IMF VS. BRICS (Patrick Geniu Yabut)

WTO
Yabut, Patrick Geniu C.

ABFS403 Mr. Jumel Estraero
A. International Monetary Fund vs. BRICS (Brazil, Russia, India, & China)
B. Chapters
I. Introduction
II. A. Statement of the Problem
B. Methodology (Document Analysis)
III. Review of Related Literature
IV. Presentation, Interpretation, & Analysis or PAID (Pres, Analysis, &
Interpretation of the Data)
V. Summary, Conclusion, & Recommendation
VI. Reference
Rajwade, A. (2014). BRICS Bank vs IMF, World Bank. HT Media LTD.

I. Introduction
Background of the Study

"The entry into force of these reforms will reinforce the credibility, effectiveness,
and legitimacy of the IMF," read the IMF statement. "The reforms represent a major step
toward better reflecting in the institutions governance structure the increasing role of
dynamic emerging market and developing countries," it added. China will have the third
largest IMF quota and voting share after the United States with 16.74 percent and Japan
with 6.23 percent. IMF chief Christine Lagarde on Wednesday commended members for
ratifying these truly historic reforms.
From Chile to Turkey, Peru to Russia, Egypt to India, and China, emerging markets
have become sharply lucrative again due to economic policy in these countries not only
becoming adaptive to US market shifts, namely, Fed policy, but also becoming proactive
by drawing up scenarios which include the prospects of US interest rate hikes. This has
largely helped stabilize commodity markets, also seen in strengthening currency stability,
ultimately leading to stronger confidence in the economy. These countries have also
learned how to weather political crises that once debilitated confidence in the economy
and pulled markets into recession (Al-Atraqchi, 2017).
BRICS governments have maintained that their bank serves to complement and
not substitute these institutions (Roychoudhury, Vazquez, 2016). The New Development
Bank of Brazil, Russia, India, China and South Africa, met on the sidelines of the World
Bank and International Monetary Fund spring meetings in Washington, D.C., to approve
its first set of loans. Valued at $811 million, this first tranche of funding will support
renewable energy projects across the BRICS countries including two solar energy
projects in India and China, and a hydropower dam in Russia. For Brazil, it created a
credit line worth $300 million for renewable energy projects such as solar and wind power.
When the idea of a BRICS-led development bank was first announced by Brazil, Russia,
India, China and South Africa four years ago in New Delhi, it was met with a range of
reactions from wariness to cautious optimism to overt celebration. Almost from day one,
it was seen to be a direct challenge to existing development banks, notably the Western-
dominated World Bank and IMF.
While these are no doubt important questions for BRICS policymakers and the
NDBs officials to consider, they also open up the space for greater engagement by civil
society. Defining the precise sustainability criteria against which projects could be judged
for selection is an area where civil society could provide input. Civil society could also
play a critical role in providing oversight of the NDBs lending practices by ensuring that
these preagreed criteria are indeed used to inform the bank's decision-making. The NDB
is expected to inject fresh thinking into development practice. It has already laid down the
framework for this by placing sustainable development at the core of its mandate.
Acknowledging that sustainable development is as much an outcome as it is a process
will help to further guide the Shanghai-based bank in its selection and implementation of
projects. As the NDB embarks on this journey, it should proactively encourage dialogue
Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

