BRICS nations agree to set up development bank

The BRICS group of emerging economies has agreed to setting up a development bank that will rival Western-backed institutions.

“It’s done,” South Africa’s Finance Minister Pravin Gordhan said on Tuesday after meeting with his counterparts from Brazil, Russia, India and China on the first day of the annual BRICS summit in Durban, South Africa.

The bank will be set up on the lines of the World Bank and the International Monetary Fund (IMF) to address the development needs of emerging and poor economies.

The proposal for a bank, with a collective foreign exchange reserve and a fund for financing developmental projects, was mooted to counter the influence of other global institutions like the World Bank, which are more tuned to pursuing policies set by the West.

The World Bank and IMF continue to favor US and Europe over BRICS nations, and in 2010, the US failed to ratify an agreement which would allow more IMF funds to be allocated to developing nations.

Meanwhile, the two largest economies of the emerging power groups, China and Brazil, signed a currency swap deal by which they will be using their own currencies for almost half of their trade exchanges.

The five-member bloc collectively accounts for about 40 percent of the world’s population, 30 percent of the world’s land mass, 20 percent of the gross domestic product in real terms and 26 percent of purchasing power.