New bank embraces role in BRICS growth
The president of the New Development Bank (NDB) for BRICS countries is optimistic about the economic future of its member nations.
“We believe that there is very good potential for win-win economic cooperation between the five countries, especially in the financial area,” said bank President Kundapur Vaman Kamath, who is commonly referred to as K.V. Kamath.
“We are determined to expand the bank’s role as an innovative and reliable development partner, increasing support to all member countries to achieve their development agendas,” he added.
Kamath was interviewed by China Daily before the 11th BRICS Summit, which will convene in Brasília, Brazil, on Wednesday and Thursday.
Formally launched in 2015 with headquarters in Shanghai, the NBD was jointly founded by the BRICS nations — Brazil, Russia, India, China and South Africa — with the goal of mobilizing resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries.
In 2018, the bank received a AA+ international credit rating, joining the group of highly rated multilateral development banks (MDBs).
Kamath also said China’s growing economy is vital to the nations’ economic cooperation.
“The growth momentum in China is strong,” said Kamath. “I believe that the economic growth will continue, and China will further contribute to the cooperation between the BRICS nations.”
Kamath, one of India’s most accomplished business leaders, has served as NDB president from the beginning. Before joining the NDB, Kamath was non-executive chairman at ICICI Bank, an Indian multinational banking and financial services company, from 2009 to 2015.
“As the first multilateral development bank established by developing countries and emerging economies, the NDB is aimed to be an integral part of the solution to some of the key infrastructure development challenges facing our member countries, respecting their sovereignty and working at speed,” said Kamath.
“The NDB aims to be innovative in terms of funding and lending, for example, by exploring opportunities offered by local currency financing,” he added.
Kamath said that in four years, the NDB has become a fully operational MDB, with 46 project approvals valued at $12.8 billion. In 2019, the bank’s board of directors so far has approved 15 loans totaling about $4.7 billion.
The NDB’s lending to China for 13 approved projects is $3.86 billion. The projects approved by the NDB span a range of sectors, including energy, transportation, urban development and environment protection, in alignment with China’s development objectives.
Kamath also said China has deep capital markets, and with strong support from the People’s Bank of China and China’s Ministry of Finance, the NDB was able to raise 6 billion yuan from bond issuance in China.
“China has set a good example in this respect, which has encouraged the NDB to do the same in its other member countries,” he said.
Since 2010, the share of the BRICS countries in world GDP in purchasing power parity (PPP) terms has grown from 30 percent to 36 percent. Kamath indicated that the NDB’s member countries “will continue to play an important role in the global economic growth in the coming years”.
Kamath said that the focus of a broad range of projects is sustainable infrastructure, including energy, transportation, urban development, water and sanitation, and environmental protection projects.
Kamath said that the NBD is focusing on the development impact of its lending through more robust monitoring frameworks and measurement of the projects’ contributions to its members’ SDG (sustainable development goals) commitments.
“Sustainability is and will continue to be at the core of our operations,” he emphasized, elaborating that infrastructure is a critical enabler of faster and inclusive economic growth, and sustainable infrastructure is essential to safeguard the physical and social environment for current and future generations.
Striving to be a “trusted partner” to its borrowers in their growth, Kamath said the NDB’s ability to offer loans in local currency is a key differentiating feature compared with other multilateral development banks.
“This helps mitigate the risks faced by borrowers and supporting the capital markets of its member countries,” he said.
On environmental and social aspects and in procurement, which are important elements of infrastructure projects, Kamath pointed out that the NDB adopts country systems as it recognizes that its member countries are capable of setting their own regulations — and where necessary, the NDB works with its member countries to strengthen the systems.
In 2017, the bank opened its Africa Regional Center (ARC) in Johannesburg. Kamath disclosed that the Americas Regional Office (ARO) in Brazil is already staffed and ready to open upon completion of formalities.