Ufa summit: BRICS leaders walk the talk, New Development Bank to lend by 2016

ufa-brics-modiUFA (Russia): Reinforcing their commitment to remapping the global financial landscape, the leaders of the BRICS group of emerging powers declared operationalization of their two signature initiatives, the New Development Bank (NDB) and Contingent Reserve Agreement(CRA), saying these institutions will act as a global safety net amid fragile economic recovery. “We welcome the substantive progress that was made since the Fortaleza Summit on 15 July 2014 during the Brazilian BRICS Chairmanship, especially the establishment of BRICS financial institutions: the New Development Bank (NDB) and the Contingent Reserves Arrangement (CRA).

The Ufa Summit marks their entry into force,” said the Ufa Declaration. The NDB, with initial start-up capital of $50 billion, is expected to approve its inaugural investment project in 2016 and it would cooperate with existing and new financing mechanisms such as the AIIB. With the $100 billion CRA coming into force, the members welcomed the signing of the BRICS-Inter Central Bank, which sets technical parameters of operations within the BRICS CRA.

The CRA allows its members to provide mutual financial support which is an important financial step, apart from providing a global safety net as well. The BRICS would work closely with all members to lift global growth, as well as strengthen the global financial system and consolidate the role of G20, said the declaration.

Taking a strong stand against stonewalling by USA and western powers over the IMF reforms, the leaders of emerging economies expressed their “disappointment” and spelt a deadline for the US to fulfill its commitments by mid-September 2015 to ratify the IMF 2010 reforms package. The leaders also mentioned the wider use of national currencies for ramping trade between members, which has asked the authorities of the member countries concerned to provide a feasible report on it. Amid fragile global recovery, the BRICS also formally adopted strategic economic partnership which will upscale trade and investment among emerging economies and positioned them as the future hub of economic growth. The 7th BRICS summit has imparted a big push to the ongoing project of recasting the global financial system and underscored the centrality of emerging powers in this process.

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