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 an observer in IMFC’s meetings. Which of the statements given above is/are correct?

Both statements are correct, so the answer is C. The IMFC is the advisory committee of the IMF's Board of Governors. It has about 24 members drawn from the Board's constituencies, and it advises the IMF on the supervision and management of the international monetary system and on the direction of the Fund's work. That is Statement 1.

Statement 2 is also correct. The World Bank, along with other international bodies, attends IMFC meetings as an observer, usually through its President. Observer status means it can take part in discussions but does not vote or sit as a member.

• Option A is wrong because it rejects Statement 2, which is correct.
• Option B is wrong because it rejects Statement 1, the IMFC's core advisory role.
• Option D is wrong because both statements hold.

The core concept is the IMF's governance structure: Board of Governors, Executive Board, and the IMFC as the policy-level advisory body. For Mains, this links to debates on global financial architecture and reform of IMF quota and voice for developing economies. The IMFC's parallel body on development issues is the Development Committee, which is often confused with it.

Trap: aspirants see "observer" and assume the World Bank is excluded from the IMF's governing machinery. Observer status is a participation right, and it does not mean exclusion.