Johnathan Paoli
The New Development Bank (NDB), colloquially known as the BRICS Bank, has announced its intention to begin offering loans in local currencies of Brazil and South Africa, as a deliberate attempt to shift reliance away from the US Dollar.
The multilateral development bank was established in 2015 by the BRICS nations (Brazil, Russia, India, China and South Africa), and its current president is the former Brazilian leader, Dilma Rousseff.
In an interview with Financial Times, Rousseff confirmed that the bank is currently considering applications for membership from about 20 countries, with the admission of four and five being most likely.
Rousseff said that between $8 – $10 billion is the lending goal for the bank this year, with the aim of having 30% of the loans in local currencies.
Rousseff said lending in local currency would allow borrowers in member countries to avoid exchange rate risk and variations in US interest rates.
“Local currencies are not alternatives to the dollar,” she said, “they’re alternatives to a system. So far the system has been uni-polar . . . it’s going to be substituted by a more multi-polar system.”
In addition, Rousseff said that the bank has tried to distinguish itself from institutions such as the World Bank and the International Monetary Fund (IMF) by refusing to set political conditions on loans.
“We repudiate any kind of conditionality, often a loan is given upon the condition that certain policies are carried out. We don’t do that. We respect the policies of each country,” she said.
This follows on remarks made by South Africa’s Minister of International Relations and Cooperation, Naledi Pandor in which she emphasised that the BRICS bloc is not in competition with the G7 group, instead it is cementing its own place in the geopolitical and geoeconomic space.
BRICS accounts for at least 42% of the world’s population and about 30% of global GDP and 20% of international trade.
“Our vision of Brics is a partnership of emerging markets and developing countries providing global leadership and serving as a catalyst for sustained and mutually beneficial global growth and sustainable development as well as driving inclusion of Africa and the Global South in the world’s systems in their widest definition,” said Minister Pandor.
Pandor said that in line with the aim and scope of BRICS, she will be calling for the modernisation of the United Nations (UN), and questioned how neither Africa, India nor South America does not have a permanent seat on the UN Security Council.
The Minister pointed to the increase in applications for membership as a sign of the positive change BRICS has become for many countries, indicating a more inclusive approach in order to shift the world from a unipolar system to more multi-polarity.
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