BRICS-backed New Development Bank invites Saudi Arabia to join the club

The New Development Bank (NDB), established by the BRICS group of nations, is set to broaden its membership as part of its efforts to increase capital and counter the influence of Western-dominated multilateral banks, Bloomberg reported.

The bank, consisting of Brazil, Russia, India, China, and South Africa, aims to diversify its members based on geography, development stages, and country size, Dilma Rousseff, the bank’s president, said. 

During the annual meeting held in Shanghai on Tuesday, Rousseff announced that Saudi Arabia is in discussions to join the bank, a move that would enhance the lender’s financial strength. 

The NDB was formed in 2014 as a counterbalance to the International Monetary Fund (IMF) and the World Bank.

Expanding NDB’s Influence

As an institution open to any United Nations member country, the NDB has steadily expanded its membership. Bangladesh, the United Arab Emirates and Uruguay became members in 2021, Egypt joined the multilateral bank in February this year. 

Drawing on her experience as the former president of Brazil, Rousseff emphasised that new members will contribute resources to the bank, enabling it to diversify its portfolio and enhance its ability to mobilize funds. She acknowledged the crucial role multilateral banks play in developing countries, recognising the challenges they face in obtaining finance to address social and economic issues on a large scale.

In an apparent bid to accelerate the de-dollarisation of the world economy, Rousseff announced that the bank would finance more projects in local currencies. In doing so, she argued that it would strengthen domestic markets and shield borrowers from currency fluctuations.

Several countries in the global south — the developing and less developed countries — have currencies that are not fully convertible within the current financial framework, causing their economies to suffer from sudden exchange rate fluctuations. 

“The world is going through a transformation process, and it’s not about one currency against another one,” Bloomberg quoted Rousseff as saying during a press briefing in Shanghai.

Leslie Maasdorp, Vice President and Chief Financial Officer of the NDB, confirmed that the bank is on track to achieve its goal of financing 30 percent of its projects in local currencies by 2026. Currently, the bank allocates approximately 22 percent of project funding in local currencies. 

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