BRICS bank to vote on Argentina’s membership

The board of the BRICS-led New Development Bank (NDB) will hold a vote for the incorporation of Argentina in August, the entity’s president Dilma Rousseff told Economy Minister Sergio Massa in Shanghai today.

The NDB is a multilateral development bank established by the BRICS states —Brazil, Russia, India, China, and South Africa— to “support public or private projects through loans, guarantees, equity participation, and other financial instruments.”

An Argentine delegation is currently taking part in a week-long trip to China and strengthening the country’s monetary reserves with the BRICS bank was one of the goals, a spokesperson for the Economy Ministry had told the Herald.

Argentina is in serious need of financial assistance due to a reserve scarcity crisis mainly caused by a historic drought that will slash between US$ 18.5 and US$ 20 billion in agricultural exports this year, according to different calculations.

In that regard, the government is also seeking the International Monetary Fund (IMF) to further lessen Argentina’s program international reserve target, while also looking for the lender to speed up the transfer of disbursements.

Next steps

Rousseff gave Massa the news at the meeting they held at 9 a.m. at NDB headquarters. Massa was joined by the head of the Central Bank, Miguel Ángel Pesce, and National Deputy Máximo Kirchner.

The meeting was about to begin with a presentation by Massa on Argentina’s intention to get indirect financial support from the BRICS, but Rousseff interrupted him amicably to say that she had some good news to share.

In Rousseff’s opinion, the inclusion of Argentina in the NBD “is the fastest way” for Argentina to get financing, Télam reported. Rousseff also said that Argentina’s incorporation into the NDB will be expressly put forward and defended by Brazil.

The country’s inclusion will be discussed by the “governors” of the financial institution (ministers and central bankers) of all the members of the bloc. The vote will take place in the first week of August in South Africa.

In order to get into the club, Argentina would have to make a capital contribution of US$ 250 million in sovereign bonds held by the Treasury. Sources in the Economy Ministry told Télam that some of those funds will come from the Guarantee and Sustainability Fund, a sovereign investment fund that partly finances ANSES, the administrator of social benefits in Argentina, including retirement pensions.

Argentina’s contribution would be 25% of the total of US$1 billion that the NDB will receive over a period of two months, since the board will also hold a vote for the incorporation of three other countries: Saudi Arabia, Egypt, and Zimbabwe.

Yesterday, Brazilian President Luiz Inácio Lula da Silva said that it would be difficult for Brazil to secure financial support for Argentina via the BRICS bank because of regulations that limit the organization from supporting countries that are not member states.

Over the past few years, BRICS members have supported Argentina’s entry into the alliance, including explicit backing from the Chinese government.

Source: Buenos Aires Herald

To read the original news report, see: https://buenosairesherald.com/world/international-relations/brics-bank-to-vote-on-argentinas-membership

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