NEW DEVELOPMENT BANK

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Context

• Honduras President Xiomara Castro's formal request for the country's admission to the New Development Bank (NDB) led by BRICS.

Details

President Xiomara Castro's Official Visit to China:

• President Xiomara Castro of Honduras embarked on a six-day official visit to China.
• The purpose of her visit was to strengthen bilateral relations between Honduras and China.

Formal Request for Admission to the NDB:

• During her visit, President Castro held a meeting with the NDB President, Dilma Rousseff.
• President Castro formally requested Honduras' admission to the BRICS-led New Development Bank.
• The request signifies Honduras' interest in joining the NDB as a member country.

Significance of NDB Membership:

• Access to Funding: Membership in the NDB would provide Honduras with access to funding for infrastructure and development projects.
• Strengthened Ties: Becoming a member of the NDB would further strengthen Honduras' ties with the BRICS countries.
• Economic Opportunities: Membership in the NDB could present new economic opportunities for Honduras and promote its development goals.

About New Development Bank

• The NDB, also known as the BRICS Bank, is an international financial institution.
• It was established in 2015 by Brazil, Russia, India, China, and South Africa (BRICS countries).
• The bank's headquarters are located in Shanghai, China.
• Egypt joined the BRICS Bank as its fourth new member in December 2021.
• The other three new members are Bangladesh, Uruguay, and the United Arab Emirates.
• This expansion of membership is seen as a sign of the bank's growing importance as a multilateral development institution.

Objectives and Mandate:

• Development Financing: The primary objective of the NDB is to provide financing for infrastructure and sustainable development projects in member countries and other emerging economies.
• Complementary to Existing Institutions: The NDB aims to complement the work of existing multilateral development banks by focusing on areas that may be underserved or require additional funding.
• Promoting Sustainable Development: The NDB places emphasis on promoting environmentally sustainable projects that contribute to social and economic development.

Governance Structure:

• Shareholding: Each BRICS member country has an equal shareholding and voting rights in the NDB, with an initial subscribed capital of $50 billion.
• Board of Governors: The highest decision-making body is the Board of Governors, composed of finance ministers or central bank governors from each member country.
• Board of Directors: The Board of Directors, appointed by member countries, is responsible for day-to-day operations and strategic decision-making.

Funding and Operations:

• Project Financing: The NDB provides loans, grants, and other financial instruments to support development projects.
• Capital Increase: The bank has the ability to raise additional capital through bond issuances and attracting investments from other sources.
• Focus on Sustainable Infrastructure: The NDB prioritizes investments in sustainable infrastructure, renewable energy, transportation, and other sectors with long-term developmental impact.

Partnerships and Collaborations:

• Co-financing and Collaboration: The NDB actively seeks partnerships with other multilateral development banks, national development institutions, and private sector entities to co-finance projects and share expertise.
• Sustainable Development Goals (SDGs): The NDB aligns its operations with the United Nations' Sustainable Development Goals, working towards poverty eradication, social inclusiveness, and environmental sustainability.

PRACTICE QUESTION Q) Analyze the role and significance of the New Development Bank (NDB) in the global financial architecture. How does it differ from traditional multilateral development banks? (250 words)

https://theprint.in/world/honduras-requests-entry-to-brics-led-development-bank-on-china-trip-3/1621892/