BRICS Move on Creating New Development Bank

The governments of the five BRICS member states (Brazil, Russia, India, China, and South Africa) are pushing forward on the required national ratifications of the agreement to set up a BRICS Development Bank and Contingency Reserve Fund (CRA) dedicated to funding progress and protecting themselves from financial crisis.

On Wednesday, ratification was completed by two nations.

Russia’s Federation Council followed the earlier vote of the Duma in approving the bank/fund’s instruments of ratification, thus completing parliamentary ratification for Russia.

On Feb. 25, India’s Cabinet, chaired by Prime Minister Narendra Modi, also ratified the New Development Bank (NDB) and the BRICS Contingent Reserve Arrangement (CRA) giving New Delhi’s nod to start the bank later this year. The bank’s operations will begin after all member countries deposit their instruments of ratification with Brazil. The government statement issued after the cabinet meeting reiterated the members’ thinking behind this bold project:

“The New Development Bank will mobilize resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, to supplement existing efforts of multilateral and regional financial institutions for global growth and development…. The establishment of the bank would also reflect the close relations among BRICS countries, while providing a powerful instrument for increasing their economic cooperation.”

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Unlike the existing multilateral development banks, the governance structure and decision making of the BRICS’ new financial institutions will be equitable, the statement added, and will provide a powerful instrument for increasing economic cooperation among BRICS members. This will ensure a back-up safety net that will allow India to go ahead with its necessary and bold policy decisions without being concerned about the international economic development, wires reported it read.

Last week (Feb. 19), South Africa’s cabinet approved sending the ratification instruments over to their parliament.

Brazil’s Senate has yet to take up ratification, but the head of the powerful National Federation of Industry (CNI) issued a call on Feb. 10 for it to do so quickly. Brazil’s Ambassador to Russia, Antonio Guerreiro, spoke to Ria Novosti two days ago of the urgency of each member state to move quickly on ratification.