By: Shahzad Ahmad
“We should remain committed to multilateralism and the basic norms governing international relations, work for a new type of international relations, and foster a peaceful and stable environment for the development of all countries. We need to make economic globalization open, inclusive, balanced and beneficial to all, build an open world economy, support the multilateral trading regime and oppose protectionism. We need to advance the reform of global economic governance, increase the representation and voice of emerging market and developing countries, and inject new impetus into the efforts to address the development gap between the North and South and boost global growth.”
— Xi Jinping President of the People’s Republic of China (At the Plenary Session of the BRICS Xiamen Summit 4 September 2017)
The ninth annual BRICS summit was held in Xiamen, China on 3-5 September. The BRICS concept, coined in 2001 by Jim O’Neill, a Goldman Sachs economist, morphed into a formal association in 2008 in the hope it would become an influential global association and, in particular, grow to rival the Group of Seven (G-7) forum of major developed economies and leading democracies in the governance of global affairs. Since then, the bloc has engineered a significant restructuring of the global governance built on US-led Bretton Woods institutions. Covering 44 percent of the world’s population, abundant natural resources, vast markets, and economies with huge growth potential, the bloc has become a key engine of economic growth. It currently accounts for more than half of global growth. It has increased the share of voting rights for emerging markets at the International Monetary Fund and World Bank. It has also started operating its own New Development Bank, largely backed by China.
But if question marks on the future of BRICS are repeatedly raised, the New Development Bank (NDB) is probably the most concrete avenue through which the grouping can deepen cooperation. Recently, the NDB Board of Directors approved four projects in China, Russia and India with loans totalling more than $1.4bn.
The second tranche of projects broadens the scope of NDB’s activities from renewable energy to areas ranging from information technology to energy conservation. This includes a $2bn sovereign project finance facility for flood control and water quality extended to Hunan province in China, and a $470m sovereign project loan for developing the rural drinking water supply scheme in the Indian state of Madhya Pradesh. Going forward, another $30bn in loans, including a total of 15 projects by the end of 2017 and up to 50 in 2021, has already been announced.
According to the Bank’s five-year strategy, two-thirds of all projects will be devoted to sustainable infrastructure development. The NDB’s stated commitment to sustainable infrastructure is perhaps its most important differentiating feature, carving out a niche for itself among existing multilateral development banks.
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