BRICS Bank to focus on funding infrastructure development
World Bank ready to work closely with bank
DUBLIN: The proposed Bank announced by the BRICS leaders at their summit here will focus on infrastructure development due to insufficient longterm financing and foreign direct investment, especially investment in capital stock.
These are all areas of acute interest to India, said government sources as well as Indian industrialists attending the Fifth BRICS summit, which ended here.
But the specifics of the scale, location and structure of the Bank will be worked out over the coming months, and some finality is likely to be achieved by September when the five leaders are likely to meet on the sidelines of the next G 20 summit in St. Petersburg.
Side by side with the Bank, the BRICS summit also saw action on another front — creation of a Contingent Reserve Arrangement (CRA) amongst BRICS countries. This too has its genesis last year when, meeting on the sidelines of the G-20 summit in Los Cabos (Mexico), the BRICS leaders asked their finance ministers and central bank governors to explore the construction of a financial safety net. “This [the BRICS Bank] is now a reality…We gave a big idea, and this is a good beginning. We should be able to influence discussions and decisions in the G-20, International Monetary Fund and other multilateral institu-
MUMBAI: Describing the BRICS Development Bank as a significant undertaking, the World Bank has said that it will stand ready and work closely with the new bank to end poverty throughout the developing world. BRICS Summit in Durban decided to launch a development bank and create a $100 billion fund for contingency reserve arrangement to tackle any emergency financial crisis in member countries. “We welcome the announcement of the establishment of a BRICS development bank and stand ready to work closely with the new bank to end poverty and build shared prosperity throughout the developing world,” the World Bank said in a statement. “Establishing a development bank is a significant undertaking,” the Washingtonbased global lender said. “The World Bank will work closely to partner with regional development banks in a bid to enhance the effectiveness of our collective work,” it said. Chinese Finance Minister Lou Jiwei said the BRICS (Brazil, Russia, India, China, South Africa) development bank would be “complementary” to the existing development institutions such as the World Bank and the Asian Development Bank.
the tions,’’ said Union Finance Minister P. Chidambaram who quarterbacked long-drawn out discussions on the setting up the Bank on behalf of India.
Federation of Indian Chambers of Commerce and Industry (FICCI) President Naina Lal Kidwai pointed out that long-term financing market in many developing countries, including India, was relatively undeveloped. The Bank’s resolve to prioritise investments in capital stock, she felt, would spur domestic and other financial institutions to step in also.
Emerging Summit deliberations, Prime Minister Manmohan Singh and Presidents of Brazil, China, South Africa and Russia devoted a separate statement on the Bank, thus signalling its importance in meeting the unmet infrastructure requirements of the developing world. The shortcomings in the orientation of the World Bank, said the leaders, constrained global aggregate demand. BRICS co-operation towards more productive use of global financial resources could make a positive contribution to addressing this problem, they added.