Leaders of the BRICS nations will launch their long-awaited development bank at a summit next week and decide whether the headquarters should be in Shanghai or New Delhi, Russian finance minister Anton Siluanov said on Wednesday.
The creation by Brazil, Russia, India, China and South Africa of a $100-billion bank to finance infrastructure projects has been slow in coming, with disagreements over its funding, management and headquarters.
“The (headquarters) issue will be decided on the level of the heads of the countries,” Siluanov told journalists, adding that the choice is between Shanghai and New Delhi. BRICS leaders will meet July 15-16 in the Brazilian coastal city of Fortaleza.
The launch will be the group’s first major achievement after struggling to take coordinated action following an exodus of capital from emerging markets last year, triggered by the scaling back of US monetary stimulus.
The new bank will symbolise the growing influence of the BRICS, something that Russia has hoped for after the West imposed sanctions on Moscow in the spring for annexing part of Ukraine and its continued involvement in the country’s crisis.
Capitalisation of the new bank has been a major sticking point, but Siluanov confirmed that the funding would be divided equally, with an initial total of $10 billion in cash over seven years and $40 billion in guarantees.
The $50 billion will be eventually built up to $100 billion, and the bank will be able to start lending in 2016, he said. The bank, first proposed in 2012, was approved at last year’s BRICS summit in South Africa but failed to be launched during the meeting in Russia last autumn of the Group of 20 developed and developing nations.
The bank will be open to other countries that are United Nations members, but the BRICS share is never to decline below 55%, Siluanov said.
The chairmanship, with a term of five years, will rotate among the members, but the first chairmanship is yet to be decided, Siluanov said.
The heads of the BRICS will also sign a blueprint agreement on the group's other project — a $100-billion fund to steady the currency markets, which has also been off to a slow start.
The initiative became more acutely needed after an inflow of cheap dollars fuelled a boom in the BRICS for a decade and then reversed to a sharp outflow last year.
"We have reached an agreement that, in current conditions of capital volatility, it is important for our