Rousseff’s Vision for BRICS New Development Bank—By and For Developing Countries

Aug. 24, 2023, 2022 (EIRNS)—Central to the ability of nations to escape the cycle of endemic poverty is having credit for productive economic investment. That’s what has been controlled and largely restricted by the Western-dominated IMF and World Bank, which treat developing countries’ economies as accounting problems to be balanced, making loans with strings attached, and often leaving the borrowing nation in worse shape and with more debt than before it took the loan.

Speaking Aug. 23 at the BRICS Summit in South Africa, the New Development Bank’s (NDB) President Dilma Rousseff likely caused many within the trans-Atlantic financial establishment to panic. Her remarks clearly indicate that a serious bank, intent on the generation of significant amounts of credit for development, is in the works. As such, she also made a powerful distinction between the NDB and the existing multilateral development banks: “Our financial support is provided without onerous conditions.”

Though the NDB’s capital base is small and the bank is only planning to lend $18.2 billion during 2023 and 2024, it is playing an important role in the BRICS process, and was spoken of very highly by leaders throughout the summit. It is also of note that the bank, over the recent period, has struggled with liquidity problems, which have held it back from accomplishing more, including “15 months without carrying out any public issuance of dollar-denominated securities,” due to the Western sanctions against Russia and crushing interest rate hikes. The new admission of more capital-rich United Arab Emirates and Saudi Arabia into the BRICS and the NDB at the Aug. 22-24 BRICS summit will surely improve the bank’s limited capital base.

Two developments stand out, however, regarding the significance of the NDB as headed up by Rousseff. One, it has committed to selling bonds within the local currencies which the bank is operating, allowing it to leverage local capital—including government capital—to support its lending. It has conducted that in China, and now, on Aug. 15, for the first time in South Africa, and is beginning the process in Brazil as well.

Second, and more importantly, Rousseff made the point that the NDB is committed to lasting physical investments into developing nations. She has made that point several times before, but reiterated in her remarks that “the NDB is a bank created by and for developing countries.” “For developing countries and emerging economies, it is about overcoming the condition of mere suppliers of commodities, considering the immense wealth we have in rare earths and various ores,” she said. “The Global South needs to seek to add value to its wealth and its source of sustainability. It needs to seek reindustrialization with new characteristics.” Rousseff also warned that nations of the Global South cannot become “consumers of ‘high-technology platforms’ products, limited, in our economies, to being passive users of digital applications. So we need smart and productive connectivity.” Finally she declared: “The NDB does not act alone. We need to work increasingly closely and directly with our member countries to better identify their most significant needs and focus our support on projects that have the greatest additional impact.”

Rousseff was President of Brazil in 2014, when she hosted the BRICS Summit in Fortaleza, where the decision was taken to form the New Development Bank and Contingent Reserve Arrangement.