Institutions of Economic Policy Seminar was held at Corvinus University of Budapest on 30 April 2019. The convener of the seminar was Péter Ákos Bod, the former governor of the Hungarian National Bank (1991-1994).

1. BRICS - New Development Bank
BRAZIL | RUSSIA | INDIA | CHINA | SOUTH AFRICA
Presenters | Mahlatse Mabeba | Ziphozihle Kili
30 April 2019

2. Contents
 Introduction
 BRICS - from developing to emerging economies
 Where are BRICS countries?
 Global GDP Shares
 Global GDP Ranking
 Credit ratings of BRICS governments
 BRICS Capitalization
 BRICS Financial architecture
 Developments
 Political system of BRICS countries
 Conclusion

3. Introduction
 BRICS are leading emerging economies and political powers at regional and international level
 The acronym BRIC was coined by the British economist Jim O’Neill in 2001
 The goal is to finance investment in infrastructure and sustainable development
 The focus is on financing project in BRICS, emerging, and developing countries
 BRIC symbolize the shift of global economic power away from the developed G7 economies
(which represent 58% of the global net wealth – US$317 trillion)
 BRICS New development bank was approved in March 2013 (Durban Summit)
 In 2013, BRICS accounted for about 27 percent of the global GDP
 The total BRICS population is 2.88 billion (42 percent of the entire global population), and the five
countries cover 26 percent of the planet’s land.

4. BRICS – from developing to emerging economies
 The relevance of BRICS
 The outstanding size of their economies
 Strong growth rates
 The demand of a stronger political voice internationally
 BRIC met all the above requirements
 South Africa was accepted to the group because of the following:
 Leading economy in Africa
 One of the most important political actors in Africa
 Its an upper-middle income country
 The only African nation with a G-20 seat
 BRICS primary objective is to gain influence in institutions of global governance
 BRICS have tremendous influence on the South-South Cooperation (SSC)

5. Where are BRICS countries?
SUMMITS
2010 - Brazil
2011 - China
2012 - India
2013 - South Africa
2014 - Brazil
2015 - Russia
2016 - India
2017 - China
2018 - South Africa
2019 - Brazil
BRICS
G7

6. Global GDP Growth and Share

7. Global GDP Ranking
 In 31 years from now, if things
go right, the combined
economies of BRICS could
be larger than the
economies of G7.

8. Credit ratings of BRICS governments
Long-term issuer ratings (foreign) by Credit Ratings Agencies - 2019
Credit rating
agent
Brazil Russia India China South Africa
S&P BB- BBB- BBB- A+ BB
Moody’s Ba2 Baa3 Baa2 A1 Baa3
Fitch’s BB- BBB- BBB- A+ BB+

9. BRICS Capitalization

10. BRICS Financial Architecture
COMPONENTS PURPOSE
1. New Development Bank  Primary focus of lending is on infrastructure projects
 Authorized lending of US$34 Billion annually
 South Africa will be the African Headquarters of the Bank
 Initial capital contribution of US$10 Billion each (US$50 Billion)
 BRICS rating agency (Still to be implemented)
 Local currency bond fund (Still to be implemented)
2. BRICS Contingency Reserve
Arrangement
 CRA was established in 2015 by the BRICS countries
 CRA is a framework for providing protection against global liquidity
pressures
 Assist members national currencies when being adversely affected
by global financial pressures
 The resources allocated to the CRA will amount to US$100 Billion
 CRA is generally seen as a competitor of the IMF
3. BRICS Payment System  In 2015 BRICS initiated consultation for payment system
 It is an alternative to the Society for Worldwide Interbank Financial
Telecommunication (SWIFT) system
 Transnational multilateral payment system that will enable settlement
in national currencies and provide greater independence

11. Developments
KEY RECENT DEVELOPMENT OUTCOMES
1. Expansion of bank’s project
pipeline
As at October 2018:
 Total of 13 projects were approved (US$2,978 Billion)
Since operations:
 Overall total of 26 projects were approved (US$6,538 Billion)
2. Addition of members  In 2017 AGM BoG approved terms and conditions for new
membership.
 In 2018 the expansion of membership and shareholding framework
was completed
 The projected year of allowing new members to the club is 2022
3. NDB’s regional offices  The first regional office has been set up in Johannesburg, South Africa
 In 2018 agreements was reached to set up new regional offices in
Brazil, Russia, and India

12. Political System of BRICS Countries
 China is a socialist republic run by a single party. State power is exercised through the communist party,
central people’s government, provincial and local representation.
 Russia is a federal semi-presidential republic where the president is the head of state and of a multi-party
system with executive power exercised by the government.
 Brazil is a federal presidential representative democratic republic, whereby the President is both head of
state and head of government, and of a multi-party system.
 India is a federal parliamentary democratic republic in which the President of India is the head of state and
the Prime Minister of India is the head of government. India follows the dual polity system, i.e. a double
government that consists of the central authority at the Centre and states at the periphery.
 The Republic of South Africa is a parliamentary representative democratic republic. The President of South
Africa serves both as head of state and as head of government. The President is elected by the National
Assembly and must retain the confidence of the Assembly in order to remain in office. South Africans also
elect provincial legislatures which govern each of the country's nine provinces.
 All these countries have different political systems, economic structures and historical background.
 BRICS have in common their marginalization and underrepresentation in important stages of the current
world order

13. Conclusion
 BRICS activities are around political coordination and economic, financial and multisectoral
cooperation.
 In the former, the BRICS agenda gives priority to coordination within the G20, including the IMF
reform.
 In the latter, BRICS advocates the reform of the United Nations and its Security Council, with a
view to enhancing its representativeness, and favor's the democratization of international
governance.
 BRICS is open to cooperation and constructive engagement with third countries, as well as
with international and regional organizations in dealing with current international issues.

14. Thank You