Question

Assertion [A]: The International Monetary Fund (IMF) provides precautionary financing in case of financial emergencies to member countries.

Reason [R]: It has been mandated to ensure the stability of the international monetary system.

Read the above given statements carefully and select the option that is true.

• A. Both A and R are true. R is the incorrect explanation of A.
• B. Both A and R are true. R is the correct explanation of A.
• C. A is true but R is false.
• D. Both A and R are false.

Answer 1

The correct option is A Both A and R are true. R is the incorrect explanation of A.

The IMF’s fundamental mission is to ensure the stability of the international monetary system. It monitors the economic and financial policies of its member countries and provides technical advice on needed policy adjustments. It provides precautionary financing to countries with balance of payments difficulties to help them rebuild their international reserves and stabilize their currencies. The IMF also engages with governments around the world to strengthen and modernise their financial institutions. Thus, it helps its member countries to restore conditions for strong economic growth.