BRICS New Development Bank to explore ‘expanded financing channels’
But there are doubts about the bank’s growth prospects since all BRICS members are grappling with economic slowdown or recession
Finance Minister Lou Jiwei on Wednesday called for the New Development Bank to explore new financing options, lure private capital and cut red tape in its first five-year plan to shore up the global clout of the infrastructure-focused lender established by BRICS nations.
Expanding financing channels for the bank has been a recurring topic among the five member nations Brazil, Russia, India, China and South Africa during the lender’s two-day first annual meeting in Shanghai, which ends today.
“New financing channels shall be sought after, including attracting policy institutions, commercial banks, insurers and private capital through public-private partnership,” Lou said at the opening ceremony.
He said BRICS nations faced difficulties attracting foreign capital in the challenging global economy and called for the bank to develop local-currency business to secure stable and low-cost capital.
The lender raised 3 billion yuan (HK$3.5 billion) from a green bond issue in Shanghai on Tuesday, with subscriptions exceeding 9 billion yuan.
The NDB, formerly called the BRICS Development Bank, officially started operations a year ago, with initial capital of US$50 billion, evenly contributed by the five member countries.
It is one of the two policy banks, along with the Asian Infrastructure Investment Bank, that are heavily backed by Beijing and are being pitched as alternatives to established global institutions such as the World Bank and the Asian Development Bank.
But there have been mounting doubts about the bank’s growth prospects since nearly all of the BRICS members are grappling with severe economic slowdown or recession.
At a briefing on Wednesday, NDB president K.V. Kamath said the bank was weighing issuing more local currency bonds in coming years in member countries such as South Africa, India and Russia where there was rising demand.
Xu Mingqi, a researcher at the Shanghai Academy of Social Sciences, said on the sidelines of the meeting that private capital may not be as patient as governments in waiting for long-term returns on such large-sum projects.
