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Brics Agree to Base Development Bank in Shanghai - WSJ
By JEFFREY T. LEWIS and PAULO TREVISANI CONNECT
Updated July 15, 2014

The Brics and other emerging-market countries have vast needs for financing of infrastructure projects, according to the chief executive of Brazilian development bank BNDES, who estimated the need for long-term project finance at about $800 billion.

The new institution, whose first chief executive will be from India, will start out with capital of $50 billion, to be paid in equally by all five Brics countries. Capital is planned to grow eventually to $100 billion, according to the memorandum released after the meeting in Brazil of the heads of government of the five countries.

The Brics have been trying for years to reform the International Monetary Fund and the World Bank, the backbone of the world's global financial structure, to give emerging markets more influence over those institutions, but with little success.

"In the IMF and the World Bank, the U.S. and a handful of allies really do make almost all the decisions, and the vast majority of the world…doesn't really have a voice," said Mark Weisbrot, co-director of the Center for Economic and Policy Research, in Washington, D.C. "The fund has lost most of its influence on the middle-income country in the last 15 years. This is part of the process of change in these international institutions."

The Brics countries on Tuesday called on the members of the IMF to implement reforms to the organization that were agreed on in 2010, and for members to agree to a new formula for voting rights at the IMF.

The World Bank finances development projects around the world, and the IMF is the lender of last resort to countries that don't have the dollars to pay their foreign debt. The IMF in particular is widely disliked among countries that need its help, because of the stringent budget control conditions it usually places on governments in return for its help.
economic_development  BRIC  Vladimir_Putin  IMF  World_Bank  infrastructure 
july 2014 by jerryking
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