Spotlight: BRICS Bank Proves Progressive One Year after Establishment
BEIJING, July 21 (Xinhua) – Against all odds in a slack global economy, the New Development Bank (NDB) set up by the BRICS nations has proved progressive for the past year since its establishment.
While addressing the annual meeting of the bank’s board of directors held in Shanghai Wednesday, Chinese Vice Premier Zhang Gaoli said the Chinese government will continue to back and facilitate the bank’s future development.
EFFICIENCY & PRUDENCE
The NDB was first proposed at the BRICS summit in New Delhi, capital of India, in 2012. In just one year after its official opening, the NDB has made remarkable progress, and has issued its first bonds worldwide to raise funds for clean energy projects in member states.
NDB President K.V. Kamath said the past year has seen achievements in at least three areas, including selecting its first loan projects, the timely payment of equity capital by stakeholders, and the first yuan-denominated bonds in seven years issued by a global financial institution.
Wang Lei, a researcher on BRICS cooperation with Beijing Normal University, said the bank is both efficient and prudent.
Noting that the bank, proposed and led solely by the emerging economies, has done well in building up its internal organizations and begun to operate in just one short year, he said its performance is indeed very efficient.
He also said that, instead of offering services to the whole financial market, the decision to fund green projects has shown that the bank’s managers are also quite prudent and pragmatic.
SEEK EXPANSION THROUGH PRAGMATIC COOPERATION
The NDB now has about 70 staff, the number of which is expected to grow up to around 100 by the end of 2016, when the bank’s first regional office in Johannesburg, South Africa will also be opened, Kamath said.
As far as Wang is concerned, although the high-level management is now in place and has been operating effectively, the NDB remains understaffed, which is not conducive to expanding its business.
In the next phase, Wang suggested the multilateral development bank should prioritize improving its internal structure while strengthening its team building.
Meanwhile, another challenge that the NDB is facing when choosing projects to fund is how to expand its financial support from the range of BRICS members to that of other emerging markets and developing countries.
In April, the multilateral lender announced it would provide 811 million U.S. dollars in a first of loans for clean energy projects in four of the BRICS nations.
But compared to the BRICS members, quite a few low-income countries have a more urgent need to improve their infrastructure.
The World Bank estimated that the financial gap for developing countries in upgrading their infrastructure has reached up to 1 trillion dollars, of which traditional development-promoting agencies, including the International Bank for Reconstruction and Development and the International Development Association, could only provide about 40 percent.
“This will be both a responsibility and a pressure for the NDB,” said Wang. “The bank should strengthen the research over the development of developing countries’ infrastructure as well as their progress in sustainable development.”
He suggested the financial body, on that basis, design and run new projects in a precise manner, so as to better demonstrate the purposes of South-South Cooperation.
SEEK INNOVATION IN COOPERATION
In 2012, facing the plunge in commodity prices and a sluggish global recovery, the BRICS economies generally experienced slowing growth rates, and some even saw negative growth. However, combined domestic and international pressure inspired a strong will among the five emerging countries to strengthen their cooperation.
So far, the BRICS have developed over 60 cooperative mechanisms, covering various fields such as economy, trade, finance, agriculture, education, science and technology, culture, and think tanks. The cooperation in finance has become the most fruitful, with the NDB as a good example.
Over the past year, the NDB has become a tangible force behind the mutually beneficial cooperation within the BRICS. It has also pushed forward a reform of the international financial system, which could no longer objectively reflect the profound changes in today’s global economic order.
In December 2015, the U.S. Congress eventually ratified the International Monetary Fund (IMF)’s 2010 quota and governance reform plan, which was blocked for years. After that, China became the third biggest shareholder of the IMF, and Brazil, India and Russia were also included among the top ten shareholders of the institution.
Such a transformation was brought about by the financial cooperation within the BRICS nations, which had a direct impact on the reform of the international financial system, said Wang.
Besides, the NDB has set forth a new set of operating rules for the international financial system with an emphasis on equality both within the BRICS and between donor countries and recipients, which set up a new model of international aid and a new type of partnership, Wang said.
But there’s still room for the bank to improve itself in financing, according to experts. For example, the NDB should offer more financial aid to developing countries in Latin America and Brazil to give them more options, said Bruno De Conti, economics professor at the University of Campinas in Brazil.
“This could help those countries to avoid some harsh requirements imposed by the IMF and World Bank without losing chances of development,” he said.
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