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 yesterday.
The creation by Brazil, Russia, India, China and South Africa of a US$100 billion bank to finance infrastructure projects has been slow in coming, with disagreements over its funding, management and headquarters.
"The issue will be decided at the level of the heads of the countries," Siluanov said.
BRICS leaders will meet from July 15 to 16 in the Brazilian coastal city of Fortaleza.
The launch of the bank 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.
Capitalisation of the new bank has been a major sticking point, but Siluanov confirmed the funding would be divided equally, with an initial US$10 billion in cash over seven years and US$40 billion in guarantees.
The US$50 billion would be eventually built up to US$100 billion, and the bank would be able to start lending in 2016, he said.
The cash will continue to be held in the reserves of each BRICS country, but it can be transferred if needed to another member to soften volatility in its foreign exchange market.
China, holder of the world's largest foreign exchange reserves, will contribute the bulk of the contingency currency pool, or US$41 billion.
If a need arises, China will be eligible to ask for half of its contribution, South Africa for double and the remaining countries the amount they put in.
"Some countries may put in less, but their needs are also greater, proportionally," Siluanov said.