Fortaleza: A shanghai-based development bank and reserve fund seen as alternative to Western-led institutions had been created by BRICS group on Tuesday. He also announced that the first president will be an Indian while the first board chair will hail from Brazil.
The development bank will have initial capital of $50 billion that could rise to $100 billion, funded equally by each nation to avoid concerns that one country has more power than the other.
The New Development Bank will mirror the Washington-based World Bank while the reserve is seen as a “mini-IMF.”
After drawn-out negotiations about the bank’s location, BRICS leaders agreed to put its headquarters in Shanghai.
The Contingent Reserve Arrangement will have $100 billion at its disposal to head off potential economic volatility linked to the United States exiting its stimulus policy.
China is making the biggest contribution, $41 billion, followed by $18 billion each from Brazil, India and Russia and $5 billion from South Africa.
The leaders of Brazil, Russia, India, China and South Africa agreed to launch the institutions to finance infrastructure projects and head off future economic crises.
President of Brazil Dilma Rousseff said, “We took the historic decision to create the BRICS bank and the reserve agreement — an important contribution to reconfigure the system of international economic governance.”
Rousseff pressed again for urgent changes in the International Monetary Fund’s voting shares “to reflect the unquestionable weight of emerging countries.”
Russian President Vladimir Putin claimed the agreements as “a very powerful way to prevent new economic difficulties.”
Chinese President Xi Jinping said, “We need to work to improve economic governance at a global level, increase the representations and voice of developing countries.”
The bank will help fund infrastructure and sustainable development projects, the summit declaration said.
Prime Minister of India Narendra Modi said the BRICS must act as a “united and clear voice for a peaceful, balanced and stable world.”
Bureau Report
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