UPSC Prelims 2011 Q75: Indian Economy – International Institutions & Reports
Regarding the International Monetary Fund,
which one of the following statements is correct?
- (a) It can grant loans to any country
- (b) It can grant loans to only developed countries
- (c) It grants loans to only member countries
- (d) It can grant loans to the central bank of a country
Answer: (c) It grants loans to only member countries
Explanation
IMF lending rules: which statement is correct
The International Monetary Fund (IMF) operates under specific membership-based lending rules.
| Option | Verdict | Reason |
|---|---|---|
| (a) Can grant loans to any country | Incorrect | IMF lending is restricted to its member countries, not any country globally |
| (b) Can grant loans only to developed countries | Incorrect | IMF lending is not restricted by development status; both developing and developed member countries can borrow |
| (c) Grants loans only to member countries | Correct | Only IMF member countries are eligible to access its lending facilities |
| (d) Can grant loans to the central bank of a country | Incorrect | IMF loans go to member country governments, not directly to central banks as a separate category |
IMF lending basics:
| Point | Detail |
|---|---|
| Eligibility | Member countries only |
| Not restricted by | Development status (developed or developing) |
| Recipient | The government of the member country |
Answer: (c) It grants loans to only member countries.
Why each option is right or wrong
- (a) Incorrect. IMF lending is limited to member countries, not open to any country.
- (b) Incorrect. Development status is not the eligibility criterion; both developed and developing members can borrow.
- (c) CORRECT. IMF membership is the defining eligibility requirement for accessing its loans.
- (d) Incorrect. Loans go to member governments, not directly framed as central-bank-specific lending.
Key point
The IMF grants loans only to its MEMBER COUNTRIES — not to any country generally, not restricted by development status, and not specifically to central banks.
Remember
IMF grants loans only to its MEMBER countries — not any country, not based on development status.
Common mistakes
- Assuming IMF assistance is available to any country, regardless of membership.
- Wrongly linking IMF lending eligibility to a country's development status.
- Confusing the recipient of IMF loans (member government) with its central bank specifically.
Exam tip
IMF = membership-based lending. The single eligibility rule to remember: you must be a member country.
Sources
- International Monetary Fund — Articles of Agreement of the International Monetary Fund (Article V: Operations and Transactions of the Fund)
- Encyclopaedia Britannica — International Monetary Fund