Prime Minister Narendra Modi and the heads of state of the other four BRICS countries, Brazil, Russia, China and South Africa, on Tuesday signed a 72-point Fortaleza Declaration that announced the New Development Bank with an initial authorised capital of $100 billion and a subscribed capital of $50 billion, and a $100 billion contingency reserve arrangement (CRA).
While the bank, first envisioned at the Delhi Summit in 2012, will supplement the World Bank in funding infrastructure projects in BRICS and other emerging countries, the CRA will help the five countries forestall short-term liquidity pressures and strengthen the global financial safety net.
Modi said BRICS was the first grouping in the world based on future potential, and not on existing prosperity or shared identities. (Source: PTI)
Addressing the plenary session of his first BRICS Summit at Fortaleza, Modi said BRICS was the first grouping in the world based on future potential, and not on existing prosperity or shared identities. “BRICS has gained enough horizontal influence to compel the world to take notice. Our own greater good, however, lies in deepening our bonds vertically,” he said.
Stating that the BRICS forum must be decentralised, he said, “We must proactively move beyond being Summit-centric. We must champion sub-national level exchanges; champion engagement between our states, cities and other local bodies,” he said. Modi put several ideas on the table, including a BRICS University, a young scientists’ forum to nurture innovation and BRICS language schools.
Among other issues, the 8,000-plus word declaration calls for urgent reforms of the Bretton Woods institutions, the International Monetary Fund and the World Bank, and also roots for comprehensive reform of the United Nations Security Council. Earlier, addressing the plenary, Brazil President Dilma Rousseff said the UNSC has not lived up to the challenges, and the legitimacy of the World Bank and the International Monetary Fund have been eroded.
The declaration noted that China and Russia reiterated the importance they attached to Brazil, India and South Africa’s status and role in international affairs and supported their aspirations to play a greater role in the UN.
“Despite the geography, the BRICS countries have built a solid and productive partnership,” said Rousseff. The BRICS grouping cannot be alienated given its influence in the regions. While advanced economies are slowly recovering, the BRICS countries are driving global growth despite their domestic slowdown, she said.
The declaration also expressed disappointment at the non-implementation of the 2010 IMF reforms. This negatively impacted the Fund’s legitimacy, it said, adding that the governance structure must reflect the increasing weight of the emerging markets in the world economy. It asked the IMF to reach a final agreement on a new quota formula before January 2015.
Similarly, it said the World Bank will reach its full potentially only if it moves towards more a democratic governance structure. It said the work on the next shareholding review must begin as soon as possible to meet the October 2015 deadline.