St Petersburg: Battling stunted growth and devaluing currencies, the five nation BRICS grouping, including India, today decided to launch a USD 100 billion currency reserve fund which is expected to help them navigate through an imminent phase out of the US stimulus package.
India will contribute USD 18 billion to the Contingent Reserve Arrangement (CRA), that will have an initial size of USD 100 billion.
China will contribute the largest chunk of the fund making a commitment of USD 41 billion. Brazil and Russia will also contribute USD 18 billion each while South Africa will give USD 5 billion.
Consensus was achieved on many key aspects and operational details regarding the establishment of the CRA, a media note on the informal meeting of BRICS leaders ahead of the G20 Summit said.
BRICS comprises of Brazil, Russia, India, China and South Africa.
The BRICS leaders, Prime Minister Manmohan Singh, Chinese President Xi Jinping, Russian President Vladmir Putin, South African President Jacob Zuma and Brazilian President Dilma Rousseff, noted the continued slow pace of the recovery, high unemployment in some countries, and on-going challenges and vulnerabilities in the global economy, particularly in advanced economies.
They said that major economies, including G20, could do more to boost global demand and market confidence.
“In light of the increase in financial market and capital flow volatility during recent months, the BRICS leaders reiterated their concerns they had expressed in the Durban Summit in March, regarding the unintended negative spillovers of unconventional monetary policies of certain developed economies,” the note said.
“They emphasised that the eventual normalisation of monetary policies needs to be effectively and carefully calibrated and clearly communicated,” it said.
BRICS leaders also expressed their concern with the stalling of the International Monetary Fund reform process.
They recalled the urgent need to implement the 2010 IMF Quota and Governance Reform, as well as to complete the next general quota review by January 2014 as agreed at the G20 Seoul Summit in order to ensure the Fund's credibility, legitimacy and effectiveness.
