The BRICS Alliance will announce a new guarantee fund to promote investment between member states. The guarantee fund will be supported by the new Development Bank (NDB) to reduce funding costs, Reuters reported. The program is similar to the World Bank’s Multilateral Investment Guarantee Agency (MIGA), which addresses changes in investment in the event of uncertainty surrounding White House economic policies.
The BRICS Guarantee Fund will reduce the cost of funding as it will be an internal payment. Brazil, which will host its 17th summit, was able to open a dialogue to maintain the new guarantee fund as the heart of its financial agenda. The funding is expected to be announced at the Rio de Janeiro summit, two sources close to the issue said.
BRICS Multilateral Guarantee (BMG) Fund to be announced at the 17th Summit
The new fund, dubbed the BRICS Multilateral Guarantee (BMG), will be nurtured by the new development bank. Sources familiar with the development revealed that the mechanism has received technical approval from the bloc’s member states. However, the final signature can be formalized and official during the summit by the Minister of Finance.
“This is a politically important assurance tool. We send a message that BRICS is alive and that we work on solutions, strengthen our NDB and meet today’s global needs.” The source on the terms of anonymity for the new fund said. The alliance draws out various ways to bypass US and Western domination in the financial sector.
It paves the way into the world of multipolar finance with the new BRICS Multilateral Guarantee Fund. However, there can be many challenges that arise as it is necessary to attract larger private fund players to its fold and keep it sustainable. Institutional investors and commercial banks work closely with the NDB to mitigate risk and achieve it.
