The World Bank has welcomed the introduction of the Brics’ US$100bn New Development Bank (NDB), launched last week in Brazil.
In a statement to GTR, a spokesperson at the World Bank says that the NDB can contribute significantly to the “infrastructure financing gap” currently seen in developing countries, and that any efforts to generate additional capital to address the developing world’s infrastructure needs should be welcomed by other development banks.
“If you look at infrastructure needs in the developing world today, the most modest estimate is that developing countries need an additional US$1tn of investment every year,” says the spokesperson.
“There is a huge need for financing and there is capital sitting on the side-lines. The World Bank is very open to working with the NDB, as the world needs successful Brics nations as engines of economic growth and sources of development solutions for other countries.”
The NDB has been jointly set up by the leaders of Brazil, Russia, India, China and South Africa, to fund infrastructure projects in these nations. The launch is the first major achievement of the partnership of Brics nations since coming together in 2009, reflecting their growing influence on the international financial system: so-far dominated by the World Bank and IMF.
At the bank’s launch, it was reportedly announced that it will be based in Shanghai and that a different member-nation will preside over its operations every five years. India will oversee the bank for the first five years, followed by Brazil and Russia.
The bank will reportedly start lending in 2016 and will initially hold US$50bn in capital, consisting of US$10bn in cash to be (accumulated over a seven-year period) and US$40bn in guarantees. It will be open to membership from other nations but the combined share of the founding members won’t fall below 55%.