http://thebricspost.com/emerging-markets-to-be-hot-commodity-in2018/#.WhhnQraWbIU
with different stakeholders, including civil society actors, who could be valuable partners
in this process.
There were separate studies conducted regarding IMF and BRICS previously
undertaken by researchers such as Ranjan & Agrawal (2011), Gallagher (2014), &
Lesage, Debaere, Dierckx, & Vermeiren (2013).
A study explores Foreign Direct Investment (FDI) inflow determinants in Brazil,
Russia Federation, India and China; collectively known as BRIC countries. A random
effect model is employed on the panel data set consisting of annual frequency data of 35
years ranging from 1975 to 2009 to identify the FDI inflow determinants. The empirical
results show that market size, trade openness, labor cost, infrastructure facilities and
macroeconomic stability and growth prospects are potential determinants of FDI inflow in
BRIC whereas gross capital formation and labor force are insignificant, although
macroeconomic stability and growth prospects have very little impact (Ranjan & Agrawal,
2011).
Financial crises can trigger different actors to reassess their ideas, interests, and
policies, and sometimes change them. The Global Financial Crisis triggered a
reassessment at the International Monetary Fund (IMF) regarding the utility of capital
account liberalization and the management of capital flows. In 2010, the IMF embarked
upon an official reassessment of these issues and in 2012 published an official
institutional view on capital account liberalization and managing capital flows that gives
more caution toward capital account liberalization and endorses the use of capital controls
in certain circumstances. This article traces the political process that yielded the IMF's
new view and draws out lessons for thinking about policy change in global economic
governance institutions (Gallagher, 2014).
The global financial crisis moved the International Monetary Fund (IMF) back to
the center stage, after some years of disengagement by major emerging markets and
developing countries (EMDCs). Neo-liberal institutionalism predicts that crises in a highly
interdependent world induce states to strengthen multilateral institutions. In the case of
the IMF, many observers believed that a more effective IMF was contingent on giving
EMDCs a larger voice. However, the 2010 Quota and Governance Reform at the IMF fell
below expectations in this regard. On the basis of an analysis of the ex-ante preferences
and power relations of the major players, we show that this should not come as a surprise
and that the 2010 reform agreement has reached the boundaries of the politically
possible. Hence, this empirical case study brings in power and preferences to qualify the
more optimist neo-liberal institutionalist accounts against the backdrop of an increasingly
multipolar world (Lesage, Debaere, Dierckx, & Vermeiren, 2013).
However, there has been no research on which is more effective between IMF and
BRICS.
Hence, from the aspects that there is a rivalry between IMF and BRICS, the
purpose of this study are to (1) distinguish the main differences between IMF and BRICS;
(2) the factors affecting their rivalry; and (3) thus interpret, explain, and compare gathered
data as the basis.

II. A. Statement of the Problem
Primarily, this study revealed which among the information gathered through data
would best distinguish the wall between IMF and BRICS.
Specifically, the following were inquiries that the study revealed:
1. What distinguishes between IMF and BRICS?

2. What are the factors affecting their rivalry?
3. What are the best approach to check which is more effective between IMF and BRICS?
B. Methodology
This method section describes in detail how the study is conducted.
Research Design
This study utilizes the qualitative type of research because of its appropriateness
to the study. Qualitative research uses interpretative frameworks from the critical
theoretical view but also reveals ways that power is embedded in social contexts (Lapan,
Quartaroli, & Riemer, 2012). Researchers will attempt to immerse themselves, viewing
meaning as more context and time-specific. Part of this research is to carry out collection
of documents obtain about a site or participants in a study which will be used by the
researchers in gathering the data. Under qualitative type of research, the researchers
specifically aim to trace the transformations and division between the IMF and BRICS.
Historical Research that interprets past trends of attitude, event, and fact. It allows
to discuss past and present events in the context of the present condition, and allows one
to reflect and provide possible answers to current issues and problems.
Data Gathering Procedure

For this study, there were two sources: primary data source using the survey
questionnaires, and the secondary data source from books, journals, researches, and
internet sources. The survey data were collected from documents. The secondary data
were utilized in presenting the review of the related literature and studies which were
obtained from the books, articles, journals, theses, and dissertations and the Web.
Prior to data collection, permission to conduct the study was secured from the
College of Arts and Sciences (CAS) and subject adviser. It describes the purpose of the
study, the importance of the subjects participation, and an assurance of the confidentiality
were presented to targeted participants retrieved from documents.

Document analysis is often used in combination with other qualitative research
methods as a means of triangulation, the combination of methodologies in the study of
the same phenomenon (Denzin, 1970, p. 291). The qualitative researcher is expected to
draw upon multiple (at least two) sources of evidence that is, to seek convergence and
corroboration through the use of different data sources and methods. Apart from
documents, such sources include interviews, participant or non-participant observation,
and physical artifacts (Yin, 1994).
III. Review of Related Literature

