(29 February 2016 – China) Reports have emerged that a new US$100 billion (A$140 billion) bank for major emerging nations will sign agreements to establish its headquarters in China.
The New Development Bank (NDB), set up by the ‘BRICS’ nations of Brazil, Russia, India, China and South Africa, has been viewed as a challenge to Washington-based institutions.
The bank’s website describes it as an “alternative to the existing US-dominated World Bank and International Monetary Fund.”
The formation of NDB comes following the launch in December of the Asian Infrastructure Investment Bank (AIIB), a $100 billion institution led by, and headquartered in Beijing. Despite concerns from the US, several major European countries signed up as members.
Societe Generale China economist Claire Huang told reporters that the new bank will offer loans with fewer strings attached than existing multilateral lenders.
“Borrowing from NDB won’t have as many obligations as borrowing from the IMF,” she said, saying the institution would act as “a small IMF” and discussions will be more streamlined because of the limited membership.
NDB president K.V. Kamath, however, insisted on Friday that the institution “will function like a prudent bank should” and offer loans on the basis of the cost of funds and an appropriate margin.
The first approvals are expected in April and he expects 10 to 15 projects to be given the go-ahead this year, he added, more than half of them in green energy.
The bank formally opened last year, but comes with several of its member nations hit by falling oil and commodity prices and global shortfall in demand.
Responding to queries about the downturn facing members, the bank’s chairman Anton Siluanov, Russia’s finance minister, told reporters “On the contrary, in a period of some difficulties… the bank has become particularly important in terms of raising investment resources.”