BRICS countries close to establishing reserve bank - Indian govt
NEW DELHI, India. Aug 29 (Interfax) - The BRICS countries - Brazil, Russia, India, China, and South Africa - have broadly agreed on the capital structure of a proposed development bank, a spokesman for the Indian government said in an interview with The Wall Street Journal on Wednesday.
"Officials from Brazil, Russia, India, China, and South Africa have agreed to set up the bank with a total capital of $50 billion, shared equally among them," the Indian official told the newspaper.
This means the BRICS countries will have equal control over the bank, which is likely to put an end to disagreements over the bank's funding and management, as China had earlier proposed $100 billion capital and sought a bigger share, the WSJ reported.
"Other key issues, such as on proposals within the group to offer a stake to developed nations like the U.S., need further discussion," the Indian official told the newspaper. "The group is considering offering a stake of 40% to 45% to non-BRICS countries," he added.
According to the WSJ, "having developed economies as shareholders would help the bank get a higher credit rating and enable it to raise cheaper funds from the market. Ratings of BRICS countries vary from barely investment grade for India, Brazil, Russia, and South Africa to exceptionally good rating for China."
"The bloc has yet to make a decision on where the bank would be based," the official told the WSJ.
These issues will probably be discussed when the group's finance ministers meet on the sidelines of the annual meetings of the World Bank and International Monetary Fund in Washington from October 11 to October 13, the official said. The BRICS finance ministers are expected to finalize a road map on establishing the bank before the next summit, which will take place next March in Brazil.
The decision to create a bank was made at the BRICS meeting in Durban, South Africa on March 26-27 of this year. The countries simultaneously agreed to establish a Contingency Reserve Arrangement of $100 billion.
On Tuesday, Deputy Governor of the People's Bank of China Yi Gang said the BRICS countries had agreed upon the general issues involved in creating a foreign currency reserve. China will hold at least half of the forex reserve. The BRICS countries will discuss the nuances of forex cooperation at the G20 Summit in St. Petersburg on September 5-6.