- Education And Career
- Companies & Markets
- Gadgets & Technology
- After Hours
- Banking & Finance
- Energy & Infra
- Case Study
- Web Exclusive
- Property Review
- Digital India
- Work Life Balance
- Test category by sumit
BRICS Sets Stage For Bank, Exchange Ties
Photo Credit :
Yu Ping, Vice Chairman of China Council of Promotion for International Trade, who is the part of Chinese delegation, said the meeting of the BRICS Business Forum recommended the setting up of the development bank for furthering trade activities among the member-countries.
Brazilian Development, Industry and Foreign Trade Minister Fernando Pimentel has already said the country will support the proposal on Thursday to fasten the process.
"This is a very powerful tool. Creating such a tool may be a major support to overcome the EU crisis," he said.
Development banks of BRICS nations are in advanced stage of reaching a pact for extending cross-country credit in local currencies of member nations.
Officials say the initiatives will take time as they need to sort out details as they plan a bloc to bring together about half the world's people. The Middle East and energy security will also be discussed, officials say.
The initiative would allow the countries to pool resources for infrastructure improvements, and could also be used in the longer term as a vehicle for lending during global financial crises such as the one in Europe, officials say.
Sudhir Vyas, a senior Indian foreign ministry official, told reporters on Monday that the BRICS would have to determine how the bank would be structured and capitalised. Such an ambitious project would take time, he said.
"We don't set up a bank every ordinary day," he said.
Heads of states and governments of Brazil, Russia, India, China and South Africa are meeting in New Delhi on Thursday to discuss a host of issues in the backdrop of global economic slowdown.
"The delegates recommended that the five BRICS countries have lot of business opportunities and for the companies to engage in cooperation and have business activities they need financing services. Therefore, there should be an institutional guarantee for financial services," Yu said.
Concerned over the fallout of the European sovereign debt crisis, BRICS countries including India on Wednesday called for collective efforts to deal with the problem.
"Adversity of financial crisis is being faced by all.
There is a need to work together to overcome from this problem," Commerce and Industry Minister Anand Sharma said here at the BRICS Business Forum 2012 organised ahead of the BRICS Summit.
Rich Nations Distorting Global Trade
Ahead of the BRICS Summit, trade ministers from Brazil, Russia, India, China and South Africa said in a joint statement, "subsidies in agriculture by some developed countries continue to distort trade and undermine the food security and development prospects of developing countries".
Such protectionism should be shunned,the statement said, after the trade ministers' meeting.
"The ministers emphasised the need to resist protectionist tendencies...," it added.
They have also agreed for a pact to extend cross-country credit in local currencies of the member countries. The MoU in this regard would be signed tomorrow, a Commerce Ministry official said.
Commerce and Industry Minister Anand Sharma, in a joint press conference, said it should be possible for the intra - BRICS trade to more than double to $500 billion by 2015. At present, it is $212 billion.
The BRICS group of emerging world powerhouses - Brazil, Russia, India, China and South Africa - are also expected to launch plans this week for a joint development bank and measures to bring their stock exchanges closer together.
Five Nation Stock Index
A benchmark equity index derivative shared by the stock exchanges of the five BRICS nations will be launched on Friday, the exchanges involved said earlier this month. They would be cross-listed, so can be bought in local currencies.
The leaders are also expected to sign agreements allowing their individual development banks to extend credit to other members in local currency, a step towards replacing the dollar as the main unit of trade between them.
A senior Indian government source said the Middle East and energy security will be high on the agenda, including Iran. The Russian ambassador in New Delhi said this week that a discussion on Syria would be among his country's top priorities.
While the plenary session on Thursday is likely to focus on common ground, bilateral meetings could touch on more sensitive issues.
The exchange rate of China's currency has sparked protests from countries, including Brazilian manufacturers, for being undervalued. Most member countries also face a slowdown in their economies.
"For different reasons, each of the (countries) has got some serious policy issues to deal with here that will determine whether they continue down the path we got everybody so excited about," O'Neill said.
Despite the problems, the growth outlook is still better than in most of the developed world, meaning the BRICS' clout will likely keep growing. O'Neill predicts the bloc's total GDP will be larger than the United States within three years and China's economy alone will overtake the United States by 2027.
Chinese Commerce Minister Chen Deming said the US and EU problems are impacting all and pulled down Chinese exports to the region. "I am sure they will recover. There is a need to prevent the EU crisis quickly before it gets worsened," he added.
Speaking on the occasion, Russian Minister for Economic Development and Trade Elvira Nabioullina said that over 50 per cent of Russian trade goes to euro-zone.
"The world has to stop accumulating risks. There is a need to work closer," she said.
The BRICS members -- Brazil, Russia, India, China and South Africa -- also raised concerns over the impact of rising crude oil prices in the wake of sanctions being imposed by Europe and the US on Iran.
"Rise (in price) of crude oil has impacted all countries.
Iran issue has become an issue for all. We need to continue with normal relations with Iran, but at the same time we respect UN resolution. We hope that unilateral movement by one country will not affect other countries," Deming said.
Sharma, too said, India respects international laws.
"But at the same time, we have economic engagements with our partners. We cannot overlook that," he said.
Sharma added that due to volatility of oil prices, India's trade balance is widening and hurting the economy.
"Our trade account is stressed primarily because of oil and gold imports," he said.
Commenting on trade among BRICS nations, South African Trade and Industry Minister Rob Davies said that there is a huge potential to increase trade among the member nations.
"It is not only government's effort which will help to increase trade, but also the business community of BRICS needs to come closer," he said.
At present, intra-regional trade of BRICS stood at $230 billion.