The New Development Bank will expand local currency financing for member countries

On August 30 local time in Cape Town, the legislative capital of South Africa, New Development Bank President Dilma Rousseff said that the New Development Bank will expand local currency financing for member countries to help the sustainable development of emerging economies and developing countries.

From August 29 to 31, the ninth annual meeting of the New Development Bank's Board of Governors was held in Cape Town under the theme of "Investing in a Sustainable Future." Rousseff pointed out in her speech at the opening ceremony on the second day of the annual meeting that emerging markets and developing countries face challenges in achieving sustainable development and need a large amount of resources and long-term financing. International liquidity should be introduced into developing countries, and alternative solutions such as local currency financing should be formulated to expand the fiscal space for investment.

The New Development Bank was established in 2015 by Brazil, Russia, India, China and South Africa. Its headquarters is located in Shanghai. It aims to support infrastructure and sustainable development projects in BRICS countries and other emerging economies and developing countries. As a supplement to existing multilateral and regional financial institutions, it promotes global growth and development.

Expanding local currency financing is one of the main strategic goals of the New Development Bank during the period from 2022 to 2026. At present, the amount of financing provided by the bank in local currencies of member countries accounts for about 22% of the total investment amount. Its goal is to increase this proportion to 30%. Rousseff emphasized that "using local currency is a strategic choice." This move can not only promote the development of domestic capital markets in member countries, but also protect borrowers from the risk of currency exchange rate fluctuations.

The New Development Bank has made certain progress in promoting local currency financing for member countries. Among the approved projects, the amount of projects invested in local currencies accounts for about 22%, of which the Chinese yuan accounts for 18% and the South African rand accounts for 4%. This proportion is significantly higher than that of other multilateral development institutions.

This time, the New Development Bank clearly stated that it will expand local currency financing for member countries. This measure is of great significance for emerging economies and developing countries. It is expected to provide more diversified financial support for the sustainable development projects of these countries, reduce financing costs and exchange rate risks, further promote the balanced development of the global economy, and also enhance the influence and competitiveness of the New Development Bank in the international financial field. The international community is full of expectations for the future practices and results of the New Development Bank in local currency financing and other aspects.