MOSCOW/BRASILIA, (Reuters) – The BRICS bloc of large, emerging economies has agreed on the structure of a proposed development bank with $50 billion in capital, but ironing out “difficult” details may take months, Russian Deputy Finance Minister Sergei Storchak said.
Officials from Brazil, China, India, Russia and South Africa agreed in early August that the bank’s capital should come from three payment categories, including subscriptions, Storchak told journalists in remarks for publication on Monday. The establishment of the development bank aimed at providing funds for infrastructure projects has been slow in coming, with prolonged disagreement over funding and management of the institution. “We must assume that the bank will not start functioning as fast as one could imagine,” Storchak said. “It will take months, maybe a year.” At the summit of the Group of 20 developed and developing nations this week in Russia’s St. Petersburg, BRICS leaders will meet in an unofficial format, Storchak said, to discuss the progress on setting up the bank and a joint reserve fund. The issues of division of the capital, payment of the capital, the location of the bank and the bank’s management still need to be decided, Storchak added. “These are systemic themes, complicated, (and) negotiations are difficult,” he said, adding that he hopes that some decisions will be made soon. The group has struggled to take coordinated action after an exodus of capital from Brazil, Russia, India, China and South Africa prompted by an expected scaling back in U.S. monetary stimulus raised fears about the health of their economies.
On Friday, India said it was seeking support from other emerging economies for coordinated intervention in offshore foreign exchange. India’s currency has shed a fifth of its value against the dollar in the past three months. But Brazil rejected outright involvement in any intervention and other major emerging economies, including Russia, would not comment.