MOSCOW: Russia, which chairs the Brics group this year, has called on its partners to create an alternative to the International Monetary Fund (IMF) to counter political pressure from Western nations ahead of the Brics summit later this month.

Russian Finance Minister Anton Siluanov, who is hosting the meeting, said the global financial system is controlled by Western countries and that the group, which represents 37 per cent of the global economy, needs to create an alternative.

“The IMF and the World Bank are not performing their roles. They are not working in the interests of Brics countries,” Siluanov said at an event on the first day of the meeting.

“It is necessary to form new conditions or even new institutions, similar to the Bretton Woods institutions, but within the framework of our community, within the framework of Brics,” Siluanov added.

Russia had its forex reserves in dollars and euros frozen and its financial system heavily hit by sanctions by the West after it invaded Ukraine in Feb 2022. The country is cut off from international capital markets.

The Moscow meeting is modeled on the Group of 20 schedule, where summits are preceded by meetings of top economic policy officials who outline proposals to be reviewed by leaders at the summit.

Siluanov has also proposed setting up a joint investment platform based on the group’s New Development Bank, its only functioning financial institution. The platform will use a new digital form of transactions, he said, without elaborating.

Brics, originally comprising Brazil, Russia, India, and China, has expanded to include South Africa, Egypt, Ethiopia, Iran, and the United Arab Emirates. Top Brics finance and central bank officials are meeting in Moscow this week.

But most finance ministers and central bank chiefs from the Brics group of countries did not attend a high-level meeting in Moscow ahead of a Brics summit, sending more junior officials instead, official documents showed.

Finance ministers from Egypt and the United Arab Emirates and the head of Iran’s central bank were present as Russian Finance Minister Anton Siluanov called for the creation of an alternative. But finance ministers and bank chiefs from China, India and South Africa stayed away, sending deputies or more junior officials instead, a day after Kremlin aide Yuri Ushakov accused the West of pressuring countries not to attend the Brics summit.

Russia’s central bank Governor, Elvira Nabiullina, has previously talked about a Brics Bridge payments system, which would link member countries’ financial systems, but progress has been slow. The only financial institution the Brics countries have established so far is the New Development Bank, created in 2015 to finance infrastructure and sustainable development projects in Brics members and other emerging economies. “The creation of a cross-border payment initiative is our main task,” Siluanov told the officials. Russia is also pushing for the creation of a Brics clearing centre, a rating agency, a reinsurance company, and a commodities exchange.

Published in Dawn, October 15th, 2024