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BRICS Development Bank begins work

July 07, 2015, 9:37 UTC+3 MOSCOW
The permanent representatives of the BRICS countries in the Bank will be approved in Moscow on July 7
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© TASS/Mikhail Japaridze

MOSCOW, July 7. /TASS/. Meeting of the Board of Governors of the BRICS Development Bank (including Brazil, Russia, India, China, and South Africa), which formally marks the beginning of work of the new Bank, will be held in Moscow on July 7.

The permanent representatives of the BRICS countries in the Bank will be approved.

"The Board of Governors holds the first meeting in order to ensure the launch of the bank. It is necessary to approve the basic management bodies of the bank and the way they work. The principles of the Board of Governors and the Board of Directors of the Bank will be approved today. The procedures they are voting on, the decisions must be specified," a source on the Russian delegation told TASS.

According to him, the strategy of the bank for the next 5 years will be also discussed on July 7, and a corresponding document will be presented in autumn. The source added that the BRICS Development Bank office will open in Russia in a year and a half.

It is also expected that on July 7 the central banks of the BRICS countries will sign an operating agreement for the pool of currency reserves.

The agreement on creation of BRICS Pool of Conventional Currency Reserves was signed in July 2014 in Fortaleza, Australia. The agreement stipulates financial aid to BRICS member states. This aid may be provided by efficiently providing liquidity to the country in need by other members of the pool.

Difficulties with the country’s balance of payments, which may be presented by a sharp drop in the national currency, lack of short-term liquidity and other financial problems, will serve as rationale. The initial volume of the Pool of Currency Reserves will total $100 bln, with Russian share at $18 bln. The pool is conventional, which means that the reserve funds of the member states are not used until a joint decision to accede to the request is made.-0-tre

The representative of India Kundapur Vaman Kamath became the first president of the new BRICS Development Bank. A representative of Brazil has become the first chairman of the board of directors. Russian Finance Minister Anton Siluanov has been appointed as the chairman of the Board of Governors.

BRICS is an informal association of five major emerging national economies: Brazil, Russia, India, China and South Africa. The group was founded in June 2006 at the St. Petersburg International Economic Forum and was known as BRIC prior to inclusion of South Africa in 2009. Russia is presiding in BRICS in 2015 and is chairing the BRICS Business Council until April 2016. An agreement on establishment of the BRICS New Development Bank to fund infrastructural and sustainable development projects in BRICS member-states and emerging economies was signed at the summit in 2014.

BRICS summit in Ufa on July 8-9 will be the main event during Russia’s presidency tenure.

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