Fortaleza (Brazil), July 16 : The BRICS group of emerging powers, after setting up a development bank to help finance infrastructure, Wednesday decided to explore new areas of cooperation such as insurance, and facilitate market inter-linkages and financial integration.
At the end of their Sixth Summit in this northeastern seaside city, leaders of the five emerging economies of Brazil, Russia, India, China and south Africa pledged to deepen partnership with a “renewed vision” for mutual benefit, and engage with emerging market economies and developing countries (EMDCs), especially of South America.
“We believe that strengthened dialogue among BRICS and South American countries can play an active role in enhancing multilateralism and international cooperation, for the promotion of peace, security, economic and social progress and sustainable development in an interdependent and increasingly complex, globalizing world,” the leaders said in their “Fortaleza Declaration”.
They also adopted an 23-point action plan, called the “Fortaleza Action Plan“, that includes dialogues on economic, foreign and security policy to foster common development, as well as people-to-people contacts. The Sixth Summit took place at a time when the world community is assessing how to address the challenges of strong economic recovery from the global financial crises, persistent political instability and conflict, non-conventional threats and climate change.
The BRICS leaders said strong macroeconomic frameworks, well regulated financial markets and robust levels of reserves have allowed EMDCs in general, and the BRICS in particular, to better deal with the risks and spillovers presented by the challenging economic conditions in the last few years.
“In this context, we reaffirm our strong commitment to continue working among ourselves and with the global community to foster financial stability, support sustainable, stronger and inclusive growth and promote quality jobs.” “The BRICS stand ready to contribute to the G20 goal of lifting our collective GDP by more than 2 percent above the trajectory implied by current policies over the coming 5 years,” it said. Referring to financing constraints faced by the BRICS, as well as other EMDCs, the leaders said the setting up of the New Development Bank (NDB) would help mobilise resources for infrastructure and sustainable development projects.
“Based on sound banking principles, the NDB will strengthen the cooperation among our countries and will supplement the efforts of multilateral and regional financial institutions for global development, thus contributing to our collective commitments for achieving the goal of strong, sustainable and balanced growth.”
The development bank will have initial capital of $50 billion that could rise to $100 billion, funded equally by each nation to avoid concerns that one country has more power than the other. The countries also set up a reserve fund, the Contingent Reserve Arrangement, which will have $100 billion at its disposal to head off financial volatility. The countries signed a Memorandum of Understanding on Cooperation among BRICS Export Credit and Guarantees Agencies that will improve the support environment for increasing trade opportunities among our nations.
On new areas of cooperation, the leaders said there is potential for BRICS insurance and reinsurance markets to pool capacities. “We direct our relevant authorities to explore avenues of cooperation in this regard,” they said. They pressed for urgent changes in the International Monetary Fund’s voting shares “to reflect the unquestionable weight of emerging countries.” The leaders voiced their serious concern at the non-implementation of the 2010 International Monetary Fund (IMF) reforms, which, they said, negatively impacts on the IMF’s legitimacy, credibility and effectiveness.
“The Fund must remain a quota-based institution. We call on the membership of the IMF to find ways to implement the 14th General Review of Quotas without further delay,” they added. The leaders also welcomed the setting up of the BRICS Information Sharing and Exchange Platform, which seeks to facilitate trade and investment cooperation.