By THE AFRICA BAZAAR Staff Writer
As the 6th BRICS Summit gets underway this week in Brazil, BRICS (Brazil, Russia, India, China and South Africa) leaders will meet to mull ambitious projects: The creation of a BRICS Development Bank and the Contingent Reserve Arrangement for emerging markets countries that will work similarly to the IMF and the World Bank group for member countries.
The BRICS Development Bank and the CRA will mirror the World Bank and IMF respectively. Each initiative will receive $100 billion in initial funds from member countries. The BRICS countries will initially each contribute $10 billion for a total of $50 billion in capital to the bank.
The five founding members of the new Bank will retain controlling interest should any new members be admitted. The bank’s name has yet to be chosen and Shanghai, Johannesburg, New Delhi and Moscow are the four possible locations for its headquarters.
The BRICS Development Bank funds will be used for financing infrastructure and sustainable development projects in the BRICS member nations and other developing countries.
Other countries, investment banks and multilateral institutions may become shareholders of the bank, subject to approval by the BRICS member countries.
The CRA, on the other hand, will function as an additional buffer of defense for BRICS countries facing difficulties with their balance of payments. China will contribute $41 billion, Brazil, Russia and India will each contribute $18 billion and South Africa will contribute $5 billion to the initial capital.
Access to resources will depend on assessments conducted by two different committees: a board of governors of the fund and a technical advisory board.
Other issues on the agenda: Produce the Fortaleza Declaration, which will consolidate the common views of the group on issues of the international agenda and on matters of cooperation within the BRICS. The countries are also studying the possibility of launching a platform to foster the development of common methodologies for social indicators.
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