Tuesday, March 26th 2013 - 05:48 UTC

BRICS summit to discuss creation of development bank with 50bn initial capital

Brazilian President Dilma Rousseff will attend this week's BRICS summit of five emerging powers hosted by South Africa to discuss creation of their own development bank, the Planalto office announced.

President Dilma Rousseff confirmed attendance

Rousseff will join Chinese President Xi Jinping, Indian Prime Minister Manmohan Singh, Russian President Vladimir Putin and South African President Jacob Zuma in Durban on Wednesday.

The talks will focus on how to spur development and reform international financial institutions such as the International Monetary Fund. The leaders will also discuss security issues.

But the top agenda item is likely to be the establishment of a development bank, meant to fund infrastructure and development projects in member states and developing nations, and a joint foreign reserves fund.

Last month, a senior South African diplomat said the five BRICS nations were considering a capital investment of 50 billion dollars.

Last week, Brazilian Trade and Industry Minister Fernando Pimentel said Brazil and China plan to sign a bilateral accord in Durban to promote trade in their national currencies.

With a combined GDP totaling around 14 trillion dollars, the BRICS have accounted for 30% of global economic growth since Goldman Sachs coined the BRIC acronym in 2001.

Last year, intra-BRICS trade soared to 282 billion, up from only 27 billion 10 years ago.
And Brazil's trade with its BRICS partners totaled 91 billion last year, up from 7.6 billion in 2002, according to the Brazilian presidency.
 

8 comments Feed

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1 Condorito (#) Mar 26th, 2013 - 12:51 pm Report abuse
Not sure by which criteria South Africa has been appended on to the BRIC.
Token African nation?
2 yankeeboy (#) Mar 26th, 2013 - 01:32 pm Report abuse
This is have the same outcome as Bank of the South which nobody wants to talk about any longer.
All of these wannabe big boys should concentrate on the internals of their own country rather than spending time and effort on projects doomed to failure.
All of them have economies on the brink of failure and rife with corruption. They can never succeed until they eradicate the corruption and move the masses of illiterate slum dwellers into the middle class.
3 mastershakejb (#) Mar 26th, 2013 - 03:44 pm Report abuse
I think we all know which country will be providing that 50 bn (china), and which country will be borrowing it (brazil).
4 ElaineB (#) Mar 26th, 2013 - 04:20 pm Report abuse
@1 Yes, that is exactly why the BRIC countries invited South Africa to join. They wanted a representative from Africa.
5 Condorito (#) Mar 26th, 2013 - 04:53 pm Report abuse
@4
I thought as much, but they do score highly on several other BRIC selection criteria:

- horrendous poverty
- pseudo or non-existent democratic process
- a rape every 30 seconds
- a murder every minute
- omnipresent corruption

Why isn't Venezuela a BRIC?
6 ElaineB (#) Mar 26th, 2013 - 06:25 pm Report abuse
@5 LOL!

It is interesting that the whole concept of the BRIC(S) was 'invented' by a US investment bank, Goldman Sachs. A couple of economists there looked at emerging markets and predicted that the BRIC countries could become a new economic superpower by the year 2050. This was later revised to 2030. But there are so many factors to consider.

Like most countries battling extreme poverty and depravation of the majority, they can only think in the immediacy. They want to be considered an economic Superpower NOW. They are not ready and will not be for a long time, even supposing they manage to work together; we are talking disparate societies and cultures. One of the countries will reign supreme in the future and the others will be trailing along. But it will not be for a long time and in the meantime, they have a lot of emerging to do.

These are countries to trade with but I cannot see the balance of power changing any time soon. Good luck to them.

IMO water is likely to be the most sought after commodity in the future. It will cause wars, or rather, the lack of it.
7 briton (#) Mar 26th, 2013 - 07:25 pm Report abuse
As is said,
The mortar in those brics,
Will be china

Remove the mortar and the brics will collapse,
If you can’t do the cash your self, done rely on others,
As you will surely find to your cost, that you will not have control over it,
And it can be used as leverage.
Just a doshy thought..

.
8 ChrisR (#) Mar 27th, 2013 - 02:12 pm Report abuse
I think the following paragraph may be a very good pointer to the real agenda:

“The talks will focus on how to spur development and reform international financial institutions such as the International Monetary Fund. The leaders will also discuss security issues.”

Forget “The talks will focus on how to spur development”, they are doing this already through commercial links.

NOW we come to the nuts and bolts: “and reform international financial institutions such as the International Monetary Fund.” They want to skew things towards them because they consider themselves outside the ‘Northern Countries Club’ and they are but for good reasons.

Brasil cannot make their mind up about the economy from an international investor point of view. First they do one thing to encourage inwards investment only to follow it by lies from the Finance Minister about the state of the economy which immediately reduces confidence.

Then the President takes it on herself to instruct government banks to increase loans to lower income families and small businesses despite the risks to good bank governance and capitalisation. What a surprise when the banks are downgraded by rating companies for being under-capitalised and having severely reduced reserves. There are many, many other difficulties that will show themselves in the coming years and the President then may not have the resolve that Dilma has without a new structure which provides financial advice some many times more competent than the present setup.

And finally: “The leaders will also discuss security issues.” There are two principal issues here:
1) Preventing one of the participants robbing the money (Russian mafia in Cyprus style);
2) Preventing the money supplier (Chin) from using the power that brings to subjugate member countries. They are already doing that in Africa and THAT is the reason an African country needs to be involved.

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