This section discusses the related literatures that were helpful in the study. Data
and information were obtained from books, journals, periodicals, magazines, unpublished
theses, and online sources. It is divided into three parts which are: Foreign Literature,
Local Literature and Synthesis.
Foreign Literature
An article and published last 2015 that has the title of The BRICS countries just
launched a rival to the IMF and World Bank was done by Sergei Karpukhin. The so-
called emerging BRICS countries are made up of Brazil, Russia, India, China and South
Africa, and their "New Development Bank" has been seen as a challenge to the
Washington-based International Monetary Fund and World Bank. At the time of the
summit, Russian Foreign Minister Sergei Lavrov said in a statement that BRICS
"illustrates a new polycentric system of international relations" demonstrating the
increasing influence of "new centers of power". The BRICS nations represent 40 percent
of the world's population and previously agreed to establish the bank, with estimated
capital of $100 billion (90 billion euros). The BRICS countries have also agreed to set up
a $100-billion reserve fund, aimed at shielding them from short-term liquidity pressure
and promoting greater financial cooperation.
According to Can The Brics New Development Bank Compete With The World
Bank and the IMF? conducted by John Manning issued last 2014 states that major
feature of the new bank is that it will allow the BRICS to reduce their overwhelming
dependence on the US dollar. As UC Berkeley professor Barry Eichengreen points out,
worldwide some 60 percent of foreign-currency reserves and 85 percent of foreign-
exchange transactions are in US dollars. This makes countries unwilling to accept the
prescriptions of the IMF to remain dependent on the readiness of the Federal Reserve to
provide dollars to their central banks. This dependence is one more thing that the BRICS
want to do away with or at least reduce, hence the establishment of the Contingent
Reserve Arrangement. Whats more, they all want to reduce their dependence on the US
dollar as a whole, a drive that fits in nicely with Chinas strategy of making the yuan a
global currency. Yet the biggest challenge for the five countries will be to overcome their
internal differences and discrepancies, which will likely make it difficult to reach a
consensus when it comes to using NDB funds. Still only time will tell whether the New

Development Bank is an empty vessel or a functional lending institution capable of
measuring up to the IMF and the World Bank.
Based on the article The BRICS may be sputtering but its bank is keeping the
dream alive written by Devjyot Ghoshal published in 2017, It hasnt been the best of
times for the BRICS, the five-member bloc that was once advertised as the next global
economic powerhouse. Political uncertainty, in particular, has ravaged some member
countries: it took the wind out of fast-growing Brazil, and is deepening in South Africas
already reeling economy. Russia, meanwhile, finally saw its economy grow after seven
straight quarters of contraction, but damp oil prices and continuing Western economic
sanctions wont do the recovery any favors. As the BRICS attempts to pull itself out of the
hole, the only real manifestation of its collective economic might, the New Development
Bank (NDB) is trying to keep the dream alive.
According to BRICS to launch World Bank and IMF rivals by Al Jazeera issued
last 2014 The leaders of Brazil and Russia have expressed support for a plan to launch
a new development bank and emergency reserves fund, an ambitious challenge to the
Western-run multilaterals that shape global finances. The BRICS countries have a shared
desire for a bigger voice in global economic policy. They now account for 21 percent of
global economic output and have contributed more than 50 percent of world economic
growth in the past decade. In a further sign that an agreement had been reached on the
headquarters, an Indian government official played down the debate and said India's top
priority was to make sure members of the institutions all had equal voting rights, unlike
Western-run multilaterals they seek to challenge, such as the World Bank.
BRICS bank, AIIB to break IMF, World Bank monopoly: China think tank by The
Economic Times issued last 2015, The formation of the New Development Bank (NDB)
by the BRICS nations along with the formation of the Asian Infrastructure Investment
Bank (AIIB) will break the monopoly of the IMF and World Bank and make their functioning
more democratic, a state-run Chinese think tank has said. The establishment of the
BRICS New Development Bank, an emergency reserve fund, and the AIIB will break the
monopoly position of the International Money Fund (IMF) and the World Bank (WB)," said
the article written by Liu Zengyi, research fellow of Shanghai Institutes for International
Studies. Regional stability is the basis of the economic collaboration, while the latter can
boost the development of the former. In light of this, both the BRICS and the SCO will
jointly and effectively promote stability and prosperity in Asia and the entire world.
Local Literature
An article published in 2016 World powers 'misuse' World Bank, IMF BRICS
bank exec written by Agence France-Presse. The BRICS would not have gone so far as
to create their own development bank if they were fully satisfied with the existing
institutions,' says Paulo Nogueira Batista, vice president and chief risk officer at the New
Development Bank. Europe and the United States have "misused" the World Bank and
International Monetary Fund for their own ends, according to an executive at a new bank
launched by major developing countries. The remarks come as the World Bank and IMF,
long-standing pillars of the post-war global economy, gather this week in Washington for
their annual meetings, and as Washington and Brussels confirmed their de facto
monopoly on the institutions' leadership. The birth of the "BRICS bank" and of their own
monetary fund marked a small revolution, according to Nogueira Batista. It's the first time
that a development bank of global scope is established by emerging market countries
alone with no participation of the industrialized countries. The new bank is still a minnow
compared to the IMF and World Bank, with their 189 member states. And its success is
far from being a foregone conclusion, as its own vice president concedes.
Associated Press with Business Inquirer published in 2014, Emerging nations
plan their own World Bank, IMF states Fed up with U.S. dominance of the global financial
system, five emerging market powers this week will launch their own versions of the World
Bank and the International Monetary Fund. Brazil, Russia, India, China and South Africa,
the so-called BRICS countries, are seeking alternatives to the existing world order, said
Harold Trinkunas, director of the Latin America Initiative at the Brookings Institution. The
bloc comprises countries with vastly different economies, foreign policy aims and political
systems, from Indias raucous democracy to Chinas one-party state. Whatever their
differences, the BRICS countries have a shared desire for a bigger voice in global
economic policy. After decades of rapid growth, the five countries account for nearly one-
fifth of world economic activity. Each has had painful experiences with Western financial
dominance: Theyve contended with economic sanctions imposed by Western powers.
Or theyve been forced to make painful budget cuts and meet other strict conditions to
qualify for emergency IMF loans. The IMF and the World Bank seem to be taking the new
challengers in stride.
Published by Laurence Agcaoili in 2017 entitled IMF retains 6.6% growth forecast
for Philippines this year that In the ASEAN-5 economies (Indonesia, Malaysia,
Philippines, Thailand, Vietnam), growth is expected to strengthen in 2017 to 5.2 percent
(from five percent in April), partly because of stronger-than-expected external demand
from China and Europe, the IMF said. The Philippines emerged as the fastest growing
economy in the region last year with a gross domestic product growth of 6.9 percent from
5.9 percent in 2015, aided by one-off gains from election related spending that boosted
consumption as well as higher investments.
The book IMF congratulates BRICS for new fund, offers help written by By
Reuters published in 2014 states that The International Monetary Fund congratulated the
five BRICS countries for creating a new reserves fund that intends to challenge Western
dominance in the global lender. The IMFs managing director, Christine Lagarde, said the
lender would like to work with the BRICS in the new fund, which pools together $100
billion in reserves from Brazil, Russia, India, China and South Africa. BRICS leaders
launched the fund and a joint bank of the same size in a bold step to press for a bigger
say in the global financial order centered on the IMF and the World Bank. The fund, known
as Contingent Reserve Arrangement, aims to help BRICS countries with balance of
payment difficulties. IMF staff would be delighted to work with the BRICS team dedicated
to this project with a view to reinforcing the cooperation among all parts of the international
safety net, Lagarde said in a statement. China, holder of the worlds largest foreign
exchange reserves, will contribute the bulk of the reserves pool, or $41 billion. Brazil,
India and Russia will chip in $18 billion each and South Africa $5 billion.

