BRICS eyes common development bank
Business Standard, March 28, 2012
The group of five rapidly emerging economies, Brazil, Russia, India,
China and South Africa, or BRICS, is likely to finalise a proposal
to establish a common BRICS Development Bank during the fourth BRICS
summit. The leaders of the BRICS countries are also expected to sign
the much-awaited deal on enabling credit facility in local
currencies paving the way to boost intra-regional trade.
Proposals for a common bank and a credit facility in local
currencies were mooted during the third BRICS summit in China last
year.
Commerce & industry and textiles minister Anand Sharma said, “There
is large untapped growth potential of intra-BRICS trade and
investments, which we are looking to exploit. The BRICS Development
Bank is in the advance stages of concluding agreements on extending
credit facility in local currencies and a multilateral letter of
credit confirmation facility agreement to facilitate further
consolidation of trade and investment ties. Such intra-BRICS
initiatives would not only contribute to enhanced intra-BRICS trade
and investment, but also facilitate our economic growth in difficult
economic times.”
At the fourth BRICS academic forum earlier this month, the idea of a
common development bank, or an investment fund, which can assist in
the development of BRICS and other developing countries, was again
mooted. However, according to Sudhir Vyas, secretary for economic
affairs in the ministry of external affairs, the proposal to have a
BRICS investment bank to fund infrastructure and development is
still being considered by BRICS’ leaders, and it might take time for
the idea to see the light of day.
Indian industry lobbies such as the Federation of Indian Chambers of
Commerce and Industry and the Confederation of Indian Industry have
urged BRICS leaders to focus on operational modalities to establish
financial institutions such as a development bank or a common
investment fund.
Bipul Chatterjee, deputy executive director, CUTS International, a
Jaipur-based think tank, said, “The common BRICS bank would be a
major development. If there is an intra-regional bank, it would be
good for all developing countries. This summit is likely to see an
agreement on cooperation among banks. The credit facility deal is
another important aspect of this summit. Money is there in these
five countries, but credit facilities, which are extremely important
to boosting trade, are not good.”
G K Pillai, former commerce and home secretary and chief adviser to
the BRICS Trade & Economic Research Network, had earlier said the
group should start building consensus for a common candidate from
the group of developing countries for the next director-general of
the World Trade Organisation..
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