Johannesburg - China will not dominate the new Brics bank just because its headquarters are in Shanghai, Finance Minister Nhlanhla Nene said on Thursday.
“As you've seen, there is a commitment to play at an equal level... There is a commitment to strike a balance. We do not foresee any dominance,” Nene told reporters in Midrand.
He said the bank was founded on the principle that the five Brics countries, Brazil, Russia, India, China, and South Africa, would each play an equal role.
Beyond the foundation of the bank, which formally occurred at the sixth Brics summit in Fortaleza, Brazil, a contingent reserve arrangement (CRA) was established.
The CRA was a framework for a “plurilateral financial safety net”, Nene said, which would complement existing financial safeguards.
For example, it could address short-term balance of payments problems that member countries faced.
“There is no outright cash that goes into the pool. It is a virtual pool we can call upon,” Nene said.
The CRA would be worth US$100 billion, comprising foreign reserves of the Brics countries, with China making available US41bn, Brazil, Russia and India US$18bn each, and South Africa US$5bn.
The CRA would allow China to seek help of US$20bn, Brazil, Russia, and India US$18bn and South Africa US$10bn.
The bank would have authorised capital of US100bn, subscribed capital of US50bn and focus on infrastructure investment and sustainable development projects.
Earlier, Nene said while all five Brics countries wanted to host the bank's headquarters, in the end what was most important was what the bank did.
“The beauty of being a collective is you need to understand, this is in the interest of all five countries. We all would have loved to host it here, but the important thing is what the bank is going to do.”
A regional centre would be located in Johannesburg and benefit South Africa and the African continent, Nene said.
“South Africa welcomes the establishment of the bank and is excited about the economic potential that this institution will bring to the continent.”
Nene said the bank's establishment, and the setting up of both its headquarters and first regional office in Johannesburg, were a high priority.
“There is a great sense of urgency among all member countries. We are hopeful the first project (via the bank) would be in sub-Saharan Africa, driven by the regional office.”
The headquarters and regional office would be established concurrently, before the first loan was disbursed. - Sapa