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BRICS Launch Development Bank

vi-brics-summit16 July 2014: The Sixth BRICS Summit resulted in the establishment of the New Development Bank, which is to finance infrastructure and sustainable development projects in BRICS and other emerging and developing economies. The Summit also launched a BRICS Contingent Reserve Arrangement (CRA), and issued a declaration outlining the five countries' common position on a number of global issues, including climate change and sustainable energy.

Held from 14-16 July 2014, in Fortaleza and Brasília, Brazil, the Sixth BRICS Summit of Heads of State and Government convened leaders from Brazil, the Russian Federation, India, China and South Africa for discussions under the theme ‘Inclusive Growth: Sustainable Solutions.' Key outcomes of the Summit include: agreement on the New Development Bank, with an initial authorized capital of US$100 billion; a treaty for the establishment of a BRICS CRA; and the Fortaleza Declaration. In addition, the five countries signed a memorandum of understanding (MOU) on cooperation among BRICS export credit insurance agencies, and a cooperation agreement on innovation.

Emphasizing existing financial constraints in addressing infrastructure gaps and sustainable development needs, the Fortaleza Declaration describes the aims of the New Development Bank as strengthening inter-BRICS cooperation, as well as supplementing the efforts of multilateral and regional financial institutions for global development. The New Development Bank agreement establishes, inter alia: the location of the Bank's headquarters in Shanghai, China; the presidency for the first five years, to be held by India; an initial subscribed capital of US$50 billion and an initial authorized capital of US$100 billion, equally distributed amongst the founding members; and a membership open to all UN members. Furthermore, the five countries decided that the Chair of the board of directors will be from Brazil.

According to the treaty establishing CRA, it comprises “a framework for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.” The initial committed resources to the CRA total US$100 billion, with US$41 billion coming from China, US$18 billion from Brazil, the Russian Federation and India each, and US$5 billion from South Africa.

On climate change, the Fortaleza Declaration: calls on all countries to build on the decisions of the UN Framework Convention on Climate Change (UNFCCC) for a successful conclusion of a climate agreement in 2015, in accordance with the principles and provisions of the Convention; reiterates support to the presidency of the 20th session of the Conference of the Parties (COP 20); and notes the UN Climate Summit, to be held in September 2014.

On sustainable energy, the Declaration stresses the role of renewable and clean energy, research and development of new technologies, and energy efficiency as drivers of sustainable development, economic growth, reduced energy costs and efficient natural resource use. The countries also express support to international efforts and cooperation to promote the deployment of renewable and clean energy, and energy efficiency, including related technologies, as well as universal energy access. In the context of the UN Sustainable Development Goals (SDGs), they also indicate their support for a facilitation mechanism for the development and transfer of clean and environmentally sound technologies.

On 14 July, related events held during the Summit included: meetings of finance ministers and central bank governors, trade ministers, and development bank presidents; a business forum; and a session of the BRICS Business Council. In addition, on 16 July, a working session between the leaders of the BRICS and Heads of State and Government of South American countries was held in Brasília.

The first BRICs Summit was held in 2009 in the Russian Federation, with the participation of Brazil, the Russian Federation, China and India. Since 2010, the group expanded to include South Africa, and BRICS Summits have been held annually. [VI BRICS Summit Website] [VI BRICS Summit Agreements] [Agreement on the New Development Bank] [Minutes of the BRICS Ministerial Meeting] [Treaty Establishing the CRA] [The Fortaleza Declaration]