18 November 2014
President Jacob Zuma flanked by international relations minister Maite Nkoana-Mashabane and finance minister Nhlanhla Nene during the informal BRICS meeting. (Image: GCIS)
An interim board of directors has been set up by BRICS to lead the next phase to establish the National Development Bank (NDB), an institution similar to the International Monetary Fund that will support the five emerging national economies.
This was announced by BRICS (Brazil, Russia, India, China and South Africa) during an informal meeting on the first day of the G20 Leaders’ Summit held in Brisbane, Australia from 15 to 16 November, according to a statement from the South African Department of International Relations and Cooperation (DIRCO).
Appointment of NDB president
The leaders of BRICS also recommended their finance ministers to appoint an NDB president and vice-president well in advance of the next BRICS Summit to be held in the Russian city of Ufa in 2015.
The bank, which will be headquartered in Shanghai, China, will focus on BRICS infrastructure projects, but will be also open to new members from the United Nations. Each BRICS country will contribute US$2-billion to the bank’s funds from their budgets over the next seven years. The bank’s authorized capital will be set at US$100 billion.
BRICS cooperation at new level
BRICS leaders underscored that the signing of the agreements establishing the NDB and the Contingent Reserve Arrangement (CRA) brought BRICS cooperation “to a fundamentally new level with the creation of instruments to contribute to the stability of the international financial system’, according to DIRCO.
“The Leaders asked their Finance Ministers and Central Bank Governors to ensure that, by the next BRICS Summit, the CRA Working Group concludes the procedural rules and operational guidelines of the Governing Council and the Standing Committee of the CRA. They also asked their Central Bank Governors to ensure that the Inter-Central Bank Agreement foreseen in the CRA be concluded by the Summit in Russia.’
On the G20 Leaders’ Summit, BRICS leaders discussed some of the issues on the agenda, which include measures to promote growth and job creation; investment and infrastructure; trade; and cooperation on tax matters.
Six years after the international financial crisis, BRICS leaders noted that a full recovery is yet to be experienced by member countries. However, emerging market economies have been contributing to global economic activity by sustaining high growth rates, despite adverse circumstances and spill-overs from policies of major advanced economies, especially monetary policies.
“The Leaders noted the G20 efforts, but underscored that more needs to be done to support global demand in the short-run, especially by advanced economies, and to promote an increase in investment and long-run growth potential. They underscored that investment and economic reforms are critically important to boosting demand and lifting long-term growth. Emerging market economies remain in general well prepared to face external shocks,’ said DIRCO.
The BRICS leaders also noted their concern at the non-implementation of the 2010 International Monetary Fund reforms, and its impact on the Fund’s legitimacy and credibility. They said in the event that the United States fails to ratify the 2010 reforms by the end of 2014, they called on the G20 to schedule a discussion of the options for next steps that the IMF has committed to present in January 2015.
The Ebola epidemic is of concern and has severe economic and social impact, the BRICS leaders noted. They also expressed their commitment to work with the international community in the response to this epidemic and supported efforts made by the United Nations and its agencies, including the World Health Organization, as well as other institutions.
In addition, BRICS leaders reaffirmed their commitment to reinforce full-fledged intra-BRICS cooperation as agreed at the Fortaleza Summit in Brazil earlier this year. They said they look forward to the formulation of a long-term economic cooperation framework to forge closer BRICS partnership.