BRICS bank to promote use of local currencies to aid sustainable development
New Development Bank President Dilma Rousseff said the bank has set a 30% target for funding in the local currency of borrowing members.
The Opening Plenary Session was addressed by NDB President Dilma Rousseff in Cape Town. New Development Bank
CAPE TOWN - As the New Development Bank (NDB) enters its tenth year, its president, Dilma Rousseff, said the BRICS (Brazil, Russia, India, China, and South Africa) bank will be promoting the use of local currencies to aid sustainable development in emerging and developing economies.
She said the bank set a 30% target for funding in the local currency of borrowing members.
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South Africa on Friday increased its loans from the bank to 14, with a third loan for Transnet to fix its logistics business.
The bank’s governors are meeting in Cape Town to take stock of the bank’s performance, along with new partners the United Arab Emirates, Bangladesh, and Egypt who are in attendance for the first time.
The former Brazilian president and now head of the bank formed by BRICS nations in 2015, Dilma Rousseff, said systemic changes are needed in the international financial architecture.
Given the heavy indebtedness of many developing countries, there’s a mismatch between debt in strong currency and the income generated by development projects.
She said alternatives like funding in local currency must be considered to widen the fiscal space to invest.
“By promoting transactions in local currencies, we also facilitate investment growth, helping governments and the private sector overcome the cash flow mismatch between projects and financing. This approach provides greater predictability and reduces the high costs associated with hedging needs.”
Rousseff said the bank is putting in place local currency platforms to urgently speed up the provision of green financing to member countries.