BRICS Bank to fo­cus on fund­ing in­fra­struc­ture devel­op­ment

World Bank ready to work closely with bank

The Pak Banker - - COMPANIES/BOSS -

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.

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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.

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