Uruguay, United Arab Emirates (UAE) and Bangladesh joined the New Development Bank (NDB). The announcement was made by the president of the NDB, Marcos Prado Troyjo.
The direction of the BRICS New Development Bank (NDB) approved the United Arab Emirates (UAE), Uruguay and Bangladesh as new members, after a series of successful negotiations, initiated at the end of 2020https:// t.co/QjIYOyEsaM
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”The new members will have in the NDB a platform to foster their cooperation in infrastructure and sustainable development […]. We will continue to expand the Bank’s membership in a gradual and balanced manner,” Troyjo said in a statement issued on September 2nd.
According to the president of the NDB, the expansion of the membership is in line with the bank’s strategy of positioning itself as the main development institution for emerging economies.
Sputnik Brasil spoke with Karin Costa Vazquez, a professor at the School of International Affairs at OP Jindal University, in India, about the bank’s expansion and the NDB’s plans for the next five years.
The NDB was created by Brazil, Russia, India, China and South Africa (BRICS) in 2015. The BRICS bank, as it is better known, invests mainly in developing economies in areas such as transport, water and sanitation, clean energy, digital infrastructure, social infrastructure and urban development.
© Photo / VEB.RF
President of the New Development Bank, known as the BRICS Bank, Marcos Troyjo, speaks during a meeting promoted by the Russian presidency of the bloc, November 16, 2020
In these six years of operations, the NDB has already approved around 80 projects, with a total value of approximately US$30 billion (approximately R$155 billion).
Karin Costa Vazquez explains that the NDB expansion process has been on the agenda for a long time, practically since the creation of the bank and that it has always been a long-awaited stage.
“It is an important step for the NDB to fulfill its vocation of being a global development bank […]. Practically speaking, this means that membership expansion also enables the bank to increase subscribed capital, in addition to mobilizing additional capital from the private sector to finance infrastructure and sustainable development. Likewise, in addition to mobilizing additional resources, the expansion also enables the NDB to start investing in new markets and help these new countries to resolve domestic infrastructure and sustainable development bottlenecks.”
According to the newspaper Estadão, a fourth partner, probably from Africa, should be announced by the end of the year. Thereafter, the bank is expected to accept three to four new members per year, potentially reaching a total of 20 members in the coming years.
According to the internal regulations of the NDB, Uruguay, Bangladesh and the UAE will be effective when the countries complete their internal processes and deposit the instrument of accession.
© AP Photo / Pavel Golovkin
Presidents of China, Xi Jinping, and Russian Presidents, Vladimir Putin, talk with the help of interpreters during a meeting of BRICS leaders at the Itamaraty, in Brasília, November 14, 2019 (file photo)
Uruguay is the first country in Latin America to join the NDB as a new member. Azucena Arbeleche, Uruguay’s Minister of Economy and Finance, said the country sees in the NDB “a great opportunity to take advantage of cooperation with its member countries, with the objective of achieving stronger international integration in cross-border trade and investment flows “.
© AP Photo / Matilde Campodonico
Uruguayan President Luis Lacalle Pou speaks alongside his Economy Minister Azucena Arbeleche during a press conference in Montevideo, Uruguay. file photo
Bangladeshi Finance Minister Mustafa Kamal says that joining the NDB “has paved the way for a new partnership at an important moment in 50 years of our independence.” Troyjo, in turn, highlighted the fact that Bangladesh is one of the fastest growing economies in the world.
Karin Vazquez considers the adhesion of these two countries “very interesting” because it opens up the possibility for the BRICS bank to act on a regional scale in Latin America and South Asia.
“As Uruguay neighbors Brazil and Bangladesh neighbors India, this gives the bank the possibility to finance binational projects at first and, in the event of the entry of other members in the regions, regional economic integration projects, which is also one of the areas of priorities in the current NDB’s five strategy […]. The entry of these countries paves the way for this new activity of the bank on a binational scale at first, and regionally at a possible second moment”, comments the specialist.
As for the UAE, Minister of State for Financial Affairs, Obaid Humaid Al Tayer, considered that joining the NDB “represents a new step towards improving the role of the UAE economy on the global stage, especially in light of the country’s great capabilities and knowledge. has in support of infrastructure projects and sustainable development”.
The OP Jindal University professor claims that the UAE is a global financial hub, which can expand NDB projects with the private sector, in addition to the fact that the country has invested in projects in line with the 2030 agenda of the United Nations (UN) , a plan with sustainable development goals to ensure a healthy planet and a decent life for future generations.
© AP Photo / Jennifer Peltz
UN Headquarters in New York with flags of member states
“[EAU] it is a country that has been actively seeking to diversify its economy. Fundamentally an oil producer and exporter, the country has been promoting the service sector for some years, even in line with the UN’s 2030 agenda. […]. [Há ainda] the ability to mobilize resources in global financial markets and a vision oriented towards sustainable development and infrastructure that is very much in line with the NDB’s vision and mandate”, he assesses.
Overall, Karin Vazquez believes that, strategically, the choice of the first three non-founding partners of the BRICS bank indicates a logic of regional expansion, with a focus on connecting member countries with the international financial system and strengthening the “logic of integration between developing countries and from hub countries, poles or nodal centers that would be the original countries, the founding countries of the bank”.
Importance of BRICS
The OP Jindal University professor recalls that even before the new coronavirus pandemic it was estimated that emerging economies around the world needed about $2 trillion (BRL 10.3 trillion) in infrastructure investments per year for the next 20 years to maintain the growth rates of the time.
© AFP 2021 / Sergio Lima
President Jair Bolsonaro before the BRICS Summit in Brasília, November 13, 2019
However, multilateral banks, since the 1990s, and commercial banks, especially after the 2008 crisis, have greatly reduced investments in infrastructure. The NDB fills part of that need, says Vazquez.
“Today the NDB is filling this gap. It has US$ 50 billion [R$ 258 bilhões] in subscribed capital and about US$30 billion [R$ 155 bilhões] in loans. But, of course, these values are far from the investments that are demanded by emerging economies […]. But as important or even more important than the NDB’s ability to lend directly to countries is the bank’s potential to act as a financing catalyst. For example, by mobilizing private capital for infrastructure and sustainable development projects.”
Karin Vazquez also emphasizes that the BRICS bank lends in local currency, and this is very important because it helps to reduce member countries’ exposure to exchange rate volatility and systemic crises.
The expert also emphasizes the exchange of experiences of member countries to build new models of financing for development.
© AP Photo / Khalil Senosi
A railway departs from Mobassa, Kenya, towards Nairobi, the country’s capital. The project was considered the largest infrastructure project in the country, and was financed by China with about 3.3 billion dollars. The line was built with plans to extend to the Indian Ocean.
“The bank’s own emphasis on infrastructure investments is closely linked with the development experiences of Asian countries, and of China itself, which has prioritized infrastructure investments throughout its history as part of a broader strategy to integrate the [sua] economy in the global value chain and enhance competitiveness and promote economic growth.”
The OP Jindal University professor concludes by stressing that NDB will focus in the coming years on the reconstruction of member countries in the post-pandemic period, adding to this the changes that the world has been undergoing in recent years.
“I see that the launch of the bank’s new strategy, five years from next year, the reconstruction of countries in the post-pandemic, plus the transformations that the world has gone through, such as the transition to the digital economy, transition to the economy low carbon, with more and more countries, including the five member countries, pledging to decarbonize their economies by 2050, 2060. All of these elements give the NDB, in my view, a unique opportunity to project a new vision for financing, for development,” he concludes.
The opinions expressed in this matter may not necessarily coincide with those of the Sputnik newsroom.