A research conducted by Patrick Guillespie Russia and China have had enough
of western banking published in 2015 proves that Russia and China are once again
saying, "Take that, America." President Vladimir Putin approved a new $100 billion
reserve fund over the weekend that will specifically aid the BRICS nations: Brazil, Russia,
India China and South Africa. It's another step by the BRICS to build an alternative so
they don't have to go to the United States or the International Monetary Fund for any
financial help. BRICS leaders first agreed on the new fund, seen by many as a power
play against the west, at a conference last July. The BRIC countries make up 40% of the
world's population and about 20% of the world's economic activity. The reserve fund will
help BRICS countries with cash problems. It will get most of its seed funding from China,
which will contribute $41 billion. Russia, India and Brazil will put in $18 billion each, and
South Africa will give $5 billion. The timing is critical as many emerging market nations
and businesses are struggling to pay their debt for various reasons. China is also moving
forward with its own investment bank, the Asian Infrastructure Investment Bank, which
America isn't supporting financially. That bank has quickly become a thorny issue for
President Obama. European nations, such as Britain and Germany, defied U.S. requests
to withhold membership, and chose to back China's bank. Obama said he's "all for"
China's investment bank, but wants to make sure it's operated properly before the U.S.
joins. But both the bank and the fund appear to be an effort by the BRICS reduce reliance
on U.S. and Western Europe for investment.
Synthesis
Due to variety of these factors and gaps in the literature, it is important for the
present study to determine the factors affecting the re-unifying of PRC and ROC and its
advantages and disadvantages.
To address the dearth in literature, the researcher pursued this paper. And
synthesizing all the literatures gathered, linking sustainable development to incentives
would encourage governments to think about sustainable practices not as bureaucratic
formalities or risks, but as actions ultimately linked to better development outcomes. This
would be a major shift in the way environmental and social standards are currently
conceived in the international financial architecture.
While these are no doubt important questions for BRICS policymakers and the
NDBs officials to consider, they also open up the space for greater engagement by civil
society. Defining the precise sustainability criteria against which projects could be judged
for selection is an area where civil society could provide input. Civil society could also
play a critical role in providing oversight of the NDBs lending practices by ensuring that
these pre-agreed criteria are indeed used to inform the bank's decision-making.
The NDB is expected to inject fresh thinking into development practice. It has
already laid down the framework for this by placing sustainable development at the core
of its mandate. Acknowledging that sustainable development is as much an outcome as
it is a process will help to further guide the Shanghai-based bank in its selection and
implementation of projects. As the NDB embarks on this journey, it should proactively

