UPSC Prelims 2016 Q15: Indian Economy – International Institutions & Reports
With reference to the International Monetary and Financial Committee (IMFC), consider the
following statements:
1. IMFC discusses matters of concern affecting the global economy, and advises the International
Monetary Fund (IMF) on the direction of its work.
2. The World Bank participates as observer in IMFC's meetings.
Which of the statements given above is/are correct?
- (a) 1 only
- (b) 2 only
- (c) Both 1 and 2
- (d) Neither 1 nor 2
Answer: (c) Both 1 and 2
Explanation
International Monetary and Financial Committee (IMFC)
The IMFC is the main advisory body of the IMF's Board of Governors.
| Statement | Verdict | Fact |
|---|---|---|
| 1. IMFC discusses matters of concern affecting the global economy, and advises the IMF on the direction of its work | Correct | This is its stated function |
| 2. The World Bank participates as observer in IMFC's meetings | Correct | The World Bank and other institutions attend as observers |
Key facts:
| Feature | Detail |
|---|---|
| Members | 24, usually finance ministers or central bank governors |
| Meets | Twice a year: Spring Meetings and Annual Meetings |
| Decisions | By consensus; no formal voting |
| Sister body | Development Committee (joint IMF and World Bank) |
Answer: (c) Both 1 and 2.
Why each option is right or wrong
- (a) Incorrect. Statement 2 is also true: the World Bank takes part as an observer.
- (b) Incorrect. Statement 1 is also true: the IMFC advises the IMF on its work.
- (c) CORRECT. The IMFC advises the IMF, and the World Bank is an observer at its meetings.
- (d) Incorrect. Both statements about the International Monetary and Financial Committee are true.
Key point
IMFC: 24-member advisory committee of the IMF Board of Governors; meets twice a year; World Bank attends as observer.
Remember
IMFC advises the IMF; World Bank observes.
Common mistakes
- Thinking the IMFC takes binding decisions; it only advises.
- Confusing the IMFC with the Development Committee.
- Assuming the World Bank is a member and not an observer.
Exam tip
IMFC = steering committee of the IMF. Advice, not orders.
Sources
- International Monetary Fund — A Guide to Committees, Groups, and Clubs
- International Monetary Fund — IMF Governance Structure