Friday, 5 April 2019

BRICS funding agency New Development Bank plans to double its loan book to $16 billion

The New Development Bank (NDB), a multilateral finance institution established by Brazil, Russia, India, China and South Africa (BRICS) in 2014, plans to almost double its loan book to USD 16 billion this year and increase its impact, as the Bank seeks to broaden its global development partnerships and mobilise more institutional and private capital. These announcements were made at the 4th Annual Meeting of the NDB in Cape Town, South Africa which brought together senior government officials from BRICS countries, leaders of multilateral and national development institutions, distinguished scholars, prominent commercial bankers, captains of industry and representatives of civil society organizations.

NDB is headed by renowned Indian banker Shri KV Kamath. In his keynote speech, he mentioned that in the year 2019 New Development Bank will build on the strong momentum in its operations with an aims to double its loan approval book to about USD 16 billion. The Bank will ramp up its hard currency financing from the international capital markets.

The NDB was established to mobilize resources for infrastructure and sustainable development projects in member states as well as other emerging economies, and the Bank is strongly committed to supporting the sustainable development agenda of its member countries.

In 2018, the NDB approved 17 loans totaling about USD 4.6 billion, building on its base of 13 loans worth USD 3.4 billion as of the end of 2017. That brought the total loan book of the bank to 30 projects worth approximately USD 8 billion by the end of last year.

The NDB has approved five additional projects with loans aggregating to approximately USD 1.2 billion, two in China and three in South Africa, taking its total loan book to USD 9.2 billion as of today. These five new projects include RMB 825 million (USD 123 million) for the Shengzhou Urban and Rural Integrated Water Supply and Sanitation Project (Phase II); USD 300 million for the Guangxi Chongzuo Urban Water System Ecological Restoration Project; USD 480 million to Eskom for the Environmental Protection Project at Medupi Thermal Power Plant; ZAR 1.15 billion (USD 80 million) to the Industrial Development Corporation (IDC) for its Renewable Energy Sector Development Project; and ZAR 3.2 billion (USD 220 million) to South Africa's Trans Caledon Tunnel Authority (TCTA) for work on the Lesotho Highlands Water Project (Phase II).

In India, the New Development Bank has financed an ambitious Mumbai Metro Line 2B (DN Nagar - Mankhurd) prItst. It's loan book to India include Rural Road, Bridges and Water Supply projects in the states of Madhya Pradesh, Bihar and Rajasthan. NDB has also approved a Renewable Energy Financing Scheme of USD 250 million with Canara Bank.

New Development Bank has principally approved a loan to Mumbai Metropolitan Region Development Authority for the financing of Mumbai Metro Line 8 (Chhatrapati Shivaji International Airport - Navi Mumbai International Airport), Line 10 (Gaimukh - Shivaji Chowk) and Line 11 (Wadala - GPO). Other proposed loans to India include USD 224 million for 8km Brahmaputra bridge in Guwahati, Assam.

"The share of the BRICS countries in world GDP in PPP terms has grown from 30% to 36% since 2010. This growth has put increased pressures on natural resources and the environment. Fortunately, however, our members have explicitly recognized these pressures and are increasingly investing in undoing some of the past damage. Our members are also focusing on implementing development strategies aimed at minimizing adverse impacts in the future. In both these endeavours, the Bank is being called upon to assist," said Mr. Kamath in his keynote speech.

The NDB now plans to open additional regional offices in Brazil and Russia and is considering opening an Indian regional office in due course.

- Chaitanya Kulkarni.

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