03
Jul
China today said the Asian Infrastructure Investment Bank (AIIB) will not negatively affect BRICS New Development Bank and the two will play a complimentary role in funding infrastructure development in Asia.
“The BRICS (Brazil, Russia, India, China and South Africa) New Development Bank (NDB) is a landmark event in fiscal cooperation among the five emerging economies,” Chinese Foreign Ministry spokesperson Hua Chunying told a media briefing here today.
The bank will complement existing multilateral banks connectivity in the region.
“It will also influence the BRICS countries. The two banks will complement and reinforce each other and jointly contribute to infrastructure building of the developing countries and play their different role in this regard,” she said replying to a question whether AIIB will negatively impact BRICS Bank.
Fifty countries, including India, have joined the AIIB and the rules of its governance while seven other countries will sign it after ratification of their governments.
The formation of the BRICS Bank is ratified by the Chinese national legislature, the National People’s Congress (NPC) today.
The bank will fund infrastructure projects in the bloc and other developing economies, Hua said.
The agreement was signed by the bloc’s five members — Brazil, Russia, India, China and South Africa — on July 15 last year during the sixth BRICS summit.
It will enter into force only when all BRICS countries have submitted documents of acceptance, ratification or approval.
The Shanghai-based NDB will have initial authorised capital of USD 100 billion and its initial subscribed capital of USD 50 billion which will be equally shared among the founding members.
It will have a three-tier governance structure — a board of governors, a board of directors, a president and vice presidents.
As agreed by the five countries, the first chair of the board of governors will be nominated by Russia, the first chair of the board of directors by Brazil, and the first president by India, which nominated eminent banker K V Kamath to head it.
They also agreed to set up a NDB African regional center in South Africa.
The board of governors is expected to hold the first meeting on July 7 in Russia to appoint members of the board of directors and the management led by the president, according to the Ministry of Finance.
Rules regarding procedures will be made and the bank’s five-year development strategy discussed at the meeting.
The inaugural management team will take their posts in Shanghai in middle July, according to the Chinese finance ministry.
The NDB is expected to launch late this year or early next year.
The bank’s establishment will be an important achievement for financial cooperation among BRICS members, said Finance Minister Lou Jiwei.
It will promote infrastructure construction and sustainable development of the emerging and developing economies, he said.
The bank also helps promote reform of global economic governance, he said.
Chinese government will provide USD 10 billion on time as prescribed, Shi said.
For the time being, the agreement will not apply to Hong Kong Special Administrative Region, according to NPC decision.