Keep up with the news by installing RT’s extension for . Never miss a story with this clean and simple app that delivers the latest headlines to you.

 

​BRICS countries near development bank deal to rival IMF, WB

Published time: July 09, 2014 15:51
Edited time: July 11, 2014 12:27
President of the Federative Republic of Brazil Dilma Vana Rousseff, Prime Minister of the Republic of India Manmohan Singh, second left, President of the Russian Federation Vladimir Putin, President of the People's Republic of China Xi Jinping and President of the Republic of South Africa Jacob Zuma, from left, pose for group photographs. (RIA Novosti)

President of the Federative Republic of Brazil Dilma Vana Rousseff, Prime Minister of the Republic of India Manmohan Singh, second left, President of the Russian Federation Vladimir Putin, President of the People's Republic of China Xi Jinping and President of the Republic of South Africa Jacob Zuma, from left, pose for group photographs. (RIA Novosti)

The emerging economies of Brazil, Russia, India, China and South Africa, are a couple of days from agreeing the $100 billion BRICS development bank, as well as a $100 billion currency pool. It could challenge global lenders like the IMF and World Bank.

The bank will be called the New Development Bank, and will provide finance for infrastructure projects. Its creation will meet the needs of emerging and poorer economies according to Russian Finance Minister Anton Siluanov.

In a speech Wednesday he confirmed the funding would be divided equally, Russia will contribute $2 billion in initial capital for the BRICS bank over seven years.

The bank will start with $10 billion in cash and $40 billion in guarantees. The $50 billion will be eventually built up to $100 billion.

The bank will be able to start lending in 2016, the minister says.

The final decisions concerning the creation of the bank are expected to be made by the BRICS leaders at a summit in Brazil on 14-16 July.

Apart from the BRICS countries other UN members may also participate in the bank’s development, but their total share won’t exceed 45 percent.

The location of the headquarters is still not decided, but Siluanov said the two favorite cities are Shanghai and New Delhi.

BRICS leaders are also expected to sign an agreement to establish an additional $100 billion fund to steady the currency markets.

"We have reached an agreement that, in the current conditions of capital volatility, it is important for our countries to have this buffer a so-called “mini-IMF”- a financial organization which could quickly react to capital outflow, providing liquidity in hard currency, in particular in US dollars,” Siluanov said.

The need arose after the long inflow of cheap dollars which fueled a boom in the BRICS countries for a decade reversed into a sharp outflow in 2013.

Even though the new bank will be a small rival to the World Bank which has capital of $223 billion, or the International Monetary Fund, it will serve as a reminder to the US of the shift in the global economy towards the developing world.

Currently BRICS countries make up over 40 percent of the world’s population and account for about 20 percent of global GDP.

Comments (51)

 

Chappy 27.08.2014 04:57

The end of capitalism. Hope New Development Bank is govern by the bestprinciples of Leninism.

 

Douglas Hayse 16.07.2014 12:25

Bye bye USD doom is near, the replacement reserve currency is starting up.

 

Giovanni 16.07.2014 10:45

The world will only benefit from BRICS NRgy!!!

View all comments (51)
Add comment

Authorization required for adding comments

Register or

Name

Password

Show password

Register

or Register

Request a new password

Send

or Register

To complete a registration check
your Email:

OK

or Register

A password has been sent to your email address

Edit profile

X

Name

New password

Retype new password

Current password

Save

Cancel

Follow us

Follow us