The New Development Bank (NDB), a Shanghai-based multilateral bank founded by BRICS, has made comprehensive achievements during its first year of operation but challenges still remain, especially in terms of financing, officials at the bank said on Wednesday.
The multilateral development bank, jointly established by Brazil, Russia, India, China and South Africa, approved the first set of projects with total commitments of $811 million in April and successfully issued its first yuan-denominated green bond worth 3 million yuan on Tuesday, NDB President K. V. Kamath said at the opening ceremony of NDB's first annual meeting in Shanghai on Wednesday.
All of these loans support renewable energy projects, which, to a certain extent, have earned a reputation for the NDB as an institution that backs green and sustainable infrastructure.
Chinese Vice Premier Zhang Gaoli also stressed at the Wednesday event that to stand out among the several multilateral development banks in the world, the NDB must give full play to its advantages to provide strong support to infrastructure construction and sustainable development in BRICS countries and other developing economies.
Despite the achievements, nearly all of the speakers mentioned the bank will make efforts in expanding financing channels in the future, which is one of the challenges facing the NDB.
"As global risk aversion rises, demand for financing from multilaterals - including the NDB - will increase. In order to meet this demand, the NDB should ideally be able to leverage itself appropriately and prudently," Kamath said. "However, current global credit rating systems make it excessively difficult for an institution of the south such as the NDB to achieve reasonable levels of leverage."
"We will need to engage with the global rating agencies on this aspect," he noted.
Zhang also offered suggestions regarding the future development strategies of the bank.
"The NDB should expand cooperation among BRICS countries, establish a new global platform for common development, build new cooperative partnerships, create innovative financing models and improve global governance," Zhang said in his speech on Wednesday.
China's Minister of Finance Lou Jiwei and Pravin Gordhan, Minister of Finance of South Africa, among others, also addressed at the opening ceremony of the annual meeting.
According to Lou, the recent international market turmoil has caused many difficulties for the developing countries in using foreign funds, therefore, the NDB should actively develop local currency business to provide stable and low-cost funding for the member countries.
Cooperation with policy banks, commercial lenders, insurance groups and other parties is also highly encouraged in the area of infrastructure projects.
"Besides financial support, the NDB should be committed to offering high-quality knowledge services to developing countries to support their innovation capability," Lou noted.
