Finance Minister Enoch Godongwana has emphasised the need for the Brics' New Development Bank to lend in local currencyHobbled by the impact of sanctions against founding shareholder Russia, the New Development Bank set up by the Brics countries needs to increase its local currency fundraising and lending, South Africa's finance minister has said.
"Most countries that are members of the NDB have been encouraging to provide loans in local currencies," Godongwana said. Chief Financial Officer Leslie Maasdorp said at the NDB headquarters in Shanghai that the bank aims to increase local currency lending from about 22% to 30% by 2026, but that there were limits to de-dollarisation.The bank's operating currency is dollars for a very specific reason, US dollars are where the largest pools of liquidity are
"Because of the capital market challenges of 2022, and in an endeavour to preserve the bank's core financial ratios, there was indeed a slowdown," Maasdorp said.While the NDB has approved loans worth $32.8 billion for projects ranging from Mumbai metro lines to solar lighting in Brasilia, the loans on its balance sheet were worth less than half that amount at end-March.So far, China is by far the NDB's most successful local currency market.
Bangladesh, the United Arab Emirates and Egypt have joined since 2021, bringing its membership to eight. Uruguay is part way through the process of joining, while By comparison, the Asian Infrastructure Investment Bank, which is backed by China and began operating in 2016, has 106 members, including 23 European countries and 45 outside of Asia.
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