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Difficulty: EasyInternational Economic Organizations and Regional Integration (ECOWAS, OPEC, IMF, World Bank, WTO, AfDB)

A member country facing temporary short-term foreign exchange shortages and balance of payments deficits requires financial assistance to stabilize its international currency reserves. Which international economic organization is primarily responsible for providing this short-term balance of payments support?

  1. International Monetary Fund (IMF)Answer
  2. B
    World Bank
  3. C
    World Trade Organization (WTO)
  4. D
    African Development Bank (AfDB)

Answer

International Monetary Fund (IMF)
The International Monetary Fund (IMF) was established at Bretton Woods with the primary objective of promoting international monetary cooperation, fostering exchange rate stability, and extending short-term financial accommodation to member nations suffering from balance of payments deficits.

Step-by-Step Solution

1
Identify the primary economic need presented in the scenario.
The scenario requires short-term financial aid for balance of payments disequilibrium and foreign reserve stabilization.
Different multilateral organizations handle distinct financial timeframes and economic objectives.
2
Match the identified need with the core mandate of global economic organizations.
The International Monetary Fund (IMF) provides short-term financial support and credit facilities specifically for balance of payments adjustment.
Whereas the World Bank and regional banks provide long-term capital loans, the IMF focuses on short-term monetary stability.

Key Concept

Functions and Mandates of International Financial Institutions (IMF vs. World Bank)
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Topics

International Economic Organizations and Regional Integration (ECOWAS, OPEC, IMF, World Bank, WTO, AfDB)

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