At a press conference on Saturday (5), the president of the New Development Bank (NDB), Dilma Rousseff, was asked if the BRICS Bank could be considered a kind of International Monetary Fund (IMF). Created in 1944 at the Bretton Woods Conference, the IMF provides loans and financial rescues to countries in economic difficulty.
The former president of Brazil was categorical when commenting on the differences she considered most obvious between the two institutions: “We are a bank made by the Global South for the Global South. Therefore, the Global South controls the bank. The bank’s partners are the so-called “emerging and developing countries,” referring initially to Brazil, Russia, India and China, later joined by South Africa, Iran, Saudi Arabia, Egypt, Ethiopia and the United Arab Emirates. Recently, the group welcomed Colombia, Uzbekistan and Algeria.
Another point highlighted by Rousseff is the horizontality among member countries. There is a level playing field, without one state or another deciding the Bank’s actions. There is either a consensus or no decision on strategic issues, and there is a need for a qualified majority in the case of day-to-day issues. She explains that in other banks, “a certain amount of shareholder control also implies control of governance and the ability to set guidelines”, and this is a major difference compared to the NDB approach.
The third highlight is that the bank prioritizes the demands of its member countries. “We don’t impose priorities on them. We don’t tell them ‘This must be your development path. We can give them an opinion, but without conditioning them to accept it or not.”
Thus, Rousseff explains that the NDB presents proposals according to the demands of member countries, without dictating projects or conditions for funding. In particular, it does not make funding conditional on any “criteria that do not respect the sovereignty and priority of each country’s specific programs. I think that is NDB’s most important difference.”
The proposal to break with the Bretton Woods model, which includes the IMF and the World Bank, consequently promoting development more fairly financed is a topic discussed by the NDB and was mentioned several times during the events of the meeting that took place July 3 and 4, of which Dilma’s press conference was part.
Brazil’s Finance Minister, Fernando Haddad, took part in the event’s opening ceremony and argued that the Bretton Woods organization of world finance needs to be replaced by a vision of international management of global problems. “The problems are no longer national; financing countries will no longer be enough to face these challenges.”
Marta Fernández, coordinator of the BRICS Policy Center, talked to BdF and pointed out that, unlike traditional banks, the NDB was created with equal quotas among the founding members and has a more horizontal structure. “To the extent that they were unable to progress in reforming multilateral financial institutions, the BRICS countries created their own mechanism.”
Results and priorities
At the press conference, Rousseff talked about the creation and functioning of the NDB, in addition to officially announcing the entry of Colombia and Uzbekistan into the bank. She also explained that there are other possible countries to join, but she can’t comment much, as the board of governors has decided not to expose the countries that intend to be members due to ongoing negotiations.
Dilma also explained that over its first decade, the BRICS Bank approved 122 investment projects totaling US$42 billion. The amount already disbursed totals US$22.2 billion, destined mainly for infrastructure, logistics and electrical systems. Brazil is one of the countries where this investment is being made, having approved 29 projects totaling US$7 billion. So far, US$4 billion has been disbursed, equivalent to 18% of the NDB’s total.
The bank’s current strategic priorities are attracting new members, establishing itself as a development platform for countries in the Global South, expanding financing and fundraising in local currencies, investing in infrastructure, and increasing financing to include innovation and support for developing countries’ industrialization.
One of the bank’s current focuses is innovation, especially in science and technology, both for member countries to be closer to what current reality demands at the international level, and for the bank itself to be more efficient in its actions.
