Why in news:
- External Affairs Minister S. Jaishankar left early on Wednesday for a weeklong visit to South Africa and Namibia, beginning with his attendance at the BRICS (BrazilRussiaIndiaChinaSouth Africa) Foreign Ministers’ meeting in Cape Town.
- The leaders of BRIC (Brazil, Russia, India, and China) countries met for the first time in St. Petersburg, Russia, on the margins of G8 Outreach Summit in July 2006.
- Shortly afterwards, in September 2006, the group was formalised as BRIC during the 1st BRIC Foreign Ministers’ Meeting, which met on the sidelines of the General Debate of the UN Assembly in New York City.
- After a series of high level meetings, the 1st BRIC summit was held in Yekaterinburg, Russia on 16 June 2009.
- BRIC group was renamed as BRICS (Brazil, Russia, India, China, South Africa) after South Africa was accepted as a full member at the BRIC Foreign Ministers’ meeting in New York in September 2010. Accordingly, South Africa attended the 3rd BRICS Summit in Sanya, China on 14 April 2011.
- BRICS is an important grouping bringing together the major emerging economies from the world, comprising 41% of the world population*, having 24% of the world GDP* and over 16% share in the world trade*.
- BRICS is an acronym that started as BRIC in 2001, coined by Jim O’Neill (a Goldman Sachs economist) for Brazil, China, India, and Russia.
- Later in 2010, South Africa was added to become BRICS. Goldman Sachs claimed that the global economy will be dominated by the four BRIC economies by 2050.
BRICS Contingent Reserve Arrangement:
- The BRICS Contingent Reserve Arrangement(CRA) is a framework for the provision of support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures.
- It was established in 2015 by the BRICS countries: Brazil, Russia, India, China and South Africa.
- The legal basis is formed by the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement, signed at Fortaleza, Brazil on 15 July 2014.
- It entered into force upon ratification by all BRICS states, announced at the 7th BRICS summit in July 2015.
- The objective of this reserve is to provide protection against global liquidity pressures.
- This includes currency issues where members’ national currencies are being adversely affected by global financial pressures.
- The CRA is generally seen as a competitor to the International Monetary Fund (IMF) and along with the New Development Bank is viewed as an example of increasing South-South cooperation.
New Development Bank:
- The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS states (Brazil, Russia, India, China and South Africa).
- According to the Agreement on the NDB, “the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments.”
- Moreover, the NDB “shall cooperate with international organizations and other financial entities, and provide technical assistance for projects to be supported by the Bank.”
- The Agreement on the NDB specifies that every member will have one vote and that no member would have any veto powers.
- The bank is headquartered in Shanghai, China. The first regional office of the NDB is in Johannesburg, South Africa.
- The second regional office was established in 2019 in São Paulo, Brazil, followed by GIFT City, India and Moscow, Russia.
New members in NDB:
- In September 2021, Bangladesh, the United Arab Emirates and Uruguay joined the NDB.
- In December 2021, the NDB admitted Egypt as a new member.