The correct answer is Option 3: Both 1 and 2.

Explanation:

1. IMFC discusses matters of concern affecting the global economy, and advises the International Monetary Fund (IMF) on the direction of its work.

The International Monetary and Financial Committee (IMFC) is a forum for cooperation among the finance ministers and central bank governors of the 190 member countries of the International Monetary Fund (IMF). The IMFC meets twice a year, usually in April and October, to discuss matters of concern affecting the global economy, review the work of the IMF, and advise the IMF on the direction of its work.

The statement, "IMFC discusses matters of concern affecting the global economy, and advises the International Monetary Fund (IMF) on the direction of its work" is, therefore, correct.

2. The World Bank participates as an observer in IMFC`s meetings.

The World Bank Group (WBG) is a global financial institution that provides loans, grants, and technical assistance to developing countries for various purposes, such as reducing poverty, improving infrastructure, and promoting economic growth. The World Bank participates in the meetings of the IMFC as an observer, along with other international organizations, such as the World Trade Organization (WTO), the Organisation for Economic Co-operation and Development (OECD), and the Financial Stability Board (FSB).

The statement, "The World Bank participates as an observer in IMFC`s meetings" is, therefore, correct.

In conclusion, both statements are correct. The IMFC discusses matters of concern affecting the global economy and advises the IMF on the direction of its work, and the World Bank participates as an observer in IMFC`s meetings.