Question

Given below are two statements: one is labelled as Assertion (A) and the other is labelled as Reason (R).
Assertion (A): IMF is an international organisation which works to ensure the stability of international monetary system.
Reason (R): All IMF members enjoy an equal say in decision-making.
In the light of the above statements, choose the most appropriate answer from the options given below:

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
• B. Both (A) and (R) are correct but (R) is not the correct explanation of (A)
• C. (A) is correct but (R) is not correct
• D. (A) is not correct but (R) is correct

Hint:

In the IMF and World Bank, voting power is proportional to money (quotas). It is not "one country, one vote."

Answer 1

The Correct Option is C

Concept: The International Monetary Fund (IMF) is a major financial agency of the United Nations. Its primary purpose is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries to transact with each other.

Step 1: Evaluating the Assertion (A).
Assertion (A) is correct. The IMF was established in 1944 at the Bretton Woods Conference. Its core mission is to promote international monetary cooperation, facilitate the expansion and balanced growth of international trade, and provide temporary financial assistance to countries facing balance-of-payments difficulties.

Step 2: Evaluating the Reason (R).
Reason (R) is incorrect. Unlike the United Nations General Assembly, where each country has one vote, the IMF does not operate on the principle of "equal say." Instead, it uses a weighted voting system based on a quota system. Each member country is assigned a quota based on its relative size in the global economy.

Step 3: Understanding Weighted Voting.
Wealthier, more economically powerful nations (like the U.S., Japan, and Germany) have larger quotas and, consequently, more voting power. This means that decision-making is dominated by a few developed nations, which is a frequent point of criticism from developing countries.