MOSCOW: Ufa, the capital of Bashkortostan in Russia, will witness the establishment of New Development Bank (NDB), a joint initiative of Brazil, Russia, India, China and South Africa (Brics) with an initial capital of $100bn.
The signing of documents on the establishment of NDB — which will have its headquarter in China and whose first president elect is an Indian veteran banker K V Kamath — will take place along the VII Summit of Brics during July 8-10.
The summit is also expected to see the establishment of “Fund of Reserve Currencies” with a capital of $100bn, which is an alternative to the International Monetary Fund (IMF), which “depends on the pressure of the US and EU countries”, Russian Ambassador to Qatar HE Nurmakhmad Kholov told the media here yesterday.
The main objective of the bank is the financing of infrastructure projects and sustainable development of the economies of the member-states and developing countries.
It is assumed that NDB, which will provide loans for strategic profitable projects and “long” loans, will be a major multilateral development bank, providing assistance along ‘south-south’ line and will be an alternative to the ‘north-south’ cooperation, he said in the presence of envoys from other Brics countries.
The agreement on the establishment of the bank will enter into force when all member states fulfil ratification procedures, he said, highlighting that Russia and India have already ratified the agreement, while South Africa and China are expected to complete this work in July and Brazil will do the same soon.
The bank is open to broad capital injection and also intends to fund projects, not only in the countries of the founders but also in other countries. The banks’ initial portfolio will be in dollars but eventually move to a multi-currency basket.
The main task of “Fund of Reserve Currencies”, according to Kholov, is to support any Brics member in the case of short-term financial difficulties or problems with the member state’s balance of payments.
Unlike the IMF, which is based on Washington consensus that comes with special conditions attached in the form of liberal reforms and the opening up of national markets, he said the proposed fund would work on Beijing consensus, which reflects the desire of the countries to maintain their national sovereignty as well as multi-polarity in the world.
Alongside the Brics summit, there will also be meeting of Shanghai Cooperation Organisation (SCO), where security issues will also be discussed. India and Pakistan are set to join SCO, which, according to Russian President Vladmir Putin, “is an open organisation and any state that has common aims, can join it.”
Russia, Kholov said, has always insisted on retaining the traditional activity of “Shanghai Six” in combating all manifestations of the three evils of terrorism, extremism and separatism.
