BRICS member states have begun preliminary discussions on the establishment of a multilateral investment guarantee mechanism, a senior Brazilian official told SCMP. This move aims to strengthen BRICS' role in stabilizing the global economy.
Ms. Tatiana Rosito - Secretary in charge of international relations at the Brazilian Ministry of Finance - said that the discussions on this content took place after a BRICS meeting on the sidelines of the spring meeting of the International Monetary Fund (IMF) and the World Bank (WB) in Washington, USA.
The mechanism that BRICS proposes to pilot according to MIGA - the WB's multilateral Investment Guaranteeing Authority - which supports developing countries in attracting foreign direct investment by providing political risk insurance and credit guarantees.
MIGA protects investors from risks such as nationwide localization, exchange rate instability, breaches of contracts and conflicts. Established in 1988, MIGA has helped reduce risks for many infrastructure and energy projects in the most unstable areas of the world.
If established, BRICS's MIGA version will be added to the group's financial instruments, along with the Emergency Prevention Agreement (CRA) signed in 2014 and implemented in 2016.
Currently, the CRA is a $100 billion liquidity fund that supports BRICS members in balance-of-payment crises through currency exchange, helping emerging economies cope with global financial fluctuations and reduce dependence on institutions like the IMF.
According to Ms. Rosito, stabilizing financial stability among BRICS members - countries accounting for about 41% of global economic output - is one of Brazil's top goals this year as the rotating chair of the bloc. Brazil will host the BRICS summit in July.
"Reforming the international financial and monetary system" is a priority for Brazil, including "strengthening specific BRICS mechanisms such as the BRICS Development Bank and the CRA," Rosito emphasized.
The Brazilian official also said that although the New Development Bank (NDB) - also known as the BRICS Bank, headquartered in Shanghai - has the authority to provide guarantees, discussions are still ongoing about the possibility of creating a separate mechanism. All final decisions will have to be approved by the Board of Directors of the NDB.
