Q. Consider the following statements regarding Extended Fund Facility (EFF):
1. It is lending facility of the IMF.
2. It was established to help countries to overcome poverty restraints.
Which of statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A

The Extended Fund Facility is lending facility of the Fund of the IMF and it was established in 1974 to help countries address medium- and longer-term balance of payments problems.  

  • The EFF is prescribed for a country who is suffering from balance of payment problem caused by structural weaknesses and who need fundamental economic reforms.  
  • The use of the facility has increased substantially in the recent crisis period. 

Source: TMH Ramesh Singh