The BRICS Development Bank has announced plans to begin lending in South African and Brazilian currencies in order to reduce reliance on the US dollar.
The NDB was created in 2014, by the BRICS bloc of Brazil, Russia, India, China, and South Africa, as a Global South-oriented alternative to the US-dominated World Bank, which is infamous for imposing neoliberal economic reforms on impoverished countries, which hinder their development.
Vice President Kashim Shettima is currently representing President Bola Tinubu at the 15th BRICS summit in South Africa.
The conference, which commenced in Johannesburg on August 22, will focus on issues of trade and investment facilitation, sustainable development, innovation, and global governance reform.
Rousseff explained, “It is necessary to find ways to avoid foreign exchange risk and other issues, such as being dependent on a single currency, such as the US dollar”
“The good news is that we are seeing many countries choosing to trade using their own currencies. China and Brazil, for instance, are agreeing to exchange with RMB (renminbi) and the Brazilian real”, she said.
“At the NDB, we have committed to it in our strategy. For the period from 2022 to 2026, the NDB has to lend 30 per cent in local currencies, so 30 percent of our loan book will be financed in the currencies of our member countries”, Rousseff added.
“That will be extremely important to help our countries avoid exchange rate risks and shortages in finance that hinder long-term investments”, the new NDB president stressed.
She said the NDB would issue debt in rand for lending in South Africa and do “the same thing in Brazil with the real. We’re going to try to either do a currency swap or issue debt. And also in rupees.”
Rousseff said lending in local currency would allow borrowers in member countries to avoid exchange rate risk and variations in US interest rates.
She said the bank has also tried to distinguish itself from the World Bank and the International Monetary Fund (IMF) by not setting lists of political conditions on loans.
She also said the Shanghai-based lender was considering applications for membership from about 15 countries and was likely to approve the admission of four or five.
Members of the NDB not only include the founders of the BRICS but also Bangladesh, the UAE, and Egypt. Uruguay is likewise in the process of joining, and many other countries have expressed interest.
Argentina, Iran, and Algeria have formally applied to join the extended BRICS bloc, and according to the foreign minister of Russia, Sergei Lavrov, other nations that are interested “include Egypt, Turkey, Saudi Arabia, the United Arab Emirates, Indonesia, Argentina, Mexico, and a number of African nations”.
