Market instability is worrying, say Brics leaders
by Agency Staff,
2015-07-10 07:00:01.0
UFA — The Brics emerging nations said on Thursday they were worried about the volatility of global financial markets and oil prices, and agreed to co-ordinate efforts to keep their economies stable.
Leaders of Brazil, Russia, India, China and SA launched the group’s largest initiatives to date — a development bank and a currency pool — and called for a swift deal on curbing Iran’s nuclear programme.
For Russian President Vladimir Putin, hosting the summit in the city of Ufa, the bank’s launch and the pool had been a priority, as was the group’s ability to sound more unified than at previous meetings.
"We are concerned about the instability of the markets, the high volatility of energy and commodity prices, and the accumulation of sovereign debt by a number of countries," Mr Putin said.
"These imbalances affect the growth rate and our economies. In these circumstances, the Brics states intend to actively use their own resources and internal resources for development."
Frantic efforts by Beijing to stem a stock market rout helped Chinese shares bounce back on Thursday after tumbling for a week, but the costs of the heavy-handed state intervention are likely to weigh on the market.
Chinese President Xi Jinping refrained from comments about the slump, saying only there were "difficulties" in the global economy, but urged the Brics to increase co-ordination. "Let’s go hand in hand to build a great Brics partnership," he told the group.
Mr Putin said the Brics bank would become fully operational and finance energy projects next year as emerging markets attempt to challenge the Western-dominated financial system.
The Brics nations, which represent 40% of the world’s population, agreed in 2013 to establish their own development bank, with estimated capital of $100bn. Also crucial to their efforts to undermine Western hegemony is a $100bn pool of currency reserves.
Russia — which has suffered huge currency fluctuations and struggled to attract investors since the outbreak of the crisis in Ukraine — sees the bank and the currency reserve pool as an alternative to international financial institutions such as the International Monetary Fund and World Bank, which are dominated by the US.
"The New Development Bank will be financing large-scale transport and energy projects and industrial development," Mr Putin said.
The first projects would be launched next year, he said, adding that Russia would by the end of the year put together a blueprint mapping out investment co-operation between the Brics nations.
Russia and China have agreed to use each others’ currencies to promote bilateral trade and investment, with Mr Putin saying that Russia would be keen to expand the use of national currencies with other Brics countries. "I think that such development with India, Brazil and South Africa would be interesting and could no doubt lift the level of trade turnover," he said.
"A pool of nominal currency reserves, with capital of $100bn, will give us an opportunity to react to financial market fluctuations in a timely and appropriate manner."
The New Development Bank planned to raise money on local markets and internationally, its president, Kundapur Vaman Kamath, said in Ufa. It would have initial capital of $50bn.
The bank, which has its headquarters in Shanghai, China, would have its capital expanded to $100bn within the next couple of years.
"We will explore resource raising on various markets — hard currency markets and local currency markets," Mr Kamath said.
The bank would seek international and local agency ratings, a necessary step for issuing debt.
Russia has been hit by Western sanctions over its role in the Ukraine crisis, measures that limit access to foreign financing for many large firms and banks, such as the state oil company Rosneft, private gas producer Novatek and Russia’s biggest bank, Sberbank.
Mr Kamath said the New Development Bank should not be viewed as a tool to help sanctions-hit companies, but would look at requests from Russian companies.
"We will look at any proposal that the government or entity in the country wants us to look at."
Russian finance minister Anton Siluanov told reporters earlier that some projects, such as a request by Rosneft for financial support, might be listed for possible New Development Bank funds.
Mr Kamath said no specific deals were in the pipeline.
AFP, Reuters
(Left to right) Brazil's President Dilma Rousseff, Indian Prime Minister Narendra Modi, Russiain President Vladimir Putin, China's leader Xi Jinping and SA's President Jacob Zuma attend the 7th Brics summit in Ufa on Thursday. Picture: AFP PHOTO/SERGEI ILNITSKY
UFA — The Brics emerging nations said on Thursday they were worried about the volatility of global financial markets and oil prices, and agreed to co-ordinate efforts to keep their economies stable.
Leaders of Brazil, Russia, India, China and SA launched the group’s largest initiatives to date — a development bank and a currency pool — and called for a swift deal on curbing Iran’s nuclear programme.
For Russian President Vladimir Putin, hosting the summit in the city of Ufa, the bank’s launch and the pool had been a priority, as was the group’s ability to sound more unified than at previous meetings.
"We are concerned about the instability of the markets, the high volatility of energy and commodity prices, and the accumulation of sovereign debt by a number of countries," Mr Putin said.
"These imbalances affect the growth rate and our economies. In these circumstances, the Brics states intend to actively use their own resources and internal resources for development."
Frantic efforts by Beijing to stem a stock market rout helped Chinese shares bounce back on Thursday after tumbling for a week, but the costs of the heavy-handed state intervention are likely to weigh on the market.
Chinese President Xi Jinping refrained from comments about the slump, saying only there were "difficulties" in the global economy, but urged the Brics to increase co-ordination. "Let’s go hand in hand to build a great Brics partnership," he told the group.
Mr Putin said the Brics bank would become fully operational and finance energy projects next year as emerging markets attempt to challenge the Western-dominated financial system.
The Brics nations, which represent 40% of the world’s population, agreed in 2013 to establish their own development bank, with estimated capital of $100bn. Also crucial to their efforts to undermine Western hegemony is a $100bn pool of currency reserves.
Russia — which has suffered huge currency fluctuations and struggled to attract investors since the outbreak of the crisis in Ukraine — sees the bank and the currency reserve pool as an alternative to international financial institutions such as the International Monetary Fund and World Bank, which are dominated by the US.
"The New Development Bank will be financing large-scale transport and energy projects and industrial development," Mr Putin said.
The first projects would be launched next year, he said, adding that Russia would by the end of the year put together a blueprint mapping out investment co-operation between the Brics nations.
Russia and China have agreed to use each others’ currencies to promote bilateral trade and investment, with Mr Putin saying that Russia would be keen to expand the use of national currencies with other Brics countries. "I think that such development with India, Brazil and South Africa would be interesting and could no doubt lift the level of trade turnover," he said.
"A pool of nominal currency reserves, with capital of $100bn, will give us an opportunity to react to financial market fluctuations in a timely and appropriate manner."
The New Development Bank planned to raise money on local markets and internationally, its president, Kundapur Vaman Kamath, said in Ufa. It would have initial capital of $50bn.
The bank, which has its headquarters in Shanghai, China, would have its capital expanded to $100bn within the next couple of years.
"We will explore resource raising on various markets — hard currency markets and local currency markets," Mr Kamath said.
The bank would seek international and local agency ratings, a necessary step for issuing debt.
Russia has been hit by Western sanctions over its role in the Ukraine crisis, measures that limit access to foreign financing for many large firms and banks, such as the state oil company Rosneft, private gas producer Novatek and Russia’s biggest bank, Sberbank.
Mr Kamath said the New Development Bank should not be viewed as a tool to help sanctions-hit companies, but would look at requests from Russian companies.
"We will look at any proposal that the government or entity in the country wants us to look at."
Russian finance minister Anton Siluanov told reporters earlier that some projects, such as a request by Rosneft for financial support, might be listed for possible New Development Bank funds.
Mr Kamath said no specific deals were in the pipeline.
AFP, Reuters
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