Question map
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?
Explanation
The correct answer is option C because both statements are correct.
The International Monetary and Finance Committee (IMFC) meets twice a year to discuss matters on common concerns affecting global economy and accordingly advises BoG[1] (Board of Governors of the IMF). This confirms that Statement 1 is correct—IMFC discusses matters of concern affecting the global economy and advises the IMF on its work direction.
Many international institutions including World Bank participate as observers in the meetings of IMFC.[2] This clearly establishes that Statement 2 is also correct—the World Bank does participate as an observer in IMFC meetings.
Since both statements are factually accurate as per the source documents, option C (Both 1 and 2) is the correct answer. The IMFC serves as one of the two Ministerial Committees that advise the IMF's Board of Governors, with the World Bank and other international institutions participating in an observatory capacity.
Sources- [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
- [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
PROVENANCE & STUDY PATTERN
Full viewThis is a classic 'Static masquerading as Current Affairs' question. While IMFC meetings happen annually, the structure is pure static theory found in standard Economy textbooks (Chapter: International Economic Institutions). If you skipped the organizational hierarchy of the Bretton Woods twins, you missed a sitter.
This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.
- Statement 1: Does the International Monetary and Financial Committee (IMFC) discuss matters of concern affecting the global economy?
- Statement 2: Does the International Monetary and Financial Committee (IMFC) advise the International Monetary Fund (IMF) on the direction of the IMF's work?
- Statement 3: Does the World Bank participate as an observer in International Monetary and Financial Committee (IMFC) meetings?
- Explicitly states IMFC is a ministerial committee advising the Board of Governors.
- Says IMFC 'meets twice a year to discuss matters on common concerns affecting global economy'.
- Links IMFC deliberations to advisory role for the Board of Governors (policy impact).
- Explicitly states the Board of Governors (BoG) is the top-most decision-making body of the IMF.
- States the BoG is advised by two ministerial committees and names the International Monetary and Finance Committee (IMFC) as one of them.
- Says the IMFC meets twice a year to discuss common concerns affecting the global economy and accordingly advises the BoG — linking IMFC to guidance on IMF direction.
- Explicit statement that 'Many international institutions including World Bank participate as observers in the meetings of IMFC.'
- Same snippet also notes IMF–World Bank joint interactions (Development Committee), showing institutional interaction context.
- [THE VERDICT]: Sitter. Directly lifted from the 'International Economic Institutions' chapter of standard books like Nitin Singhania (Page 513) or Ramesh Singh.
- [THE CONCEPTUAL TRIGGER]: The governance structure of the Bretton Woods Twins (IMF & World Bank) and their internal decision-making hierarchy.
- [THE HORIZONTAL EXPANSION]: Map the hierarchy: Board of Governors (Top) > IMFC (Advisory) > Executive Board (Day-to-day). Compare IMFC with the 'Development Committee' (Joint IMF-WB body). Memorize the 5 currencies in the SDR basket. Know the difference between 'Reserve Tranche' and 'Credit Tranche'.
- [THE STRATEGIC METACOGNITION]: Don't just study 'What IMF does' (loans/surveillance); study 'How IMF works' (internal committees). UPSC loves administrative minutiae of major bodies (UN, WTO, IMF, WB)—specifically who advises whom and who sits as an observer.
Reference [1] names the International Monetary and Financial Committee (IMFC) as a ministerial committee that discusses common concerns affecting the global economy and advises the Board of Governors.
High-yield for governance questions on IMF structure; helps answer questions on who deliberates global economic issues within IMF and how advice flows to decision-making bodies. Learn by mapping IMF bodies and their functions for comparatives and polity-economy questions.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
Reference [1] links the Board of Governors with two ministerial committees (including IMFC) that advise it on global economic concerns.
Important for questions on IMF decision-making, quota/SDR approvals and representation; connects to topics on international economic institutions and their internal checks. Revise by diagramming roles (BoG, Executive Board, ministerial committees) and related powers.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
- Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > 13.14 International Monetary Fund (IMF) and World Bank > p. 396
References [2] and [8] describe IMF surveillance and its two periodic reports (World Economic Outlook and Global Financial Stability Report) that assess global risks—the types of 'matters of concern' IMFC would discuss.
Frequently asked in economy sections about IMF functions and instruments; links IMF analytical outputs to policymaking and multilateral discussions. Memorise report names, periodicity and focus, and relate them to IMF surveillance role.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Surveillance > p. 514
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Global Financial Stability Report (GFSR) > p. 519
The BoG is described as the IMF's top decision-making organ; understanding it is key to knowing who receives advice from ministerial committees like the IMFC.
High-yield for governance questions: UPSC often asks about institutional hierarchies and decision-makers. Links to topics on IMF reform, voting power and the role of member states. Learn by mapping IMF organs (BoG, Executive Board, ministerial committees) and their functions from standard textbooks.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
The IMFC is explicitly named as a ministerial committee that advises the BoG and meets periodically to discuss global economic concerns.
Knowing specific advisory bodies and their roles helps answer questions on how policy direction is shaped at the IMF, and on which bodies meet at ministerial level. Memorise roles, meeting frequency and whom they advise for comparatives and governance questions.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
The references group IMF topics under governance structure and note that ministerial committees advise the BoG — situating IMFC within IMF governance.
Useful for broader questions linking IMF functions (surveillance, lending, quotas) to who sets direction. Helps in essay/answer-writing on institutional reforms and accountability. Prepare by consolidating governance topics across sources and practising one-paragraph explanations of each body.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > INTERNATIONAL ECONOMIC INSTITUTIONS > p. 511
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
The key reference explicitly states that the World Bank is among institutions that participate as observers in IMFC meetings.
Understanding which organisations attend IMF bodies (members vs observers) is high-yield for governance and international finance questions; it clarifies roles in global policy fora and helps answer questions on institutional interactions. Learn by mapping IMF committees and typical observer lists from core texts.
- Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Board of Governors > p. 513
The 'Development Committee' (Joint Ministerial Committee of the Boards of Governors of the Bank and the Fund). Unlike IMFC which is IMF-focused, the Development Committee is a JOINT forum of both IMF and World Bank that advises on development issues.
Use the 'Bretton Woods Twins' Logic. The IMF and World Bank were born together and have complementary mandates. It would be administratively illogical for the World Bank to be excluded from the IMF's key strategy meetings. Therefore, 'Observer Status' (Statement 2) is a highly probable administrative courtesy.
Connect IMFC to Mains GS-2 (Global Groupings): The IMFC is the primary battleground for 'Quota Reforms'. When India demands a greater say in global finance, it is arguing for changes in the voting shares discussed in these very committees.