BRICS Development Banks End Russia’s Year-long Presidency with Approving Joint Principles of Responsible Financing
The development banks of the BRICS member countries have signed the Memorandum on the Principles of Responsible Financing in Moscow, expressing their commitment to transparent, inclusive and sustainable financial practices. The BRICS Inter-Bank Cooperation Mechanism (ICM), which reached the age of ten years in 2020, held the anniversary meeting of the heads of member banks via videoconferencing. The coronavirus pandemic made the BRICS development institutions particularly responsible for support for national economies, and a considerable part of discussions and speeches focused on sharing experience and best practices in this area. The conference was opened by the head of VEB.RF, the Russian national development institution holding this year’s presidency.
“The economic crisis faced by all economies showed the extremely important role of national and multilateral development banks in coping with the consequences of the pandemic,” VEB.RF Chairman Igor Shuvalov said. “Lockdown measures caused a dramatic drop in the supply and demand, breaking production and supply chains, reducing investment, increasing unemployment and bringing down people’s income.” In addition to rescue schemes of the national development banks, the head of the Russian development institution highlighted the programme of the New Bank of Development, founded by BRICS: during the pandemic, the bank provided a rescue package of about 10 billion US dollars for the member countries.
According to Igor Shuvalov, the most pressing global issues include debt loads growing across the whole. “Sovereign, corporate and household debt obligations reached the level called the fourth debt wave by the International Bank for Reconstruction and Development,” he said. “Our task is to track these trends and take timely precautionary measures. One of such measures is the extensive use of national currencies in our projects.”
The Russian side also shared its experience in supporting the national economy during the pandemic. As a development institution, VEB.RF was also involved in rescue measures. “The government instructed us to take part in the large-scale rescue scheme to support Russian businesses: lending to small and medium-sized enterprises on easy terms, support for employment, efforts to help systemically important companies to maintain their working capital,” Igor Shuvalov said. “Surety bonds issued by VEB.RF to commercial banks for zero- or low-interest loans to businesses totalled nearly 500 billion roubles. As a result, almost 5 million people didn’t lose jobs in small and medium-sized enterprises alone. And their families kept their standards of living.” He added that during the pandemic “VEB.RF did not suspend financing for any project”.
Signed by the BRICS member countries at the meeting, the Memorandum on the Principles of Responsible Financing consists of eight sections. The document is based on World Bank, OECD and UN experience and best practices. The principles include commitments to integrate into project assessment the analysis of environmental, social and economic impacts on local communities; promote inclusive and sustainable economic models in BRICS; give more consideration to human rights, the Paris Agreement and best practices of corporate governance in projects; achieve the maximum transparency of projects while protecting customers’ confidentiality and proprietary information.
David Rasquinha, Managing Director, Export-Import Bank of India, presented during the meeting an award to Singapore researcher Adam Yang Liu for an outstanding study in the field of the BRICS economies. The award was granted for research on the operation and development of the Chinese banking system.
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