Igor Shuvalov Interviewed on RBC: ‘New Principles Should Underlie a Post-Pandemic Economy’

According to the IMF, the COVID-19 pandemic may cost the world economy an estimated 28 trillion US dollars in 2020. And this figure will undoubtedly be even higher in 2021. No economy in the world, including BRICS, was able to avoid losses. GDP shrank in all countries except China at year-end.

But the fall could have been much deeper if the BRICS governments had failed to take prompt crisis-fighting measures. The five countries’ development banks, united in the BRICS Inter-Bank Cooperation Mechanism (ICM), provided assistance with the rescue schemes. The development banks acted as operators of the governmental rescue programmes, providing businesses with low-interest loans, helping commercial banks to restructure bad debts.

Of course, each country chose its own measures to fight the crisis. As part of the 2020 rescue package, VEB.RF issued surety bonds totalling 500.4 billion roubles (6.7 billion US dollars) to commercial banks. The BRICS economies received help from the New Development Bank (NDB). The BRICS members are to receive a total of 10 billion US dollars to fight against the pandemic and cope with its repercussions.

But the goal of the BRICS development institutions is not limited to minimise the economic consequences of the pandemic. It is necessary to provide impetus for sustainable and inclusive development rather than just reclaim the percentages of GDP lost during the pandemic. And our activities in 2020 show that together we can do much more.

The BRICS development institutions should strengthen the coordination of investment policies and the exchange of experience. That is why it is necessary to focus on several key areas. Most notably this is cooperation in healthcare, in developing smart cities and new urban technologies, as well introducing the principles of a green economy and responsible financing.

Firstly, with support from the NDB, the ICM members could help to set up a BRICS medical centre of excellence designed to assess current health risks in the member countries. The centre could regularly collect and publish research and test results, facilitating the exchange of experience and enhancing coordination in the area of vaccination and immunisation among the BRICS national ministries and agencies responsible for emergency management, environmental and natural protection and public health.

The centre would also help to accelerate the BRICS certification and distribution of vaccines produced by the five member countries. We are already doing the groundwork for this initiative. We launched the From Russia with Love campaign during the pandemic, sending medications and necessary equipment, including mobile hospitals and ventilators, to other BRICS countries. Moreover, this initiative included launching the production of Sputnik V in Brazil in January.

Secondly, we should work together in close cooperation to develop cities, which are the main contributors to GDP. The pandemic was the biggest blow to their economies. But at the same time, there were positive effects: this sharply accelerated the digitalisation of services, which will continue after the crisis. And we need to strengthen the coordination of sharing experience in financing smart cities and introducing urban tech in BRICS, that is to say, the services that help to improve services for people and businesses and make the urban economy more resilient.

And finally, the pandemic—with the rethinking of the importance of human life and the value of the space around us—also made us understand that new, more sustainable and equitable principles should underlie a recovering economy. This popularised the concept of “Build Back Better” around the world, driven by the need to switch to a green economy and responsible business conduct. Last November, the BRICS development institutions signed the BRICS ICM’s Principles of Responsible Financing. 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; and much more. The introduction of the provisions of this document into the day-to-day activities of the development banks will allow them to look at their potential projects from a new perspective.

VEB.RF was deeply involved with the development of the national green finance system in 2020, and the system is to receive official approval from the government in May 2021. We find it useful to move towards the harmonisation of national approaches and the exchange of experience in this area. Since certain countries intend to introduce cross-border carbon regulation, it would be reasonable to form a working group of the BRICS ICM to develop a climate risk assessment methodology and incorporate the working group’s deliverables into the international standards and regulatory rules that may affect investment, export, and ratings of development institutions, their customers and partners.

Without being limited to these three areas, the BRICS development institutions cannot help but set themselves even more ambitious goals: to play a key role in formulating new, post-pandemic national development strategies. And in this regard, the BRICS ICM should be a workshop for assembling new financial and investment ideas, models and projects that our countries could apply at home with minimal modifications. This will allow us to deal with the economic consequences of the pandemic more effectively and will make the five countries only stronger.

VEB.RF is a member of the BRICS Inter-Bank Cooperation Mechanism, holding the presidency of the BRICS ICM in 2020.