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?

The correct answer is Both 1 and 2. Both statements about the International Monetary and Financial Committee (IMFC) are accurate. Let us examine each statement in detail to understand why.

Understanding the IMFC — Background

The International Monetary and Financial Committee (IMFC) is a key advisory body of the International Monetary Fund (IMF). It was established in 1999, replacing the earlier Interim Committee. It meets twice a year — typically in April and October — coinciding with the IMF and World Bank Spring and Annual Meetings. The IMFC is composed of 24 members, mirroring the composition of the IMF's Executive Board, with each member representing a country or a group of countries.

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

This statement is correct. The IMFC's primary mandate is exactly this — to deliberate on matters pertaining to the global economy, international monetary and financial systems, and to provide strategic guidance and advisory input to the IMF on its work program and policies. It addresses issues such as:

• Global economic outlook and risks
• International financial stability
• Exchange rate and monetary policy coordination
• IMF's role in crisis prevention and resolution
• Governance and quota reforms within the IMF

The IMFC does not have formal decision-making powers; it operates in an advisory capacity. Its communiqués, issued after each meeting, signal the policy direction the IMF is expected to follow. This is precisely what Statement 1 describes, making it fully accurate.

Evaluating Statement 2: "The World Bank participates as observer in IMFC's meetings."

This statement is also correct. The IMFC meetings are not restricted solely to IMF member representatives. Several international institutions and bodies are invited to participate as observers, meaning they can attend and contribute to discussions without having voting rights or formal membership. The World Bank Group is one of the key observers at IMFC meetings. Other observers typically include representatives from:

• The United Nations (UN)
• The World Trade Organization (WTO)
• The Financial Stability Board (FSB)
• The Organisation for Economic Co-operation and Development (OECD)

The World Bank's observer status reflects the close institutional relationship between the IMF and the World Bank — both were founded at the Bretton Woods Conference in 1944, share overlapping mandates around global economic stability and development, and hold their major meetings concurrently. This coordination is facilitated precisely through mechanisms like observer participation in IMFC sessions.

Conclusion:

Since Statement 1 correctly describes the IMFC's advisory role to the IMF on global economic matters, and Statement 2 correctly identifies the World Bank as an observer at IMFC meetings, both statements are accurate. Therefore, the answer is Both 1 and 2.