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BRICS sign two currency pacts, to set up
joint bank
Thursday March 29, 2012 05:48:12 PM,
IANS
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New Delhi: The BRICS grouping of five emerging
economic powerhouses - Brazil, Russia, India, China and South
Africa - Thursday signed two pacts to spur trade in their local
currencies and agreed on a joint working group to set up a
development bank that will raise their economic weight globally.
Prime Minister Manmohan Singh, Chinese President Hu Jintao,
Russian President Dmitry Medvedev, Brazilian President Dilma
Rousseff and South African President Jacob Zuma concluded their
fourth BRICS summit by renewing the pitch for reforming global
governance and closer coordination on global issues.
The development banks of the five countries signed a master
agreement on extending credit facilities in the local currency and
the BRICS multilateral letter of credit confirmation facility
agreement in the presence of their leaders at the Taj Palace Hotel
here.
The participating banks include the Export Import Bank of India,
Banco Nacional de Desenvolimento Economico e Social (BNDES) of
Brazil, State Corporation Bank for Development and Foreign
Economic Affairs of Russia, China Development Bank and Development
Bank of South Africa.
The master agreement is aimed at reducing the demand for fully
convertible currencies for transactions among BRICS nations, and
thereby help reducing the transaction costs of intra-BRICS trade.
The confirmation facility pact envisages confirmation of lines of
credit on receipt of a request from the exporter, the exporter's
bank or the importer's bank.
The pacts are expected to scale up intra-BRICS trade which has
been growing at the rate of 28 percent over the last few years,
but at $230 billion, it remains much below the potential of the
five economic powerhouses. BRICS has set a target of $500 billion
by 2015.
The pacts were finalized after a meeting of trade ministers of the
five countries Wednesday.
In an important step that promises to integrate the BRICS
economies closely, the five countries considered the possibility
of setting up a new development bank.
The bank is being envisaged to mobilise "resources for
infrastructure and sustainable development projects in BRICS and
other emerging economies and developing countries, to supplement
the existing efforts of multilateral and regional financial
institutions for global growth and development", said the BRICS'
Delhi Declaration.
The leaders directed their finance ministers "to examine the
feasibility and viability of such an initiative, set up a joint
working group for further study, and report back to us by the next
summit", said the declaration.
The BRICS report on synergies and complementarities between the
economies of the five countries, a reference guide for promoting
trade and investment, was also released in the presence of the
leaders. The report has been prepared by a multinational group of
experts led by Kaushik Basu, chief economic advisor to the Indian
finance ministry.
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