[www.inewsguyana.com] – The decision of the Brazil, Russia, India, China and South Africa (BRICS) group of nations to initiate a new multilateral development bank in which the five-member state will each contribute a certain amount of capital, up to $100 billion over a number of years, is one that Guyana and other South and Latin American nations will be able to derive immense benefits.
This was the main focus of the high level meeting, which concluded in Brazil yesterday and which President Donald Ramotar attended along with Finance Minister Dr. Ashni Singh.
Ramotar has indicated government’s full support for the initiative as a viable alternative to mostly Western based lending institutions such as the International Monetary Fund and the World Bank.
The president had previously voiced some concerns about some the lending terms stipulated by the traditional lending agencies and the dictating of how funds, which were accessed, were spent.
The bank, aimed at funding infrastructure projects in developing nations, will be based in Shanghai. India will preside over its operations for the first five years, followed by Brazil and then Russia, leaders of the five-nation group announced at a summit.
The BRICS group also set up a $100 billion currency reserve pool to help countries forestall short-term liquidity pressures. The long-awaited bank is the first major achievement of the BRICS countries since they got together in 2009 to press for a bigger say in the global financial order created by Western powers after World War II.
The BRICS sought coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of U.S. monetary stimulus. The new bank reflects the growing influence of the BRICS, which account for almost half the world’s population and about a fifth of global economic output.
The bank will start with a subscribed capital of $50 billion, divided equally among its five founders, with an initial total of $10 billion in cash put in over seven years and $40 billion in guarantees. The bank will start lending in 2016.
It will open membership to other countries, but the BRICS’ capital share cannot drop below 55 percent.
[Extracted and modified from GINA]