The New Development Bank (NDB), popularly known as the BRICS Development Bank, has unveiled plans to issue approximately 30% of its loans in South African rand and Brazilian real, signaling a strategic shift to reduce its reliance on the US dollar.
This move aims to diversify lending practices and minimize exchange rate risks for member countries, according to the bank’s President, Dilma Rousseff, in an interview with the Financial Times.
Established in 2015 by the BRICS nations—Brazil, Russia, India, China, and South Africa—the NDB aims to foster development and cooperation among its member countries. Rousseff emphasized the bank’s focus on expanding its membership and diversifying its geographic representation. While she refrained from disclosing the specific countries, Rousseff indicated that around four or five nations are likely to gain approval for membership.
President Rousseff stated, “We expect to lend between $8 billion and $10 billion this year. Our aim is to reach about 30% of everything we lend… in local currency.” The NDB plans to issue debt in South African rand for lending in South Africa and similarly in Brazilian real for the country. Rousseff explained that this approach would allow borrowers to evade exchange rate risk and fluctuations in US interest rates.
Lending in local currencies aligns with the NDB’s objective of creating a more multipolar global financial system, offering an alternative to the traditional unipolar dollar-dominated system. Rousseff stressed that the use of local currencies isn’t intended as an alternative to the dollar but rather as a step towards a more diversified financial landscape.
Additionally, Rousseff highlighted the NDB’s distinct approach to loans, distinguishing itself from institutions like the World Bank and the International Monetary Fund (IMF). The NDB refrains from imposing political conditions on loans, ensuring that the bank respects the policies of each borrowing country.
As the 15th BRICS summit takes place in South Africa, Vice President Kashim Shettima represents Nigerian President Bola Tinubu at the conference. The summit focuses on crucial matters of trade and investment facilitation, sustainable development, innovation, and global governance reform.