encourage dialogue with different stakeholders, including civil society actors, who could
be valuable partners in this process.
IV. Presentation, Interpretation, & Analysis or PAID (Pres, Analysis, & Interpretation
of the Data)
Through the data that has been gathered: primary and secondary, and a document
analysis states will be presented below answering the statement of the problem.
1. What distinguishes between IMF and BRICS?

The primary difference between the International Monetary Fund, or IMF, and the
World Bank lies in their respective purposes and functions. The IMF exists primarily to
stabilize exchange rates, while the World Banks goal is to reduce poverty. Both
organizations were established as part of the Bretton Woods Agreement in 1945.
The International Monetary Fund promotes monetary cooperation internationally
and offers advice and assistance to facilitate building and maintaining a countrys
economy. The IMF also provides loans and helps countries develop policy programs that
solve balance of payment problems if a country cannot obtain financing sufficient to meet
its international obligations. The loans offered by the IMF, however, are loaded with
conditions. Often, a loan provided by the IMF as a form of "rescue" for countries in serious
debt ultimately only stabilizes international trade and eventually results in the country
repaying the loan at rather hefty interest rates. For this reason, the IMF has many critics
worldwide.
The World Bank's purpose is to aid long-term economic development and reduce
poverty in developing countries. It accomplishes this by making technical and financial
support available to countries. The bank initially focused on rebuilding infrastructure in
Western Europe following World War II and then turned its operational focus to
developing countries. World Bank support helps countries reform inefficient economic
sectors and implement specific projects, such as building health centers and schools or
making clean water and electricity more widely available. World Bank assistance is
typically long-term, funded by countries that are members of the bank through the issuing
of bonds. The banks loans, however, are not used as a type of bailout, as in IMF style,
but as a fund for projects that help develop an underdeveloped or emerging market nation
and make it more productive economically.
2. What are the factors affecting their rivalry?

