At the 2014 BRICS summit in Fortaleza, Brazil, the five major emerging economies announced their impatience with failed reform within the International Monetary Fund.
Collectively, the BRICS account for nearly $16 trillion in GDP and 40% of the world’s population. These countries have previously drafted amendments to the IMF’s voting policy but have yet to see them come to fruition. “We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund reforms, which negatively impacts on the IMF’s legitimacy, credibility and effectiveness.”
On 15th July 2014, the leaders of the BRICS signed the articles of agreement for the New Development Bank (“NDB”) and a treaty for the establishment of a Contingency Reserve Arrangement (CRA) in their first effort to balance the world financial order. The New Development Bank will have assets of $100 billion from Brazil, Russia, India, China and South Africa and will rival the World Bank and International Monetary Fund. According to a briefing note, “The agreement envisages the creation of a multilateral financial institution, the New Development Bank, which will finance infrastructure projects and sustainable development projects in BRICS countries and developing countries.”
The bank’s headquarters will be in Shanghai, India will serve as the first five-year rotating president, and Russia will be the chairman of the representatives. Each country holds an equal voting share, and the bank is available to United Nations members. This can really change the face of international development funding and the economic performance of the countries the BRIC Bank invests in.
The Agreement will only come into force when all five countries ratify the legislation.
Published: 12 February 2015