BRICS Development Bank not aimed against IMF, World Bank - Russian presidential aide

MOSCOW, July 6. /TASS/. The Development Bank, which the BRICS group of the world’s major emerging economies (Brazil, Russia, India, China and South Africa) is establishing, is not aimed against the IMF or the World Bank, Russian presidential aide Yuri Ushakov said on Monday. The BRICS Development Bank will be open for other participants, the presidential aide said. A BRICS summit that will be held in the Urals city of Ufa in the coming days will discuss "particular aspects of the launch of the Development Bank and a pool of currency reserves, Ushakov said. The Board of Governors of the BRICS Development Bank will start its work already on Tuesday, July 7, the Russian presidential aide said. ‘We believe that the emergence of the BRICS New Development Bank and a pool of BRICS currency reserves will give rise to a common mechanism that can effectively stabilize the national capital markets in case of crisis developments in the global economy and open possibilities for joint lending to various investment projects and generally for expanding trade and economic ties," the Russian presidential aide said. The Kremlin believes these two BRICS mechanisms will help strengthen the world financial architecture," Ushakov said. "This is neither a counter-balance nor an alternative to the IMF or the World Bank. This is simply an additional set of tools for solving common tasks," the Russian presidential aide said. The BRICS Development Bank is open for any country to joint it," Ushakov added. This issue is not topical at present as the Bank will be launched into operation only after the BRICS Ufa summit and it is, of course, necessary to see how it will function, the presidential aide said. The BRICS Development Bank will have an authorized capital of $100 billion, with each founding country contributing 20 percent. A pool of BRICS currency reserve will have the same amount, with China contributing $41 billion, Brazil, Russia and India $18 billion each and South Africa $5 billion, the presidential aide said. BRICS New Development Bank to operate on commercial principles The BRICS New Development Bank will be a banking institution based on deriving profit, Russian Foreign Ministry Ambassador-at-Large Vadim Lukov said in April. "The opinion of the shareholders [of the BRICS New Development Bank] is that all projects should be profitable. This is not a mutual aid fund or a grant-issuing office. The New Development Bank will be built on commercial principles," said Lukov who is the Russian Foreign Ministry’s coordinator for BRICS affairs. Compared with the Asian Infrastructure Investment Bank, which is primarily focused on Asia, the BRICS New Development Bank will deal with projects in the grouping’s five countries, as well as projects in other countries in a proportion of two to one, the Russian diplomat said. Russia’s Finance Ministry has said it expects the New Development Bank to start working by late 2015 and reach full-scale operations in 4-5 years. Under an agreement between the BRICS countries, the Bank’s first president will be from India and the first chairman of the board of directors will be from Brazil while a representative of Russia will be the first chairman of the bank’s board of governors. The bank will be headquartered in Shanghai, China. Read more