BRICS Summit - Durban

Leaders from Brazil, Russia, India, China and South Africa approved a $100-billion fund to combat currency crises, while failing to reach an agreement on financing for a development bank.
China may provide the bulk of the funding for the foreign-currency pool, Russian Finance Minister Anton Siluanov said in an interview in Durban, South Africa. Negotiators are considering proposals for China to contribute $41 billion, Brazil, Russia and India to provide $18 billion each and South Africa $5 billion, he said. “The establishment of a selfmanaged contingent reserve arrangement would have a positive precautionary effect, help BRICS countries forestall short-term liquidity pressures, provide mutual support and further strengthen financial stability,” South African President Jacob Zuma said after leaders from the five nations met in Durban.
The BRICS countries, which have 43% of the world’s population and total foreign-currency reserves of $4.4 trillion, are seeking greater financial sway to match their rising economic power. Emerging markets from Brazil to Turkey have been hit by currency swings as interest rates near zero in the US, Japan and Europe fuelled foreign investors’ appetite for higher-yielding assets. Brazil’s real has gained 1.9% against the dollar this year, while South Africa’s rand has slumped 8.8%.
Officials didn’t provide details on how the currency fund will operate. In October, Brazilian Finance Minister Guido Mantega said the pool will be modelled on the Chiang Mai Initiative, which gives Japan, China, South Korea and 10 southeast Asian nations access to $240 billion of emergency liquidity to shield the region from global financial shocks.

While leaders agreed that a development bank was “feasible and viable”, they failed to provide detail on how it would be funded. The Brics nations have been studying the viability of the bank for a year. In the run-up to the summit, officials from Brazil and Russia indicated each country could contribute $10 billion. “We have reached broad consensus,” said Chinese President Xi Jinping at the summit closing. The agreement on the banks and currency reserve arrangement “will further unlock potential cooperation”, he said. India proposed the bank a year ago amid criticism from developing nations that the World Bank and International Monetary Fund aren’t doing enough to address underdevelopment and Western nations have too much say over their management.

Prime Minister Manmohan Singh made five suggestions for BRICS, covering global growth to security, as the influential bloc of Brazil, Russia, India, China and South Africa moves forward after concluding the first cycle of five summits in each of these emerging economies.
“As we look to the future, the progress over the past five years encourages us to set higher ambitions, seek new avenues and set new goals for our cooperation,” the prime minister told the plenary session of the fifth edition of BRICS summit in this coastal city of South Africa.
“However,our roadmap for the future should focus on consolidating and deepening our existing cooperation. We should also carefully prioritise existing and new areas, keeping in view our strengths, our resources and the difference we can make, both for our people and the world,” he said.
Accordingly, he made five suggestions:
Respond to the persisting weakness in the global economy by deploying adequate resources to revive growth.
Look at R&D and related exchanges through the prism of emerging economies rather than focus on the developed world.
Make economic development more broadbased and inclusive, not just as a moral imperative but also as a pragmatic approach.
Work more cohesively at global forums to advance the agenda of sustained economic recovery and balanced outcome on issues related to trade, development and environment.
Work closely for the reform of global institutions of political and economic governance like the UN Security Council and the International Monetary Fund that reflects contemporary realities.
“It is my belief that over the last five summits, our forum has become more cohesive and more relevant. We derive as much value from our diversity as from our synergies — equally, we stand to benefit enormously from our convergence and collective strength,” the prime minister said.
“The world faces uncertainties, turbulence and transition on an unprecedented scale, leading to multiple economic and security challenges for us,” he said.
“It is incumbent upon us to use our collective voice and capacity and make an effective and meaningful contribution to addressing these challenges and fostering global peace, stability and security.”