The leaders of Brazil and Russia have expressed support for a plan to launch a new development bank and emergency reserves fund, an ambitious challenge to the Western-run multilaterals that shape global finances.
Brazilian President Dilma Rousseff received Russia’s Vladimir Putin in the presidential palace in Brasilia on Monday, a day before leaders of the five emerging BRICS nations meet in the northeastern city of Fortaleza.
Speaking to reporters following the meeting, Rousseff said the proposed bank would top the summit’s agenda and she hoped the proposed institution would be approved there.
After two years of negotiations, Brazil, China, India, Russia and South Africa,the so-called BRICS countries are due to sign off on the new institutions on Tuesday.
At a summit that runs until Thursday in Brazil, the five countries are expected to unveil a $100bn fund to fight financial crises, their version of the IMF.
They will also launch a World Bank alternative, a new bank that will make loans for infrastructure projects across the developing world.
The BRICS will pool an initial $50bn in the bank, with each country contributing an equal amount.
The five countries will invest equally in the lender, tentatively called the New Development Bank. Other countries may join later.
Desire for voice
Late last week, Russian presidential adviser Yuri Ushakov told Kremlin reporters that bank would be based in Shanghai, mainland China’s financial capital, citing discussion papers prepared by the member countries.
But earlier, Russia’s finance minister said India was vying with China to host the new infrastructure lender.
In a further sign that an agreement had been reached on the headquarters, an Indian government official on Monday played down the debate and said India’s top priority was to make sure members of the institutions all had equal voting rights, unlike Western-run multilaterals they seek to challenge, such as the World Bank.
Many of the bank’s rules of operation, such as investment in private projects, will be decided after its formal creation at the bloc’s sixth summit in the Brazilian city of Fortaleza.
The bank is expected to make its first loan in 2016.
The BRICS countries have a shared desire for a bigger voice in global economic policy. They now account for 21 percent of global economic output and have contributed more than 50 percent of world economic growth in the past decade.