Previous Year Question

The International Monetary Fund—IMF provides financial assistance to its member countries when they face actual or potential balance-of-payments problems.

The IMF was conceived at the Bretton Woods Conference in July 1944. Its Articles of Agreement entered into force in December 1945, and it began financial operations in 1947.

The principal objectives and functions of the IMF are:

• Promoting international monetary cooperation.

• Supporting exchange-rate stability.

• Facilitating balanced expansion of international trade.

• Providing temporary financial assistance to members facing balance-of-payments difficulties.

• Conducting surveillance of the global economy and member economies.

• Providing capacity development and technical assistance to governments and central banks.

Testing the options

Option (a) is incorrect. The IMF cannot lend to any country irrespective of its status. A country must be an IMF member to obtain IMF financial assistance.

Option (b) is incorrect. IMF lending is not restricted to developed countries. Developed, emerging and developing member countries may receive assistance when they satisfy the requirements of the relevant lending facility. Concessional financing facilities are also available for low-income members.

Option (c) is correct. The IMF provides financial assistance only to member countries. Access depends on the member’s balance-of-payments need, debt sustainability and the conditions of the relevant IMF facility.

Option (d) is not correct as an independent proposition. Programme resources may be received and administered through the member’s central bank or fiscal agency on behalf of the country. The basic eligible entity for IMF lending, however, is the member country, not any central bank anywhere in the world.

IMF versus the World Bank

The IMF does not generally provide project-specific loans for constructing a road, dam or school. Its financing principally addresses macroeconomic and balance-of-payments stability.

The World Bank Group, in contrast, provides financing for development projects, institutional reforms and long-term development programmes.

IMF lending may be accompanied by policy conditions, known as conditionality. These are intended to address the economic problems that created the need for financial assistance.

Current position (2026)

Following Liechtenstein’s admission in October 2024, the IMF has 191 member countries. IMF financial assistance remains available only to its members.

Major IMF lending arrangements include the Stand-By Arrangement, Extended Fund Facility, Flexible Credit Line and concessional facilities for low-income countries under the Poverty Reduction and Growth Trust.