BRICS’ New Development Bank (NDB) President Dilma Rousseff has announced plans to start lending in the South African and Brazilian currencies as part of efforts to reduce reliance on the US dollar.
“We expect to lend between $8 billion-$10 billion this year. Our aim is to reach about 30% of everything we lend […] in local currency,” Rousseff told a UK newspaper on Tuesday.
She added that the NDB would issue debt in rand for lending in South Africa and do “the same thing in Brazil with the real.” According to her, the NDB is “going to try to either do a currency swap or issue debt. And also in rupees.”
Rousseff also said without elaborating that the lender was considering applications for membership from about 15 countries and that the NDB was likely to approve the admission of four or five nations.
On lending in local currency, the NDB president said that it “would allow borrowers in member countries to avoid exchange rate risk and variations in US interest rates.” She insisted that “local currencies are not alternatives to the dollar,” adding, “they’re alternatives to a system. So far the system has been unipolar [...] it’s going to be substituted by a more multipolar system.”
Rousseff also apparently sought to distinguish the NDB from the World Bank and the IMF by defying loans-related political conditions.
“We repudiate any kind of conditionality. Often a loan is given upon the condition that certain policies are carried out. We don’t do that. We respect the policies of each country,” she stressed.
Rousseff remained upbeat about the future of the lender, recalling that the NDB – which was established in 2015 – is the newest of the world’s development banks. “We’ll transform ourselves into an important bank for developing countries and emerging markets. Our focus has to be that: a bank made by developing countries for themselves,” she emphasized.
Meanwhile, the 15th BRICS summit has opened in Johannesburg, South Africa, with the group’s expansion-related issues expected to top the gathering’s agenda.
“At least 23 countries have already applied to join BRICS, something that testifies to the real effectiveness and success of this mainly economic association of countries," Alexey Gromov, an expert of the Russian National Committee for BRICS Study, told Sputnik.
He added that the expansion of the bloc “can only be welcomed, but we need to deal with this process responsibly so as not to reduce the effectiveness of contacts between participants.”
Touching upon BRICS on the whole, the expert stressed that the organization “aims to contribute to the economic growth and prosperity of the member states," and that “the shortest way to it is the growth of trade and economic ties."
“However, in an environment where all commercial transactions are carried out with the help of Western financial infrastructure, such ties are at risk of external influence,” Gromov said, referring to the West’s anti-Russian sanctions as an example.
In this regard, creating independent trading instruments should be one of BRICS’ priority tasks, according to the expert.
"These include BRICS trade and energy centers, as well as the group’s stock exchange or e-commerce platform, along with the bloc’s arbitration court for resolving trade disputes, and in the future – the organization’s own currency (possibly digital) for trading within the club,” Gromov noted.
A similar tone was struck by former Colombian President Ernesto Samper, who said in an interview with Sputnik that the 2023 BRICS Summit is “significant and important for achieving three goals.”
First and foremost, the summit should add to promoting world peace and secondly - to developing one of the economic foundations of the new globalization, according to Samper.
The third goal is to begin implementing a different project of a multipolar world, in which what is really taken into account is not the economic conditions in which countries find themselves, but their political identity", the ex-Colombian president insisted.
“I believe that BRICS is currently able to grapple with what can be called new topics on the global agenda regarding food sovereignty, climate change, artificial intelligence, and development of civil society building, among other important issues,” he summed up.