The dominance of the Chinese economy and its role in trade relations makes the
BRICS much more a China-with-partners group than a union of equal members.
BRICS countries lack mutual economic interests. Trade between them is now less
than 320 bln dollars a year and declining. Their trade with the US and EU is 6.5
times higher. Chinas trade with the rest of the world is 12.5 times higher. Bilateral
trade between China and South Korea is almost as large as that between BRICS
nations.
Members are too similar in some key areas. All members (apart from Russia) hold
huge foreign reserves (15-35% of GDP) and have low external debt (15% to 37%
of GDP.) Apart from Russia, they are heavily integrated into consumer goods
production with the West.
BRICS nations compete in third markets. In many areas, from clothing (China,
India and Brazil), through economic influence in Africa (China, South Africa and
India) to international aircraft and military equipment markets (China, Russia and
Brazil) BRICS countries compete with one another. All are able to re-engineer and
copy technologies, which means sharing R&D results and innovations and the
development of cross-country scientific cooperation has limited potential.
Diversity of cultures. Phases of economic development, ideologies, definitions of
poverty and other cultural differences mean BRICS members lack common
understandings about priorities that are necessary for productive sharing of
experiences.
3. What are the best approach to check which is more effective between IMF and BRICS?
For decades the IMF and the World Bank have been the sole institutions capable
of producing international financial assistance to countries as a whole. This dominance
has been recently called into question with the rise of BRICS countries (Brazil, Russia,
India, China and South Africa) and their united ambition to create a countervailing force
in the international assistance.
One is the lack of representation at the IMF and World Bank. As South Africas
former Finance Minister explains, The roots of the World Bank and IMF still lie in the
post-World War II environment. Despite the increase in funding and participation from
developing countries, there has been little to no increase in their official role in these
global institutions, particularly in regard to voting.
It is proposed within this BRICS alternative that money should be given without
SAPs or strings otherwise attached so that nations can choose freely how to deal with
their moments of socio-economic crisis. Chief Executive Officer for Frontier Advisory in
Johannesburg Martyn Davies states to this end, The deepest rationale for the BRICS is
almost certainly the creation of new Bretton Woods-type institutions that are inclined
toward the developing world.
Analysis
Emerging economies contributed billions to an emergency IMF (International
Monetary Fund) fund designed to provide additional support to the Eurozone nations in
case the debt crisis worsens. The BRICS nations agreed to contribute a sum exceeding
70 billion dollars with China making the highest pledge of $43 billion dollars. In a move
that was as much political as it was necessary, the BRICS nations called upon the IMF to
pass quota reforms agreed upon in 2010 to increase representation and voting shares for
emerging economies, particularly BRICS. The current setup is anachronistic at best,
failing to reflect the enormous changes in the global economy over the past few decades.
In the past few years, emerging markets like China and India have used their
newly recognized economic prominence to make the organization more multilateral.
Keeping in mind the need to increase their legitimacy in a changing economic climate,
the IMF approved two rounds of reforms in 2008 and 2010. The 2010 reforms called for
a 100% increase in quota resources and a realignment of quota shares amongst member
states. The proposed changes positively affect the BRIC economies. Chinas voting
shares would increase substantially, making it the third largest shareholder. India, Brazil
and Russia would also increase their voting shares to join the top 10 biggest shareholders
of the IMF.
As much as the IMF reiterates its commitment to changing the balance of power,
institutional constraints regarding the quota formula will continue to favor advanced
economies, even if their calculated share of the global GDP has reduced dramatically in
the past three decade.
Creation of the BRICS bank is significant for future international order for three reasons:
First, it demonstrates the viability and dynamics of the BRICS despite all the
skepticism and criticism in recent years. Some of the criticisms (here and here) are
legitimate as BRICS nations have experienced slower growth lately; even Chinas
economic growth appears to be slowing down due to a variety of reasons. Critics
of the BRICS bank also point to different views among the members as evidence
of serious problems of the bank. But this misses the point. There always will be
different opinions and views among the BRICS countries, just like there are
differences among G7 members. What is important, however, is whether member
states share a major common goal that can unite them despite differences. The
answer is: development. Unlike G7 member states, BRICS members are largely
still developing countries and this situation means that for a long time these
countries will focus on how to improve the living standards of their citizens. Also,
other developing countries are desperate in need of funding for infrastructure
projects.
Second, the BRICS bank demonstrates Chinas global leadership. Given Chinas
huge size and quick development, there is little doubt that the world truly needs
Chinas leadership. What China needs to be careful about is to maintain a balance
between its own influence on the bank and other members impact. It is thus critical
for China to avoid the impression that China dominates the BRICS bank. Unlike
the U.S., China should not try to impose its own will and rules on other members
and developing countries seeking funding from the bank. This is especially the
case when BRICS members do have diverging interests and even conflicting
interests (such as territorial disputes between China and India) among themselves.
China should not use the BRICS bank as a platform to only advance its own
national interests such as the Renminbis internationalization; instead, China
should promote equality with the bank as a common platform for all developing
countries to realize their development dreams. Thus it is a good sign that although
Shanghai has been chosen as the headquarters of the new bank, the first president
will be Indian the first chairman of the board of governors will be Russian, the first
chairman of the board of directors will be Brazilian, and the first regional center of
the bank will be in South Africa.
Third, the BRICS bank is significant because it is a direct challenge to the global
order led by the West. Many view (here and here) the new BRICS bank as a
response to the failed reforms at the IMF and World Bank as developing countries
like China and India cannot increase their influence within those institutions.
However, it should be kept in mind that the BRICS bank is not currently challenging
the international liberal economic order. China and India are perhaps the two
greatest beneficiaries of an open liberal economic order; and thus the BRICS bank
should try to push the IMF and World Bank to be more open and transparent.
Ultimately the competition between the BRICS bank and the IMF and World Bank
should be about efficiency rather than a struggle between liberal vs. alternative
economic philosophies. In this sense, there is a strong complementary relationship
between the BRICS bank, the IMF and the World Bank. That said, the West, the
IMF and the World Bank should not view the BRICS bank as a threat to their
domination of the global economic order.
V. Summary, Conclusion, & Recommendation

