BRICS Development Financing Reform Discussed by Ministers
Finance ministers from BRICS nations convened yesterday in São Paulo to discuss sweeping reforms to the bloc’s development financing mechanisms, marking what could become a watershed moment for South-South economic cooperation.
The high-level meeting addressed persistent challenges in cross-border investment flows and explored new financing frameworks designed to reduce dependency on Western-dominated financial institutions.
Brazilian Finance Minister Fernando Haddad opened the session by emphasizing the need for “financial sovereignty” among developing economies. “For too long, the Global South has operated within systems designed without our interests at heart,” Haddad remarked. “Today, we begin charting a path toward more equitable development financing.”
The proposals under consideration include expanding the capital base of the New Development Bank (NDB), originally established by BRICS in 2014 as an alternative to the World Bank and International Monetary Fund. According to documents obtained from meeting participants, ministers discussed increasing the NDB’s lending capacity from its current $30 billion to potentially $100 billion by 2030.
Russian Deputy Prime Minister Alexander Novak highlighted the growing importance of local currency financing, noting that nearly 30% of trade between BRICS nations now occurs outside the dollar ecosystem. “De-dollarization isn’t merely a political statement—it’s becoming economic reality,” Novak said during his presentation.
Data from the Bank for International Settlements supports this trend, showing a 14% year-over-year increase in local currency settlements among BRICS members during the first quarter of 2025.
Indian Finance Minister Nirmala Sitharaman brought attention to infrastructure financing gaps, citing research from the Global Infrastructure Hub estimating that developing economies face a $15 trillion infrastructure investment shortfall through 2040. “The question isn’t whether we need alternative financing models, but how quickly we can implement them,” Sitharaman stated.
The ministers evaluated a proposal for a new BRICS Infrastructure Investment Platform that would specifically target critical development projects in member and partner nations. Initial funding commitments could reach $50 billion, according to preliminary figures discussed at the meeting.
Chinese Finance Minister Liu Kun presented what he termed a “collaboration framework” that would streamline regulatory requirements for cross-border investments within the BRICS ecosystem. “Administrative barriers often prove more challenging than financial constraints,” Liu explained. “We must address both simultaneously.”
South African Finance Minister Enoch Godongwana emphasized the need for financing mechanisms that address climate adaptation in developing economies. “Any reformed financing structure must prioritize climate resilience and sustainability,” Godongwana said, referencing data showing that climate-vulnerable nations pay on average 1.2% higher borrowing costs on international markets.
The discussions revealed growing confidence among BRICS nations in their collective economic strength. Combined, the expanded BRICS bloc now represents approximately 36% of global GDP on a purchasing power parity basis, according to the latest IMF figures—more than the G7 economies.
Yet challenges remain. Economists from Morgan Stanley, who analyzed the proposals, noted significant hurdles in harmonizing diverse regulatory environments and central bank policies. “The ambition is evident, but implementation will require unprecedented coordination,” wrote Morgan Stanley’s emerging markets team in a briefing note released this morning.
Perhaps most striking was the unified position on reforming international credit rating methodologies. Ministers collectively criticized what they described as “systematic bias” in sovereign rating approaches that fail to account for the unique economic structures of developing economies.
“When your economic foundations differ fundamentally from Western models, traditional rating frameworks become inappropriate measuring sticks,” said Egypt’s Finance Minister Mohamed Maait, representing one of the bloc’s newest members.
The proposals come amid heightened tensions in the global financial architecture. The World Bank’s recent capital increase has been criticized for maintaining disproportionate voting power among Western shareholders despite the growing economic clout of developing nations.
Beyond policy discussions, the meeting yielded concrete commitments. Ministers signed a memorandum of understanding on establishing a BRICS Financial Regulatory Cooperation Forum to address cross-border investment barriers. They also commissioned a technical working group to develop a common digital payments infrastructure that could eventually facilitate seamless transactions between member nations.
“What we’re witnessing isn’t just institutional reform, but a fundamental rethinking of development finance,” explained Paola Subacchi, professor of international economics at Queen Mary University of London, who tracks BRICS financial initiatives. “The real question is whether these mechanisms will complement or challenge existing institutions.”
The ministers will present their recommendations at the full BRICS summit scheduled for October in Kazan, Russia, where heads of state are expected to make final decisions on implementing the proposed reforms.
As financial markets digest these developments, the long-term implications remain uncertain. What’s clear, however, is that BRICS nations are no longer content to operate exclusively within financial frameworks designed without their input.
