But the past decade has cemented his reputation as a skilled negotiator and canny political operator, winning him an unprecedented third term running the global economic watchdog. He was unanimously re-appointed by the Funds executive board in May, in spite of having put noses out of joint in several finance ministries and central banks over the years.
Sitting in his airy office in the Funds imposing headquarters on Washingtons 19th Street, Mr Camdessus has no doubt which event will have the biggest impact on the economic landscape over the next five years. European monetary union will be the most important decision for the international monetary system since the breakdown of Bretton Woods, and it will make a constructive contribution to the emergence of an international economic order.
Some policy-makers outside Europe are concerned by the Funds deafening silence on issues such as the stability pact rules for government borrowing within the euro area and the likely relationship between the euro and other leading currencies. The US is concerned about the consequences for economic growth and financial market stability if adoption of the single currency is botched.
These issues are extremely important. But we prefer good decisions to be taken by the Europeans on their own, so they own the decisions, the managing director argues. He says he is happy with the decisions so far, for example, on links between the euro and those currencies which do not join in the first wave. Our role is only to remind the Europeans that the rest of the world is there, he says. If they were mistaken in a way that was detrimental to the rest of the world then of course we would make our point crystal clear.
Camdessus believes the European central banks primary objective should be price stability, not securing a competitive level for the euro against other currencies. He thinks the exchange rate is unlikely to be used as a weapon of trade policy, although there might be rhetoric here or there.
The Fund will hold a seminar on the international role of the euro in the spring, after which its executive board will discuss the key principles allowing its insertion in the world system.
One immediate subject of concern is the effect on the world economy of cuts in public borrowing by governments striving to meet the economic convergence targets in the Maastricht treaty. In the past the Fund has criticised the German authorities for failing to lead European interest rates low enough to compensate for this fiscal belt tightening.
Europe may be the biggest issue for the Fund in the coming five years, but over the past 12 months, much of its attention has focused on relations with Russia. The $10 bn package of assistance agreed last March represented a huge gamble on the continued progress of reform, one which looks rather more dangerous following the news that President Boris Yeltsin is back in hospital.
The Fund was created to live dangerously, Camdessus insists. Until well into 1996 the Russians were able to hit the performance criteria month after month. The problems in the second half of the year may have been the result of uncertainty over the state of the presidents health, but they are striving to come back on track and I am hopeful that they will.
The Funds other big borrower is Mexico, where along with most of the financial community the IMF failed to spot the 1994-95 financial crisis and was left with a huge bill to help clear up the mess. But Camdessus claims important lessons have been learnt, including the need to strengthen banking systems in emerging markets. The next crisis will be a banking crisis or will have banking system weakness as a very important component, he says. Those in charge of banking standards primarily the Basle committee must define applicable standards.
He also points out: The World Bank must work towards the strengthening of financial systems through its own structural adjustment loans. And we in the Fund must utilise our surveillance instruments to judge if these guidelines are effectively implemented and to check that countries avail themselves of the appropriate instruments. We must also give them the means to carry out appropriate surveillance on their own banking systems.
As the April meetings of the IMF and the World Bank approach, attention will also be focused on their joint initiative to tackle the debt burdens of the worlds poorest countries. This involves the Paris Club of creditor governments giving increased debt relief to countries with good policy performance, with the international institutions providing further assistance.
Debt sustainability analyses are already under way for several countries. By the spring meetings Camdessus expects Uganda to have reached the decision point at which its need and eligibility for extra debt relief will be determined, followed shortly by another 4 to 6 countries.
The Funds request for money to help finance its contribution to the scheme have received an extremely positive response, the managing director says. But he does not know yet whether a decision will be taken this year on the controversial proposal to provide some of the resources by selling and reinvesting part of the Funds $40 bn gold reserves.
He is keen to complete the unfinished business of his first 10 years.This includes persuading the membership to increase substantially their quotas, the subscriptions which determine their shareholdings in the Fund. He says most countries favour raising the total of $210 bn by distinctly more than 50 per cent. But the Funds biggest shareholder the US is reluctant to concede a big quota increase. We are very far away from consensus at this stage, says Camdessus.
Camdessus will need all his charm and political wiles to win the US round, but he believes the Funds performance gives him a strong case. We serve the basic purposes of the US economy: we serve trade opening, economic growth and we contribute to stability where the US has key systemic or strategic interests.
But at what cost? The answer is that it is at no cost to the US taxpayer, or the British or the French. it is only a swap of assets with their central banks, and with it we do our job. What parliament will not buy such a service at such a low cost?
