Congress approves creation of BRICS bank

The Senate approved Wednesday (June 3) the agreement establishing the BRICS Bank and the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement. The move completes an important ratification step i.e. parliament approval by member countries of the bloc (Brazil, Russia, India, China, and South Africa). The agreements had been voted by the Chamber of Deputies on May 21.

The BRICS Bank is designed to support infrastructure development in the five countries. The start-up capital will be $50 billion, consisting of $10 billion in funds and $40 billion collateral.

The deal to create the bank was signed during the BRICS Summit in Fortaleza, Brazil, in July 2014. when the country representatives decided that the bank would be headquartered in Shanghai, China, and the first president will be appointed by India.

The Treaty for the Establishment of a BRICS Contingent Reserve Arrangement was signed on that same occasion. All member countries will pool their resources into the fund, which can be used by member countries in case of crisis.

The fund will have a start-up capital of $100 billion, consisting of $41 billion provided by China, $18 billion provided by each among Brazil, India and Russia, and $5 billion by South Africa.

“We all here know all the bumps the Brazilian economy has faced, mainly due to currency fluctuations and the external crises. And what's the purpose of creating this $100 billion fund? Precisely to create a cushion, a shield to protect these countries. So this is something absolutely relevant,” reporting Senator Delcídio Amaral explained.

In a statement, Finance Minister Joaquim Levy said the new bank will be instrumental in raising Brazil's profile in the global scene. According to Levy, Brazil offers a number of benefits and businesses in the country must really compete to win.

The minister said other recent initiatives, including Brazil's membership of the Asian Investment Bank, are a testament to Brazil's willingness to support business leaders targeting the global market. He was in Paris where he signed a cooperation agreement with the Organization for Economic Cooperation and Development (OECD).

*With additional reporting by Wellton Máximo

Translated by Mayra Borges