BRICS leaders postpone forming of development bank

Five countries of the BRICS group of emerging powers wrapped up their summit in the South African town of Durban on Wednesday.

Source: Beta
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BRICS leaders decided to postpone the forming of a development bank.

South Africa, which is a part of BRICS together with Brazil, Russia, India and China had high expectations for the development bank that should finance enormous infrastructural needs in the region. The initiative to form the bank was announced at the previous BRICS meeting in India last year.

However, South Africa’s President Jacob Zuma has stated that negotiations on the forming of the bank will officially begin but not that the bank will be formed as many have been hoping, AFP has reported.

Zuma said that the BRICS leaders were satisfied with the fact that the forming of the new development bank was sustainable.

“The issue will be discussed on the sidelines of the G20 summit in Saint Petersburg in September,” he pointed out.

Russian Finance Minister Anton Siluanov has stated that the BRICS countries are yet to agree on the amount of money each country will invest in the bank. According to studies, the new bank should have a capital of USD 50bn. The five members will have to give USD 10bn each.

While many South Africans wonder how the country will secure the USD 10bn, which represents about 2.5 percent of South Africa’s GDP, Russians suggest that each country should invest USD 2bn in the beginning.

The BRICS countries want to form institutions that will allow them to rival Western-dominated institutions like the World Bank and the International Monetary Fund.

Russia, Brazil, India and South Africa also fear China’s domination in the financial institution, bearing in mind its sizeable foreign reserves.

The five BRICS leaders will meet with 15 African leaders in Durban later on Wednesday.

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