Any country consistently facing balance of payment deficiency can approach :
IMF
A balance of payments deficiency means a country's foreign exchange outflows persistently exceed its inflows, so it needs short- to medium-term external financing to stabilise its external accounts.
The International Monetary Fund was created at Bretton Woods precisely to lend to member countries facing balance of payments difficulties, through arrangements such as stand-by credit and the extended fund facility, usually with adjustment conditions.
The World Bank (IBRD) finances long-term development and reconstruction projects, not balance of payments gaps, so neither The World Bank alone nor the pairing of the IMF with the IBRD is the institution a country approaches for this purpose.
The Smithsonian Institution is a United States museum and research body; the 1971 Smithsonian Agreement only realigned exchange rates and created no lending facility.
Hence, the answer is IMF.
Similar Questions
The instrument chosen for enhancement of international liquidity is :
Assertion (A) : The member nations, consistently finding balance of payments crisis, may approach the World Bank seeking financial accommodation to mitigate the cirsis.
Reasoning (R) : The member nations facing balance of payments crisis can approach the IMF seeking redressal of the BOP crisis.
Codes :
The different forms of IMF assistance are given below. Identify the one which is mainly meant for Less Developed Countries (LDCs)
Important Questions from IMF
- IMF provides __________ assistance to correct the Balance of payment disequilibrium of member countries.
- Which one among the following is not correct ?
- Statement (I) : Developing countries can borrow more than their quota under Extended Fund Facility (EFF) of IMF.
Statement (II) : The Extended Fund Facility (EFF) was created in 1984 to help the developing countries over longer period upto 3 years. Match the items of List – I with those of List – II with regard to international monetary fund’s various schemes :
List – I List – II a. Extended Fund Facility (EFF) i. Repayment period 4 to 10 years b. Stan Arrangements ii. Repayment period 3 to 5 years c. Supplemented Reserve Fund (SRF) iii. Repayment period 2 to 5 years d. Poverty Reduction and Growth Facility (PRGF) iv. Repayment period 10 years Codes :
The instrument chosen for enhancement of international liquidity is :
