JOIN USBRICS plans $100-b development bank
In a major achievement for India in its campaign for reforming the international financial architecture, BRICS nations on Wednesday decided to establish a new development bank to finance infrastructure and to create a $100 billion Contingency Reserve Arrangement to tackle any financial crisis in the emerging economies.
The decision was taken at the BRICS Summit here which also launched a Business Council to encourage investment and trade in member countries and to expand business cooperation.
Leaders of the inter-continental grouping including Prime Minister Manmohan Singh, met here this morning for an extended session and accepted the report of their finance ministers saying “we are satisfied that the establishment of a New Development Bank is feasible and viable”.
“We considered that developing countries face challenges of infrastructure development due to insufficient long-term financing and foreign direct investment, especially investment in capital stock. “This constrains global aggregate demand. BRICS cooperation towards more productive use of global financial resources can make a positive contribution to addressing this problem,” the leaders said in a statement after the two-hour summit.
However, the leaders did not decide on the capital for the proposed bank leaving it to the finance ministers to negotiate this and other issues before September. The development bank, mooted by India at the last year’s Summit in Delhi, was originally proposed to be started with a capital of $50 billion with $10 billion from each of the members.
Incidentally, differences appear unresolved with reservations from South Africa and Brazil over the contribution.
Hailing the development bank initiative along with the other leaders, Singh said it gave him great satisfaction to note that one of the ideas that they discussed first in New Delhi — that of instituting a mechanism to recycle surplus savings into infrastructure investments in developing countries — has been given a concrete shape during the Durban Summit.
“Our finance ministers will now work to develop the details of the project,” he told a joint press conference with the other leaders. Besides host President Jacob Zuma, new Chinese President Xi Jinping, Russian President Vladimir Putin and Brazilian President Dila Rouseff participated in the summit.