Special Edition of the Eastern Economic Forum – Interview
Members of expert community are increasingly frequently saying that the optimism regarding the integration potential of the BRICS countries is fading due to significant differences in these economies, which may even be incompatible. What do you think of this opinion?
— BRICS countries are home to 25 % of the world population and face similar challenges as they move up the development curve. Even though the countries are at different stages of development, there is enough scope to share the economic models and facilitate knowledge flows between the BRICS nations.
The main stated objective of the New Development Bank is the support of the infrastructural projects in the BRICS member countries. What logic lies behind such focus? How would you evaluate the progress in this direction so far?
— Recent estimates suggest an annual funding requirement of about USD 1 trillion to meet infrastructure needs in developing countries and multilateral development banks currently cater to about 10–15 % of this demand. New Development Bank was established by our founders to stimulate investments in infrastructure projects in our member countries, channel global savings and provide funds to meet this demand. In our first year of operation, we have formulated our policies and procedures, approved our first set of loans for projects in all member states in the areas of green and renewable energy and issued our first green bond. So, I believe we have made good progress in the first year and we look forward to further build the NDB in future years.
Some members of so-called Group of Eleven, or Next Eleven, which combines some of the most rapidly developing countries, are perceived as potential BRICS members. The political benefits of the enlargement of the BRICS are unquestionable. Could you comment on the possibility of expanding the NDB’s membership?
— Our Articles of Agreement specify that all members of the United Nations could be members of the bank. Our founders envisaged increasing membership to expand our scope of activities and provide additional capital to the NDB.
The Russian leadership pays special attention to the NDB. It is not a secret that you had a meeting with Russian President Vladimir Putin on the sidelines of SPIEF this year. What, in your opinion, does this mean for the bank?
— I was honored to meet His Excellency President Putin on the sidelines of SPIEF and updated him on the progress of the bank and sought his views on the next steps for the NDB. It is important to note that leaders of all members of the bank, including Russia, strongly and continuously support our institution. The NDB looks forward to responding in a fast and flexible manner to their aspirations and interests, fostering inclusive growth and development.
How do you assess the prospects of the NDB bond issuance in rubles? What is the place of such bond issuance in the bank’s borrowing strategy?
— We are excited at the possibility of issuing local currency bonds in Russia. Our team visited Russia early this year and met with the regulators and some market participants. The Russian leadership reiterated its strong interest in NDB ruble bond issuance and we are currently evaluating the issuance process. During my trip to Saint-Petersburg, it was evident that there is a clear preference from the borrowers for ruble loans. Therefore, raising ruble financing in Russian capital markets would allow the bank to efficiently step up its operations in Russia. Recently, we have successfully issued a RMB 3 billion onshore green financial bond in China. We are exploring the possibility of raising funds in local currencies in other members of the bank, including India and Russia. Of course, we are also considering raising funds in traditional hard currency markets, such as USD.
Which projects on the territory of the Russian Federation will be prioritized by the bank in the future?
— The bank, by its mandate, will fund infrastructure projects and promote sustainable development in its member countries. We are currently examining projects suggested by the Russian Government. It is clear that the Russian Leadership prioritizes the country’s infrastructure development. The NDB will be happy to explore opportunities to collaborate in this process. This September, the NDB Vice President Mr. Zhu Xian will attend the Eastern Economic Forum to explore potential projects. As we expand the menu of our offerings, we will be open to examining different types of projects, such as private-public partnership projects in all our member countries, including Russia.
How do you assess Russia’s chairmanship at the NDB Board of Governors in 2015–2016?
— We sincerely thank the Russian Leadership for guiding us in our first year of operations. During this year, the NDB achieved several important milestones, including the signing of Headquarters Agreement with the Government of China, approval of the bank’s policies and frameworks and its first set of loans, as well as the issuance of its first green bond. Moreover, we started building up partnerships with international and national development institutions, as envisaged by our founders. To sum up, the NDB so far has met the goals envisioned by the leaders of its member countries and we look forward to further building up on this foundation.