BRICS nations sign pact for local currency facility

In an effort to reduce the transaction costs of intra-BRICS trade, the five-member emerging economies’ group on Thursday inked a pact to extend credit in the respective local currency.

The agreement, signed at the conclusion of the fourth BRICS Summit here, is intended to reduce the demand for fully convertible currencies for transactions between Brazil, Russia, India, China and South Africa (BRICS).

The Group also signed an agreement on Letter of Credit (LC) Confirmation Facility which envisages confirmation of LCs on receipt of a request from an exporter, exporter’s bank or importer’s bank.

Easier business visas

Addressing the Summit, the Prime Minister, Dr Manmohan Singh, called for greater interaction amongst our business communities. “Issues such as easier business visas must be prioritised. As large trading countries, BRICS countries have a strong interest in removing barriers to trade and investment flows and avoiding protectionist measures,” he added.

Executive Summary of the report by Ministries of Finance, central banks of BRICS Nations

BRICS Development Bank

Dr Singh said a suggestion has been made to set up a BRICS Development Bank.

Agreements signed between BRICS Development Banks

“We have directed our Finance Ministers to examine the proposal and report back at the next Summit,” the Prime Minister said. The BRICS Finance Ministers will study the feasibility and viability of the initiative and set up a joint working group for the study.

The proposal on the BRICS Development Bank formed part of the Summit’s Delhi Declaration.

Full text of Delhi Declaration

The Development Bank will be for mobilising resources for infrastructure and sustainable projects in BRICS and other emerging economies and developing countries.

The proposed Bank’s resources are to supplement the existing efforts of multi-lateral and regional financial institutions for global growth and development.

IMF, WB REFORM

Significantly, the BRICS countries called for reforming the International Monetary Fund and World Bank by increasing representation from developing countries.

They agreed to support a developing country candidate for the post of World Bank President.

Restore market confidence

Taking serious note of the impact of the Euro zone crisis on the world economy, the emerging economies’ grouping said: “The immediate priority is to restore market confidence and get global growth back on track.”

Referring to the risks of large and volatile cross-border capital flows being faced by emerging economies, they said, “We call for further international financial regulatory oversight and reform, strengthening policy coordination, financial regulation, supervision cooperation, and promoting the sound development of global financial markets and banking systems.”

The BRICS countries also called for closer cooperation to revive the stalled Doha Round talks for a deal on further liberalising global trade.

Prime Minister’s statement at the Plenary Session of the Fourth BRICS Summit, New Delhi

Key highlights of the BRICS Summit are:

Solution to problems in West Asia, North Africa, Iran and Syria through diaglogue and UN;

Supporting developing country candidate for World Bank President's post;

Prioritising food, water and energy security solutions;

Reforms in IMF, World Bank and UN Security Council by increasing representation from developing countries;

Co-operation for stabilisation of Afghanistan;

Countering terrorism and piracy;

Creation of jobs and skill development;

Enhancing growth and trade in BRICS countries;

Breathe life into WTO's Doha Round;

Infrastructure development in BRICS region;

Fair and equitable distribution of income to solve income inequalities;

Sharing experiences to solve problems arising out of urbanisation.

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