|Follow us on:|
The BRICS Bank launched last year will fund infrastructure projects in Brazil, Russia, India, China and South Africa, and challenge the dominance of the Western-led World Bank and the IMF.
“The new development bank will mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, to supplement existing efforts of multilateral and regional financial institutions for global growth and development,” read an Indian government statement on Wednesday.
“The establishment of the bank would also reflect the close relations among BRICS countries, while providing a powerful instrument for increasing their economic cooperation,” it said.
The Agreement will enter into force and the Bank will begin operations only after all member countries deposit their instruments of ratification with Brazil.
Central Banks of the member countries will also have to finalize an Inter-Central Bank Agreement containing the operational details of swap transactions and the Standing Committee’s Operational Procedures (SCOP) before the arrangement can be operational.
Russia has agreed to provide $2 billion dollars from the federal budget for the bank over the next seven years.
Russian Finance Minister Anton Siluanov is likely to become the bank’s first Chairman of the Board of Governors while India will nominate the first President of the BRICS Bank.
The first board meeting is supposed to take place in April in the Russian city of Ufa and the Bank is expected to start fully functioning by the end of 2015, according to the Russian Finance Ministry.
South African Trade and Industry Rob Davies said last year that although the capital of the New Development Bank and the Contingency Reserve Arrangement had been set at $100 billion each, this did not mean that this capital would necessarily be held in US dollars.
“We want to move away from the same old, same old way of doing things. What currencies the capital will be held in is something that will be part of the Sherpa process with the pace set by Brazil, but we expect substantive progress by the time of the next BRICS summit in Russia in June 2015,” he said.
The BRICS combined GDP grew 300 per cent in the last decade as opposed to 60 per cent growth registered by the developed world.
BRICS launched a $100 billion development bank and a currency reserve pool in July this year in their first concrete step toward reshaping the Western-dominated international financial system.
“For the past 15 years, the BRICS have been seen as the world’s best hope for sustainable growth. These five countries, representing 40 per cent of the world’s population and 25 per cent of its GDP in 2013, recorded growth rates 4 to 5 times greater than those of the US, Europe and Japan, and threatened to displace them as the world’s most important economic powers in another 20 years or so,” say Prof. Ingo Walter and Prof. Roy C. Smith of the New York University, writing for The BRICS Post.