29 March 2012
The BRICS grouping of influential emerging economies – Brazil, Russia, India, China and South Africa – have taken another step towards establishing a development bank that could one day rival the World Bank.
Indian Prime Minister Manmohan Singh, in a statement issued after the 4th BRICS summit in New Delhi on Thursday, said the leaders of the five countries had considered a proposal to set up a BRICS-led South-South Development Bank, funded and managed by the BRICS and other developing countries.
Such a bank could help its member countries pool resources for infrastructure development and to lend among themselves during difficult global times.
“We have directed our finance ministers to examine the proposal and report back at the next summit,” Singh said.
At the same time, the BRICS leaders put pressure on the International Monetary Fund (IMF) to speed up changes to its governance structure in order to better represent the developing world.
The rapid recovery of the BRICS economies from the 2008-09 global financial crisis had “highlighted their role as growth drivers of the global economy,” Singh said.
BRICS push for trade in local currencies
Also on Thursday, the export-import banks of the five BRICS countries signed two pacts aimed at promoting trade in local currencies among BRICS members – a move seen as replacing the US dollar as the main unite of intra-BRICS trade.
The “Master Agreement In Extending Credit Facility” in local currencies, and the “BRICS Multilateral Letter Of Credit Confirmation Facility Agreement” were signed by the Brazilian Development Bank, Russia’s State Corporation Bank for Development and Foreign Economic Affairs, India’s Exim Bank, the China Development Bank Corporation and the Development Bank of Southern Africa.
The agreements would “boost trade among us by offering credit in our local currencies”, Singh said, adding that the BRICS trade ministers, meeting at the BRICS Business Forum on Wednesday, had agreed to strengthen intra-BRICS trade and investment linkages.
Intra-BRICS trade, currently standing at about US$230-billion, has the potential of surging to $500-billion by 2015.