South Africa’s membership of BRICS strengthened the country’s influence in endeavours to reform structures of global governance and render global structures equitable and representative
FOR ORAL REPLY
QUESTION NO: 231 (NO2420E)
PUBLISHED IN QUESTION PAPER NO: 7-2013 OF 21 AUGUST2013
MRS J B NGUBENI-MALULEKA (ANC) TO ASK THE MINISTER OF INTERNATIONAL RELATIONS AND COOPERATION:
How has South Africa’s membership of BRICS strengthened the country’s influence in endeavours to (a) reform structures of global governance and (b) render global structures equitable and representative?
(a) BRICS Leaders meet annually at Summits and pronounce on issues pertaining to global governance and related reforms, notably in the Summit Declarations. Since the first Summit held in 2009 right up to the Fifth Summit which President Zuma recently hosted on 27 March 2013, BRICS Leaders have called for global governance reforms. BRICS Leaders stated for example at the Sanya Summit held in 2010 in China, “We affirm that the BRICS and other emerging countries have played an important role in contributing to world peace, security and stability, boosting global economic growth, enhancing multilateralism and promoting greater democracy in international relations” (Sanya Declaration, para 5). BRICS Leaders call pertinently for reform of the global financial and economic architecture, and specifically for “a quick achievement of the targets for the reform of the International Monetary Fund agreed to, at previous G20 Summits and reiterate that the governing structure of the international financial institutions should reflect the changes in the world economy, increasing the voice and representation of emerging economies and developing countries” (Sanya Declaration, para 15).
At the Fifth BRICS Summit, BRICS Leaders amplified these calls for reforms to benefit the poorest members of the IMF, including Sub-Saharan Africa as well as raised the issue pertaining to the leadership of International Financial Institutions to be open to candidates from developing countries, which is indicative of South Africa’s influence in this regard:
“We call for the reform of International Financial Institutions to make them more representative and to reflect the growing weight of BRICS and other developing countries. We remain concerned with the slow pace of the reform of the IMF. We see an urgent need to implement, as agreed, the 2010 International Monetary Fund (IMF) Governance and Quota Reform. We urge all members to take all necessary steps to achieve an agreement on the quota formula and complete the next general quota review by January 2014. The reform of the IMF should strengthen the voice and representation of the poorest members of the IMF, including Sub-Saharan Africa… The leadership selection of IFIs should be through an open, transparent and merit-based process and truly open to candidates from the emerging market economies and developing countries (eThekwini Declaration, para 13).”
BRICS Leaders also now meet on the margins of the G20 Summits where they coordinate positions in respect of global governance issues and then jointly articulate such positions, as agreed. BRICS countries have collaborated to increase the share of emerging and developing countries, including the poorest countries to increase their decision making in key global public institutions such as the IMF, and have also made very significant financial contributions in support of the IMF’s mandate to ensure global financial stability and increased economic growth.
At the informal meeting of BRICS Leaders held on 18 June 2012 on the margins of the G20 Summit in Los Cabos, Mexico, India in its capacity as the then BRICS Chairperson issued a media note on the outcomes of this meeting. The BRICS Leaders were among the first Leaders to agree to increase resources available with the International Monetary Fund and to enhance their own contributions to the IMF, with the understanding that these resources will be called upon only after existing resources, including the New Arrangements to Borrow, are substantially utilized. The BRICS contributions amounted to USD 75 billion (China contributed USD 43bn; Russia, India and Brazil contributed USD 10 bn each and South Africa contributed USD 2 bn). This would promote adequate burden sharing amongst IMF creditors. Importantly, BRICS Leaders stated that their contributions to the IMF would be contingent on the implementation of previous reforms agreed to, in a timely manner, including a comprehensive reform of voting power and reform of quota shares.
(b) The BRICS Leaders further considered the challenges that developing countries face in respect of infrastructure development, due to insufficient long-term financing and Foreign Direct Investment (FDI), especially investment in capital stock. It was felt that BRICS cooperation towards the more productive use of global financial resources can make a positive contribution to addressing this problem. Two significant outcomes of the eThekwini Summit were the decisions of BRICS Leaders to launch a new Development Bank and Contingent Reserve Arrangement. Leaders emphasised that the initial capital contribution to the bank should be substantial and sufficient for the bank to be effective in financing infrastructure.
These initiatives also relate directly to the increasing need for reform of global governance structures. South Africa together with India is currently co-chairing the formal negotiations to establish the new Development Bank. A progress report on the implementation of these decisions will be tabled by Finance Ministers to the BRICS Leaders at their next meeting on the margins of the G20 Summit in St Petersburg in September 2013.