Durban: In a clear signal of their ascendance in the geopolitical space, the leaders of Brazil, Russia, India, China and South Africa Wednesday gave their go-ahead to a BRICS bank, rivalling the World Bank and the International Monetary Fund (IMF), to address the development challenges of poor and emerging economies.
The leaders, who met for the 5th BRICS Summit here -- where the Indian delegation was led by Prime Minister Manmohan Singh -- also endorsed a $100-billion contingency reserve arrangement that will be deployed when any of the five member-nations faces a crisis.
"We (the finance ministers of the five countries) gave a big idea and that idea has now become a reality -- that is the BRICS development bank," Indian Finance Minister P. Chidambaram told journalists here, soon after the conclusion of the plenary session on the second day of the two-day summit.
He said the finance ministers and officials of the two countries have been given a 12-month time-frame to work out modalities like the capital of the proposed bank, its domicile and the governance structure.
"We should have a nearly complete document when the leaders meet again in Brazil next March," he added.
As regards the contingency reserve arrangement, Chidambaram said the bulk of the money, that is $41 billion, will be pledged by China, $18 billion each will come from India, Brazil and Russia, while South Africa has agreed to $5 billion.
The proposal for the BRICS bank and a contingency reserve arrangement was mooted when India hosted the previous BRICS Summit in New Delhi. This was to counter the influence of other global institutions like the World Bank that are more tuned to pursuing the policies as dictated by the West.
"It gives me great satisfaction to note that one of the ideas that we first discussed at New Delhi, that of instituting a mechanism to recycle surplus savings in infrastructure investments in developing countries, has been given concrete shape during the Durban Summit," Manmohan Singh told the plenary.
"We have agreed to establish the New Development Bank. The initial contribution to the Bank should be substantial and sufficient for the Bank to be effective in financing infrastructure," the leaders said in a joint statement, officially called the eThekwini Declaration after the African name for Durban.
The five-member BRICS bloc collectively accounts for 40 percent of the world's population, 30 percent of the world's land mass, 20 percent of the gross domestic product in real terms and 26 percent of purchasing power. They also together have foreign exchange reserves of $4.3 trillion.
Besides the bank and the reserve arrangement, the BRICS Summit also established a business council with five members each from the five countries, a consortium of think tanks and an enabling agreement among the development banks of the five countries to enhance financing for projects in Africa.
With this, the Summit has delivered on all the five items listed on the agenda by host South Africa.
"These are good beginnings," Chidambaram said, adding that the collective size of the five member-states of BRICS -- in terms of population, output and reserves -- makes it an important bloc. "We should be able to influence discussion and decisions in G20, the IMF and other multilateral institutions."