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 :
(R) is correct and (A) is wrong.
The two Bretton Woods institutions have different mandates: the IMF looks after international monetary stability and short-term balance of payments support, while the World Bank (IBRD and IDA) finances long-term reconstruction and development projects.
Assertion (A) is wrong: a member facing a balance of payments crisis does not go to the World Bank for accommodation to meet that crisis; the World Bank's lending is for development purposes, not for correcting payment imbalances.
Reasoning (R) is correct: providing temporary financial assistance to members facing balance of payments difficulties (through stand-by arrangements, extended fund facility and similar facilities) is a core function of the IMF.
Since R is true and A is false, the question of R explaining A does not arise.
Hence, the answer is (R) is correct and (A) is wrong..
Similar Questions
Any country consistently facing balance of payment deficiency can approach :
The instrument chosen for enhancement of international liquidity is :
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 :
Any country consistently facing balance of payment deficiency can approach :
