A new development bank launched by emerging economies will help all nations in distress to return to health, South African President Jacob Zuma said Monday.
The so-called BRICS—Brazil, China, India, Russia and South Africa—announced last month that they were setting up a development bank and emergency reserve fund.
This was seen as a major challenge to the Washington-based International Monetary Fund and World Bank, which some emerging powers see as biased towards Western policy positions.
Zuma, visiting Washington for a US-Africa summit, argued that the IMF has few success stories to show despite the often austere regimens it imposes on troubled economies in return for emergency loans.
“There has been concern from the African leaders that the existing banks that have been there before have not succeeded to produce an example country that was helped successfully and is now thriving,” Zuma told a news conference.
The new bank, he said, “is going to do things differently. No country will go to the BRICS bank and say, I need to be rescued, and find itself not being rescued.”
Experts say that much remains unclear about the scope of a BRICS bank, including how much risk it would take.
For now, only the BRICS nations will be able to draw from the $50 billion in the New Development Bank and $100 billion in the Contingent Reserve Arrangement.
The IMF, set up with the World Bank during the Bretton Woods conference in 1944, has faced criticism for imposing onerous conditions and for not giving wider representation to developing nations on its controlling committees.
Some defenders of the IMF say that restructuring plans encouraged long-term stability in Asian nations hit by the 1997-1998 crisis, as well as in Turkey, despite short-term pain.
The BRICS bank plan came after an agreement to give China and other emerging powers more voting power in the IMF got bogged down in the US Senate due to opposition by conservative Republicans.