NDB sets out priorities, aims to raise funds in diverse world markets

Huang Yixuan
New Development Bank, a multilateral development bank run by BRICS, sets out its priorities, including raising funds in diverse markets and currencies and promote social inclusion.
Huang Yixuan

New Development Bank, a multilateral development bank operated by BRICS (Brazil, Russia, India, China and South Africa) states, has set out its priorities, aiming to expand partnerships, raise funds in diverse markets and currencies, and promote social inclusion.

NDB will look to raise funds in diverse world markets, and in different currencies – such as the Chinese renminbi, the UD dollar, and the euro – bringing in resources from wherever they are available, Dilma Rousseff, its new president who was elected in March, said at the bank's annual meeting.

She emphasized the importance of local currency financing for the bank, as member countries currently conduct trade mostly in US dollars or euros, which poses a risk for countries with currencies facing depreciation due to the United States Federal Reserve's quantitative easing policy, which could lead to problems with currency exchange for trade.

"We will seek to fund a greater share of our projects in local currencies, with the dual objective of strengthening member countries' domestic markets and protecting our borrowers from the risks of currency fluctuations," the former Brazilian president said.

NDB sets out priorities, aims to raise funds in diverse world markets

Dilma Rousseff, NDB's new president who was elected in March, makes a speech at the bank's annual meeting.

As of the first quarter of 2023, the bank's current local-currency financing accounts for around 21.5 percent of its portfolio, primarily driven by renminbi-denominated loans. While for the strategic cycle of 2022-2026, NDB aims to increase the proportion of project financing volume in national currencies of its members to 30 percent.

Also among the bank's priorities is to expand its outreach and strengthen its role as a platform for cooperation, by expanding its network of partnerships and placing great emphasis on the relevance of the development projects it finances.

It also places emphasis on promoting social inclusion, pledging to support projects that help reduce inequality and that contribute to improving the living standards of the large communities of poor and excluded people that still exist in the countries of the Global South.

Ding Xuexiang, a member of the Politburo Standing Committee of the Communist Party of China and Vice Premier of the State Council, attended and delivered a speech at the meeting, stating that NDB is an important milestone in BRICS cooperation.

With the joint efforts of all parties, the bank's business continues to expand, and its international influence has steadily increased. It has become an important emerging force in multilateral development institutions, he added.

Ding hoped that the bank will work with all parties to jointly create a new era of global development. Specifically, he stressed that efforts should be made in five aspects: expanding global development cooperation, promoting global development partnerships, improving infrastructure, innovating investment and financing models, and enhancing international economic governance.

Prior to its annual meeting, NDB successfully issued 8.5 billion yuan (US$1.2 billion) worth of panda bonds in the China interbank bond market on Monday, which exceeded the bank's previous largest panda bond issuance of 7 billion yuan. This issuance reflects the bank's strategy of diversifying its participation in capital markets and mobilizing resources to support sustainable development project financing.

Through this transaction, the bank established a new panda bond benchmark in the China interbank bond market. The transaction attracted the attention and participation of domestic and foreign investors, and the bond was ultimately priced with a negative yield spread.

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