New Delhi: The hegemony of the World Bank and IMF – posing certain political conditions through economic means – could end with the creation of BRICS development bank. However, the scope of the non-BRICS nation in availing of loan facilities is yet to be spelt out. But Shanghai as its headquarters is finalised.  Besides the economic message there is a political message as these countries seek to end the US hegemony as well.
Analysts believe that the bank will be a way to tap China’s vast financial resources. The bank will have initial capital of $50 billion with each country contributing an equal share, while the reserve will have $100 billion at its disposal. For the fund, China will make the biggest contribution, $41 billion, followed by $18 billion from Brazil, India and Russia and $5 billion from South Africa.
Currently, countries gain access to international capital – including Chinese – through loans from the Washington D C-based World Bank and International Monetary Fund (IMF). Both institutions provide loans to fund major infrastructure projects or stabilise economies that are in trouble.
Now, the creation of a BRICS development bank could offer countries a way to negotiate for infrastructure loans much more directly with China, the major financial power of the BRICS group. Beijing and its partners appear to regard the bank as an alternative to the World Bank and IMF, suggesting they want to invest in each other and possibly other emerging countries’ infrastructure projects much more directly.
Beijing and its partners have frequently faulted the World Bank and IMF as being Western-dominated and not adequately representing their own priorities. They all, however, remain members of both institutions.
The stated goal of the new BRICS development bank is to provide its members with a way to pool money for investment in targeted infrastructure projects among themselves. But the project also aims to support increased commerce between BRICS and other emerging economies, suggest loans could be made for developing ports, roads, and other infrastructure necessary for trade.
The grouping of emerging states began with four members in 2009 and added South Africa as a partner the following year. Membership in BRICS is based on the fact that all five countries are distinguished by their large, fast-growing economies and significant influence on regional and global affairs.
Together, the five members of BRICS account for 25% of global gross domestic product and 40 percent of the world’s population.