Question

Given below are two statements :
Statement I : The International Monetary Fund (IMF) is an international organization that oversees those financial institutions and regulations that act at the international level.
Statement II : All the 189 members of IMF organization have equal say.
In the light of above statements, choose the correct answer from the options given below :

• A. Both statement I and statement II are true.
• B. Both statement I and statement II are false.
• C. Statement I is true, but statement II is false.
• D. Statement I is false, but statement II is true.

Hint:

IMF decision-making power is based on financial quotas, NOT equal representation. The US and G7 nations dominate voting rights, making statement II false!

Answer 1

The Correct Option is C

Concept: The International Monetary Fund (IMF) is an international financial institution established to promote international monetary cooperation, facilitate international trade, foster sustainable economic growth, and oversee international financial governance.

Step 1: Evaluating Statement I.
Statement I states that the IMF oversees financial institutions and regulations that operate at the international level. This is True. The IMF provides macroeconomic surveillance, policy advice, and financial assistance to member states experiencing balance-of-payments problems.

Step 2: Evaluating Statement II.
Statement II states that all member states of the IMF have equal say. This is False. Voting power in the IMF is not based on a "one-member, one-vote" democratic principle. Instead, voting weight is determined by a quota system based on each member nation's financial contribution and relative position in the world economy. As a result, powerful Western countries (the G7 nations, especially the United States) hold disproportionate voting power and decision-making influence.

Step 3: Conclusion.
Statement I is true, but Statement II is false. Thus, Option (C) is the correct choice.