BRICS exploring emerging nations' alternative to IMF, World Bank

SINGAPORE: The BRICS group of nations are exploring the possibility of establishing a South-South Development Bank as an emerging economies' alternative to the existing West-led financial institutions, and will hold a meeting in New Delhi next week to discuss its feasibility.

External Affairs Minister S M Krishna has said an experts' meeting would be held in the Indian capital on March 19 as China and India, in association with Brazil, Russia, and South Africa, have taken the initiative to discuss such a bank as a BRICS-led project.

The idea is being discussed at a time when emerging nations are pushing for greater say and quotas in the economic affairs of Bretton Woods institutions like the World Bank and IMF, over which Europe and the US have a traditional hegemony.

They are also demanding an end to the unwritten understanding between Europe and the US, under which the World Bank always has an American head while the IMF is always led by a European.

Krishna was cited as saying by Singapore's Institute of South Asian Studies (ISAS) in a report that the BRICS-led project would help supplement efforts of other multilateral institutions in meeting investment requirements of BRICS and other developing countries.

Krishna said some of the BRICS economies as well as other emerging economies have a large savings base, part of which is not utilised domestically.

"This leads to movement of savings to advanced countries by way of foreign exchange reserve investments in treasury and other highly-rated instruments in advanced economies," he said.

A South-South development bank was being envisioned as a mechanism to foster South-South Investment and help recycle such surplus savings for the developing countries' own development needs.