The Brics (Brazil, Russia, India, China, South Africa) emerging economies might decide early next year on their $100 billion (R992bn) fund designated to steady currency markets, Russia’s Finance Minister Anton Siluanov said on Friday, indicating little progress at the group’s meeting in Washington last week.
Brics officials surprised many by starting work last year on the pool and a joint development bank to reshape the global financial architecture long dominated by rich nations.
But progress has been slow and the bank with a capital of up to $50bn is still far from running, amid disagreements over burden sharing and where it should be based.
Expectations that the Federal Reserve would “taper” its US bond-buying scheme have reversed the cheap dollar flows that had fuelled a boom among the Brics economies, adding urgency to make funds available to members facing balance of payments difficulties.
At the Brics leaders meeting in St Petersburg in September, China committed $41bn towards the pool; Brazil, India and Russia $18bn each; and South Africa $5bn.
“At the next Brics meeting early in 2014, I believe that this matter may be discussed there and a final decision may be made on that,” Siluanov said.
The pool, however, will only become operational after ratification by each country’s parliament. China, the holder of the world’s largest foreign exchange reserves and which is to contribute the bulk of the currency pool, wanted a greater managing role, said one Brics official. “They feel that since they’re giving the most, they should have an advantage,” the official said.
Siluanov, asked at a briefing after the group met on the sidelines of the Group of 20 on Thursday about China’s desires, said that “this has not been discussed” at the meeting.
China also wanted to be the location of the headquarters of the group’s development bank, one Brics official said. Siluanov said the bank’s main site remained one of the key issues to be resolved.
Another issue still to be resolved is the size of the initial capital, with Siluanov saying the discussion was whether it should be $10bn or $30bn.
“We spoke in favour of contributions in phases, $10bn within 10 years, so it is not burdensome to Russia’s budget and the budget of other countries,” Siluanov said.
But some say China wants the bank’s capital to be larger.
“Brazil and India want the initial capital to be shared equally. We know that China wants more,” said a Brazilian official. “However, we are still negotiating, there are no tensions arising yet.” Siluanov said the group had agreed to decide on this “through a consensus”. – Reuters