BRICS bank to get go­ing in two yrs

In­dia to head the agency for first six years

The Political and Business Daily - - FRONT PAGE -

IN­DIA will have the Pres­i­dency of the BRICS' $100 bil­lion New De­vel­op­ment Bank for six years with head­quar­ters in China that will be­come op­er­a­tional in about two years, a ma­jor step for re­shap­ing the in­ter­na­tional fi­nan­cial sys­tem dom­i­nated by the West.

In­dia's pres­i­dency will be fol­lowed by Brazil and Rus­sia who will have five years term each un­der an agree­ment reached af­ter in­tense ne­go­ti­a­tions among the five coun­try-group­ing BRICS -Brazil, Rus­sia, In­dia, China and South Africa.

The an­nounce­ment about the bank and a $100 bil­lion Cur­rency Re­serve Ar­range­ment (CRA) that will help coun­tries to deal with short-term liq­uid­ity pres­sures, was made last night at the con­clu­sion of the VIth BRICS Sum­mit here at­tended by Prime Min­is­ter Naren­dra Modi, Pres­i­dents Vladimir Putin of Rus­sia, Xi Jin­ping of China, Ja­cob Zuma of South Africa and Dilma Rouss­eff of Brazil.

In­dian of­fi­cials said a pe­riod of six months had been pro­vided for rat­i­fi­ca­tion of the agree­ment by re­spec­tive Par­lia­ments of the mem­ber-na­tions ex­cept in the case of In­dia where no Par­lia­men­tary en­dorse­ment was re­quired. The mem­ber- coun­tries have six months there­after, to pay the first of the seven in­stal­ments.

Given this time frame, the bank is ex­pected to get go­ing in about two years, of­fi­cials said.

For CRA, China will con­trib­ute max­i­mum at $41 bil­lion fol­lowed by In­dia, Rus­sia, Brazil with $18 bil­lion each and South Africa with $five bil­lion to have a pos­i­tive pre­cau­tion­ary ef­fect, help coun­tries fore­stall short-term liq­uid­ity pres­sures, pro­mote fur­ther BRICS co­op­er­a­tion as also strengthen the global fi­nan­cial safety net.

An­nounc­ing the set­ting up of the bank with head­quar­ters in Shang­hai, Dilma said, "It will help con­tain the vo­latil­ity faced by di­verse economies as a re­sult of the ta­per­ing of the United States' pol­icy of mon­e­tary ex­pan­sion."

"It is a sign of the times, which de­mand re­form of the IMF," she told re­porters at the close of the sum­mit.

Seen as first ma­jor achieve­ment of the BRICS coun­tries since they got to­gether in 2009 to press for a big­ger say in the world mon­e­tary or­der, cre­ated by the West and cen­tered on the IMF and the World Bank, the set­ting up of the bank was prompted to seek co­or­di­nated ac­tion fol­low­ing an ex­o­dus of cap­i­tal from emerg­ing mar­kets in view of the global melt­down.

Wel­com­ing the Sum­mit de­ci­sion, Modi said, "The vi­sion of a New De­vel­op­ment Bank, at the Delhi Sum­mit two years ago, has been trans­lated into a re­al­ity, in For­taleza.

– PTI

Naren­dra Modi with Rus­sian Pres­i­dent Vladimir Putin, Brazil­ian Pres­i­dent Dilma Rouss­eff, Chi­nese Pres­i­dent Xi Jin­ping and South African Pres­i­dent Ja­cob Zuma at BRICS sum­mit

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