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BRICS Bank receives strong support from finance ministers
Finance ministers of Brazil, Russia, India, China and South Africa
have agreed on a BRICS bank on the lines of the World Bank and the
International Monetary Fund (IMF) that will address the
development needs of emerging
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Durban:
In a clear signal of their ascendance in the geopolitical space,
the leaders of Brazil, Russia, India, China and South Africa
Wednesday gave their go-ahead to a BRICS bank, rivalling the World
Bank and the International Monetary Fund (IMF), to address the
development challenges of poor and emerging economies.
The leaders, who met for the 5th BRICS Summit here -- where the
Indian delegation was led by Prime Minister Manmohan Singh -- also
endorsed a $100-billion contingency reserve arrangement that will
be deployed when any of the five member-nations faces a crisis.
"We (the finance ministers of the five countries) gave a big idea
and that idea has now become a reality -- that is the BRICS
development bank," Indian Finance Minister P. Chidambaram told
journalists here, soon after the conclusion of the plenary session
on the second day of the two-day summit.
He said the finance ministers and officials of the two countries
have been given a 12-month time-frame to work out modalities like
the capital of the proposed bank, its domicile and the governance
structure.
"We should have a nearly complete document when the leaders meet
again in Brazil next March," he added.
As regards the contingency reserve arrangement, Chidambaram said
the bulk of the money, that is $41 billion, will be pledged by
China, $18 billion each will come from India, Brazil and Russia,
while South Africa has agreed to $5 billion.
The proposal for the BRICS bank and a contingency reserve
arrangement was mooted when India hosted the previous BRICS Summit
in New Delhi. This was to counter the influence of other global
institutions like the World Bank that are more tuned to pursuing
the policies as dictated by the West.
"It gives me great satisfaction to note that one of the ideas that
we first discussed at New Delhi, that of instituting a mechanism
to recycle surplus savings in infrastructure investments in
developing countries, has been given concrete shape during the
Durban Summit," Manmohan Singh told the plenary.
"We have agreed to establish the New Development Bank. The initial
contribution to the Bank should be substantial and sufficient for
the Bank to be effective in financing infrastructure," the leaders
said in a joint statement, officially called the eThekwini
Declaration after the African name for Durban.
The five-member BRICS bloc collectively accounts for 40 percent of
the world's population, 30 percent of the world's land mass, 20
percent of the gross domestic product in real terms and 26 percent
of purchasing power. They also together have foreign exchange
reserves of $4.3 trillion.
Besides the bank and the reserve arrangement, the BRICS Summit
also established a business council with five members each from
the five countries, a consortium of think tanks and an enabling
agreement among the development banks of the five countries to
enhance financing for projects in Africa.
With this, the Summit has delivered on all the five items listed
on the agenda by host South Africa.
"These are good beginnings," Chidambaram said, adding that the
collective size of the five member-states of BRICS -- in terms of
population, output and reserves -- makes it an important bloc. "We
should be able to influence discussion and decisions in G20, the
IMF and other multilateral institutions."
(Arvind Padmanabhan can be contacted at arvind.p@ians.in)
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