BRICS development bank to lend $ 2.5 billion next year

From left: Brazil’s President Michel Temer, Russian President Vladimir Putin, Indian Prime Minister Narendra Modi, Chinese President Xi Jinping and South African President Jacob Zuma pose for a group picture during BRICS (Brazil, Russia, India, China and South Africa) Summit in Benaulim, in the western state of Goa, India, 16 October - REUTERS  

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Reuters: The development bank set up by the BRICS group of emerging economies will ramp up lending to $ 2.5 billion next year after making its first loans to back green projects, its President K.V. Kamath told Reuters.

The BRICS - Brazil, Russia, India, China and South Africa - agreed to create the New Development Bank (NDB) in July 2014 with initial authorised capital of $ 100 billion. The lender was officially launched a year later.

“The second year is scaling up, concentrating on people, getting all the skillsets in,” said Kamath, a veteran Indian banker appointed as the first head of the Shanghai-based NDB.

He was speaking on the fringes of a weekend BRICS summit hosted in the resort state of Goa by Prime Minister Narendra Modi. The gathering seeks to add substance to the group that grew out of an acronym devised by Goldman Sachs economist Jim O’Neill back in 2003 that projected a long-term boom and global power shift in their favour.

With Russia, Brazil and South Africa on the economic skids and China slowing, the initial euphoria has faded, yet Kamath said the BRICS had much to gain by deepening their cooperation.

“The fact is that these countries, collectively, have for the last few years contributed to more than 50% of incremental economic wealth that has been generated globally,” said Kamath. “I don’t see that changing.”

The NDB, headquartered in Shanghai, will expand its staff to 300 over the next three years but run a tight operation that seeks to take quick decisions and transfer experience across all five BRICS member states.

It has already approved loans totalling $ 900 million to green projects in each member state. It has also started a renminbi-denominated borrowing program, issuing a 3 billion yuan ($ 450 million) bond.

Kamath, 68, said there was plenty of room for new lenders like the NDB and the Chinese-led Asian Infrastructure Investment Bank (AIIB), in addition to established institutions like the World Bank.

“Infrastructure alone has needs globally of $ 1-1.5 trillion a year – all the multilateral banks put together can do maybe 15% of this,” said Kamath, who ran India’s ICICI Bank Ltd from 1996 until 2009.

“The phrase I would like to use is cooperate and work together, rather than compete. I don’t see competition as a key challenge in this context.”

BRICS agrees to fast-track new credit rating agency

AFP: The BRICS nations agreed on Sunday to fast-track the setting up of their own credit-rating agency to better cater to developing economies, rivalling existing ones based in Western countries.

Prime Minister Narendra Modi said they agreed to move ahead on the ratings agency, although there was no timetable announced for its formation.

“To further bridge the gap in the global financial architecture, we agreed to fast-track the setting up of the BRICS credit rating agency,” Modi said.

“In the past year, BRICS have played an active role in shaping the global agenda for change and development,” he said.

The agency comes amid accusations from within the bloc that the three traditional ones - Moody’s, Standard & Poor’s and Fitch Ratings - are all Western-based and favour those economies.

Plans for the agency follow the establishment of a BRICS bank 12 months ago with an initial capital of $ 100 billion, which has been seen as a challenge to Western-based institutions.  

The ‘New Development Bank’ has so far granted total loans of $ 900 million focused on renewable energy projects to the BRICS member nations of Brazil, Russia, India, China and South Africa.

“NDB has kept clean energy and green and sustainable infrastructure as its priority,” Modi said. 

Bank president K.V. Kamath, a former Indian private banker, has said in recent days that a new ratings agency would be able to help developing nations, according to the Press Trust of India news agency.

BRICS was formed in 2011 with the aim of using members’ growing economic and political influence to challenge Western hegemony.