Leaders of the BRICS nations are meeting in a summit in Brazil, where they will announce a new, multi-billion-dollar currency reserve fund and development bank, amid growing doubts about their global economic clout.
Heads of state from Brazil, Russia, India, China and South Africa, known as the BRICS nations, gathered in Fortaleza on Tuesday for the sixth annual BRICS summit, which brings together some of the world’s largest emerging economies to discuss development, trade, business and economic policy.
The leaders began Tuesday morning in a closed session, and are scheduled to sign agreements focusing on trade and business in the afternoon. On July 16th, the summit will move to the capital of Brasília.
The launching of the reserve fund and development bank, worth more than $100 billion, is the centerpiece of the three-day summit. The initiative, tentatively called the New Development Bank, is being presented as an alternative to the World Bank and the International Monetary Fund, which many other nations view as being dominated by the U.S. and European countries. According to preliminary reports, the bank will have an initial capital of $50 billion.
These founding countries hope the fund and bank, which can be used to fight future financial crises and make loans for global infrastructure projects, may be a way to remedy their perceived lack of participation in global governance and economic policy. At the same time, they face criticism from their own populations and foreign investors who say their sluggish economies have diminished their international economic power.
Brazilian President Dilma Rousseff and Russian President Vladimir Putin both expressed high hopes for the fund during a July 14 meeting in Brasília. The BRICS nations “are among the largest in the world and cannot content themselves in the middle of the 21st century with any kind of dependency,” Rousseff said.
A location has yet to be selected for the bank’s headquarters. Top candidates include Shanghai, New Delhi and Moscow, with Shanghai the apparent frontrunner, according to Reuters reports.
The five BRICS nations represent 40 percent of the global population and 20 percent of the global economy, but they have recently seen a drop-off in the rapid economic growth many had experienced in previous years. Both Russia and Brazil experienced only 1 percent growth in the last year.
Additional reporting from Associated Press