* BRICS leaders to meet in South Africa next week
* Reserves pool, infrastructure bank to be discussed
* Pool could initially total up to $120 billion
By Lesley Wroughton and Alonso Soto
WASHINGTON/BRASILIA, March 21 Leaders of the
world's major emerging economies are likely to endorse plans at
a summit next week to create a joint foreign exchange reserves
pool and an infrastructure bank, senior emerging market
officials said on Thursday.
Leaders from Brazil, Russia, India, China and South Africa,
known as the BRICS, will gather in the coastal city of Durban,
South Africa, on March 26 and 27.
The leaders will discuss a report prepared by working groups
led by Brazil on the proposed reserves pool and another by India
and South Africa on the creation of the infrastructure bank, the
The reserves pool of central bank money would be available
to emerging economies facing balance of payments difficulties or
could be tapped to stabilize economies during periods of global
financial crises, according to documents outlining the plan that
were obtained by Reuters.
"There are still some differences among the countries, but
we believe that the BRICS will give the green light to both
projects," said a senior Brazilian government official.
But officials in Brazil, Russia and South Africa cautioned
that it was too early for the leaders to reach formal agreements
on both the bank and the reserves fund.
The proposals reflect frustration among emerging market
nations at having to rely on the World Bank and International
Monetary Fund, which they see as still reflecting the interests
of the United States and other industrialized nations.
"It is too early to reach formal agreements on the bank and
on the reserves fund, but both topics are on the agenda," said
Paulo Nogueira Batista, executive director for Brazil and 10
other countries in the IMF.
"What exact form the political commitments in the communique
will take is something yet to be decided. It is not settled
yet," Nogueira Batista cautioned.
The other Brazilian official, who asked not to be named
because he was not authorized to speak about the matters
publicly, told Reuters the proposed contingency reserve
arrangement would initially hold between $90 billion and $120
billion, although a figure was unlikely to be included in a
final statement by the leaders.
Officials have said that the reserve pool should be similar
in size to the Chiang Mai Initiative of southeast Asian
countries, which was doubled to $240 billion in May to boost
their protection against external shocks.
One official said the reserve pool could eventually be much
larger than the Chiang Mai Initiative, which includes China and
Japan. China has emphasized that the size of the BRICS
contingency pool needs to be big enough to make an impression on
GROWING FINANCING NEEDS
Another senior emerging market official said the BRICS were
also considering injecting an initial $50 billion into the new
infrastructure bank. Details on the scale, location and
structure of the bank will be discussed, but not agreed at the
summit, the official added.
The bank would support the ever-growing financing needs in
emerging and developing nations for roads, modern-day port
facilities, and reliable power and rail services.
Brazilian Trade Minister Fernando Pimentel said on Thursday
that some issues remained to be resolved before the
infrastructure proposal could be presented to the presidents for
approval in Durban.
"I hope the presidents of the BRICS approve the plan to
create the bank, but I am not sure this proposal will be
presented because the technical discussions are not over yet,"
Pimentel told reporters.
While the proposed $50 billion is small compared to the huge
infrastructure needs of developing countries, it is larger than
the $29.1 billion the World Bank committed in 2010 for
infrastructure development in developing countries.
Countries like China have invested heavily in
infrastructure, but poorer ones in South Asia and Africa have
struggled to finance new projects.
"As for a development bank, we are on the threshold of
taking an official decision on this issue," Russian Deputy
Foreign Minister Sergei Ryabkov told reporters in Moscow on
Thursday. "There are only a few days left (until the summit),
and complete clarity will be introduced," he added.
Ryabkov said the BRICS were closer to a decision on an
infrastructure bank than on the proposal for the reserves fund.
The Africa Development Bank has estimated Africa can become
a middle-income region if it spends about $90 billion a year on
infrastructure. The World Bank has a slightly higher estimate.
World Bank Chief Economist Kaushik Basu believes there is a
place for a BRICS-led infrastructure bank to help ease pent-up
funding pressures in developing economies.
"The big problem for building up infrastructure is not a
problem of bricks and mortar, it is long-term finance," the
former Indian finance ministry official said at an event at the
Center for Global Development in Washington on Tuesday.
"This money that has not been there has been a pressure on
the BRICS countries," Basu said.