Sharon Chen, Raymond Colitt and Zhou Xin Brisbane, Australia
THE FIVE Brics nations agreed to speed up the formation of a development bank and raised concerns over the pace of the global economic recovery.
The leaders of Brazil, Russia, India, China and South Africa, who met on the sidelines of a Group of 20 (G20) summit in Brisbane, Australia, instructed their finance ministers to name the bank’s president by the time they next meet in Russia, according to a statement from the Brazilian government. The global economic situation has not improved since the group last met in July, Brazil President Dilma Rousseff told the other leaders.
At that meeting in Fortaleza, Brazil, the Brics agreed on the structure of a $50 billion (R553bn) development bank, which will have its headquarters in China and with India holding its first rotating presidency. They also agreed on the creation of a $100bn currency exchange reserve.
Both measures, which need approval from legislatures in each country, are aimed at providing a financing alternative to the International Monetary Fund (IMF) and the World Bank, in which Brics countries have been seeking more say.
“The advanced countries haven’t managed a consistent recovery and international trade isn’t growing enough to stimulate emerging markets,” Rousseff said.
Indian Prime Minister Narendra Modi told the meeting that he expected to ratify the agreement by the end of this year.
“Brics’ decisions on making their own financial institutions have been successfully implemented,” Russian President Vladimir Putin said at the meeting. The total volume of capital in the development bank and currency reserves would enable the group to get joint mechanisms that could stabilise national capital markets in case of a world economic crisis, he said.
The group also said delays in changes at the IMF to give emerging economies more equal representation were “unjustifiable” and urged the G20 to consider alternatives, according to the statement from Brazil’s government.
China President Xi Jinping urged the group to quickly establish the development bank and called for a bigger voice for Brics nations in global economic governance.
Global Growth
The Brics economies grew 5.7 percent last year, a rate that is forecast to slow to 5.3 percent by next year, according to economists. The IMF last month cut its forecast for advanced economies’ output by 0.1 percent to 2.3 percent next year. It cut its projection for world economic growth next year to 3.8 percent.
Australian Treasurer Joe Hockey said G20 finance ministers were confident of reaching their goal of lifting collective gross domestic product by an additional 2 percent, or more, in five years. “Brics countries represent a new and rising power, and they are playing an increasingly important role in the international economy,” China’s Vice-Finance Minister Zhu Guangyao said. – Bloomberg