BRICS to Ink Currency Pacts, to Push Joint Bank
Thursday, 29 March 2012, 04:39 Hrs
New Delhi: The BRICS grouping of five emerging economic powerhouses - Brazil, Russia, India, China and South Africa - will sign two pacts to promote trade in their local currencies and are expected to endorse plans for a joint development bank that will raise their economic heft in the global system. Prime Minister Manmohan Singh, Russian President Dmitry Medvedev, Chinese President Hu Jintao, Brazilian President Dilma Rousseff and South African President Jacob Zuma will hold wide-ranging talks and unveil their vision of an emerging world order at the 4th BRICS summit here. The leaders of the BRICS countries are expected to make a renewed pitch for reform of global political and financial governance institutions, the democratisation of international relations with a greater say for developing countries and boosting intra-BRICS trade and cooperation across diverse sectors. With the Eurozone recession festering, the leaders of the BRICS countries, which are seen as new growth poles in a multi-polar world, will focus on finding ways of sustainable global economic recovery and cement intra-BRICS cooperation for inclusive growth, food security and energy security. An ambitious all-encompassing Delhi Declaration is expected at the end of the summit that will reflect key priorities and encapsulate future plans of the BRICS as an alternative grouping of emerging economies to rival the West-dominated G7. Two pacts for promoting intra-BRICS trade in national currencies of the BRICS countries will be signed in the presence of the leaders Thursday afternoon. The two agreements will enable credit facility in local currency for businesses of BRICS countries and allow development banks to extend lines of credit to each other. No target has been set for funds that will be available through this mechanism. Chen Yuan, member of the board of governors of China's Development Bank, said Wednesday that the sum could be "hundreds of millions/billions of dollars." The pacts are expected to scale up intra-BRICS trade which has been growing at the rate of 28 percent over the last few years, but at $230 billion it remains much below the potential of the five economic powerhouses. Trade ministers from the five countries Wednesday discussed the two pacts as well as other initiatives for promoting intra-BRICS trade. The trade ministers' recommendations will be presented to the leaders Thursday. They also agreed to make collective efforts to break the impasse on Doha round of the Word Trade Organisation (WTO) talks and push forward developing countries' agenda at the G20 meet. The leaders of BRICS countries are also expected to push for a BRICS Development Bank or South-South Bank and may set up a panel to study the nitty-gritty of setting up such an institution which could emerge as a World Bank of developing countries, said informed sources. "It's still very much a thought that needs to be developed. Experts have met but it will take time," said Sudhir Vyas, secretary (economic affairs) in the external affairs ministry. The bank is expected to provide funds for infrastructure projects in developing countries and could also lend during global financial crises. The BRICS report on synergies and complementarities between the economies of the five countries, which will serve as a reference guide for promoting trade and investment, will also be released in the presence of the leaders. The report has been prepared by a multi-national group of experts led by Kaushik Basu, chief economic advisor to the Indian finance ministry.