Summary.
Nations known as the BRICS, Brazil, Russia, India, China and South Africa,
announced the creation of a new, $100 billion development bank (NDB). The project is
aimed at lending money to developing nations for investments, much like how the
American and European-backed International Monetary Fund (IMF) and World Bank
operate.
Traditionally, the job of head of the World Bank always goes to an American, while
that of the International Monetary Fund is invariably filled by a European, usually a French
national. For much of the post-war period, this was a reasonable trade-off, reflecting the
prevailing balance of geopolitical and economic power in the Western world.
But then China, followed quickly by India and Russia, adopted free-market reforms
and joined the global economy. The world changed. Admittedly, both the IMF and the
World Bank have changed a bit with it, but they have yet fully to reflect the shift that has
occurred. Both the US and Europe are reluctant to relinquish their grip on these
institutions.
As a result of all this, and for the first time since joining the world economy, the
Brics nations, Brazil, Russia, India, China, South Africa and their hangers-on, are in open
rebellion. At a summit in Delhi yesterday, they determined in frustration to set up their
own development bank, with an eventual view to creating an alternative to the IMF and
lessening their dependence on the dollar as a reserve currency.

Conclusion.
BRICS markets retain strong characteristics that attract equity investors. It can
count here a strong economic growth, favorable demographics, rich natural resources,
and strong finances. The worries and uncertainty will likely continue to create some angst
in the global market, but we firmly believe that these markets should do well in the long-
term.
The new BRICS development bank is unlikely to replace the IMF and World Bank
in the near future as the latter will still remain powerful players in the global economic
order. The most likely relationship between the two is a complementary relationship rather
than a conflicting one. That said, in the long run the competition between the two will
intensify and the final outcome will depend on the balance of power between the two
blocs: the developing world and the developed world. What is for sure is that we are in
for some interesting times.
Recommendation.
It is symbolic that the recent BRICS summit in Fortaleza, Brazil, took place exactly
seven decades after the Bretton Woods Conference that created the International
Monetary Fund and the World Bank. The upshot of the BRICS meeting was the
announcement of the New Development Bank, which will mobilize resources for
infrastructure and sustainable development projects, and a Contingent Reserve
Arrangement to provide liquidity through currency swaps.
Financing carried out through the BRICS bank will likely not only entail lower
borrowing costs, but also fewer conditions than similar financing arrangements with the
World Bank. The World Bank has historically focused more on poverty alleviation and
clean energy projects than large-scale infrastructure development, and its loans often
come with strict conditions for borrowers, including measures to enhance financial
openness and improve human rights. Asian countries that have balked at this kind of
interventionism may find BRICS bank loans appealing.
VI. Reference
http://thebricspost.com/emerging-markets-to-be-hot-commodity-in
2018/#.WhhnQraWbIU
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Alternative-IMF-and-World-Bank#.WhiEdraWbIU
I. Vegter. 2017. SA wont save itself but the IMF might. Daily Maverick Ltd. Africa
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Aljazeera, L. (2014) BRICS to launch World Bank and IMF rivals. Aljazeera Media
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PTI, (2015). BRICS bank, AIIB to break IMF, World Bank monopoly: China think tank.
Bennett, Coleman & Co. Ltd.
Chwieroth, J. (2010) Capital Ideas: The IMF and the Rise of Financial Liberalization.
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IMF VS. BRICS (Patrick Geniu Yabut)

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Yabut, Patrick Geniu C.

Rajwade, A. (2014). BRICS Bank vs IMF, World Bank. HT Media LTD.

Background of the Study

Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

Rajwade, A. (2014). BRICS Bank vs IMF, World Bank. HT Media LTD.

1. What distinguishes between IMF and BRICS?

Data Gathering Procedure

Rajwade, A. (2014). BRICS Bank vs IMF, World Bank. HT Media LTD.

III. Review of Related Literature

Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

1. What distinguishes between IMF and BRICS?

2. What are the factors affecting their rivalry?

V. Summary, Conclusion, & Recommendation

Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

Al-Atraqchi, F. (2017) Emerging markets to be hot commodity in 2018? Retrieved from:

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