In the wake of the COVID-19 pandemic and the Russia-Ukraine conflict, the 15th BRICS Summit convened in Johannesburg, South Africa, carried substantial expectations. In this episode of Policy Beyond Borders, Dr N R Bhanumurthy, Vice Chancellor of B R Ambedkar School of Economics University, shares his insights on the outcomes and implications of this significant summit, exploring the expansion of BRICS, their response to supply chain disruptions, the path towards de-dollarization, and the role of the New Development Bank (NDB).
Key takeaways:
- Following the aftermath of COVID-19 and the Russia-Ukraine conflict, the 15th BRICS Summit held in Johannesburg, South Africa, carried significant expectations.
- BRICS has realised its longstanding expansion goal by welcoming Argentina, Egypt, Ethiopia, the UAE, Saudi Arabia, and Iran as full members. This addition injects diversity into the group and positions it as a potent force within the G20. As emerging economies expand their influence, this move could also catalyze UN reform efforts that have languished for over 75 years.
- The impact of COVID-19 on global supply chains was substantial, but the expanded BRICS group aims to counter this by fostering inter-group supply chain expansion. Leveraging their diverse advantages, these nations seek to enhance trade and cooperation, ultimately benefiting the collective welfare of BRICS nations. This proactive approach has the potential to yield positive outcomes beyond perceived limitations.
- BRICS aims at a partial shift, with the New Development Bank issuing Rand bonds to ease foreign exchange pressure. However, long-term independence from the dollar requires strengthening our currency institutions. While reducing transaction costs and reliance, a complete dollar replacement won’t be swift.
- Analyzing the New Development Bank’s outcomes necessitates a longer time frame, beyond just a decade. NDB’s swift response time, compared to the IMF and the Asian Development Bank, benefits countries in urgent need. NDB’s evolution into a primary lender may take time due to its recent engagement in allocating resources to member countries, but it holds the potential to play a more significant role.
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