMF has been directly involved in responding to a series of major crises affecting the international monetary and financial system. In February 1995, the Executive Board extended to Mexico the largest Stand-By Arrangement to date, in the amount of SDR 12.1 billion (nearly $17 billion), as part of an international program of assistance designed to support stabilization after a collapse of confidence in the country’s currency. When the Asian crisis broke out in the summer of 1997, the IMF was quick to respond by providing financial assistance to Thailand, Korea, and Indonesia. It also established a Supplemental Reserve Facility to help affected members cope with sudden and disruptive losses of market confidence. Altogether some SDR 25.8 billion (about $36 billion) in financial assistance was approved for programs in these three countries during 1997.
In July 1998, the IMF activated the General Arrangements to Borrow (GAB) for the first time for a nonparticipant, to finance an SDR 6.3 billion (about $8.8 billion) augmentation of an Extended Fund Facility Arrangement (EFF) for Russia. Subsequently, the New Arrangements to Borrow were activated for the first time in December 1998 to help finance an SDR 13 billion (more than $18 billion) Stand-By Arrangement for Brazil when that country’s currency came under attack. Contingent Credit Lines were created in April 1999 to help prevent crises by building up market confidence in countries that, while pursuing strong economic policies, may be vulnerable to balance of payments problems stemming from financial contagion.
The experience of the successive financial crises of the 1990s pointed to the need for a coordinated effort to strengthen the international monetary and financial system to guard against future disruptions. In a series of speeches and policy actions, Camdessus encouraged the international community to take steps to strengthen the international financial “architecture” through such measures as increasing the transparency of economic decision making, strengthening banking and financial systems, increasing involvement of the private sector, liberalizing trade regimes, and modernizing international financial markets.
Poverty reduction and growth
In September 1999, as a response to the continuing need for an international effort to help the poorest countries, the Interim Committee of the Board of Governors on the International Monetary System (subsequently renamed the International Monetary and Financial Committee) endorsed replacing the ESAF with the Poverty Reduction and Growth Facility, intended to make poverty reduction a more central element of growth-oriented economic strategies among low-income members of the IMF.