BRICS calls for enhanced use of local currencies in trade between member countries

The BRICS ministers of Foreign Affairs met in Russia’s Nizhny Novgorod on June 10 and held a plethora of discussions, including an important one on the enhanced use of local currencies in trade and financial transactions between the BRICS countries.

The meeting was the first ministerial meeting following BRICS expansion in 2023 when Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE joined Brazil, Russia, India, China, and South Africa as full-fledged BRICS members.

India welcomes new members

The Indian delegation was led by senior diplomat Dammu Ravi, Secretary (Economic Relations), at the Ministry of External Affairs (MEA). Randhir Jaiswal, Ministry of External Affairs spokesperson, welcomed the new members in a post on X. "A significant meeting in the format of expanded BRICS family. India wholeheartedly welcomes the new membership," he said.

Usually, the External Affairs Minister attends such meetings. Since S. Jaishankar was reappointed as External Affairs Minister only on Monday after Prime Minister Narendra Modi's swearing-in ceremony on Sunday, he could not make it to Russia to attend the meeting.

Push for tade in local currencies

At the meeting, the Ministers recognized the need for a comprehensive reform of the global financial architecture.

“They recalled the paragraph 45 of the Johannesburg II Declaration tasking the Finance Ministers and Central Bank Governors of the BRICS countries to consider the issue of local currencies, payment instruments and platforms and to report back to the BRICS Leaders,” according to the Joint Statement.

Further, the Foreign Ministers reiterated the demand made at COP27 to guarantee that international financial institution reform will prioritise expanding the scope of financing and facilitating easier access to resources.

They anticipated that the 2025 International Bank for Reconstruction and Development shareholder review would be a great success.

As per the Joint statement released by MEA, the leaders also “supported a robust Global Financial Safety Net with a strong quota-based and adequately resourced International Monetary Fund (IMF) at its centre, and also called on “continuing the process of IMF governance reform including creating a new quota formula reflecting the economic size of its membership” during the overall review of quotas.

In accordance with the Sharm El-Sheikh Action Plan of the COP27, which Egypt hosted in November 2022, the Ministers emphasised the necessity of reforming the policies and practices of multilateral development banks (MDBs) in order to increase their lending capacities, to be able to better assist developing countries in financing their needs for development and enhancing their climate action.

Developing the New Development Bank

“The Ministers encouraged the New Development Bank to follow the member-led and demand-driven principle, employ innovative financing mechanisms to mobilise financing from diversified sources, enhance capacity building and knowledge exchange, including with knowledge sources from developing countries, assist member countries in achieving the SDGs and further improve efficiency and effectiveness to fulfil its mandate, aiming to be a premier multilateral development institution for EMDCs,” the Joint Statement read.

They agreed to jointly develop the New Development Bank into a new type of Multilateral Development Bank of the 21st century and urged the Bank to execute its purpose and functions in accordance with the Agreement on the New Development Bank in a fair manner.

“The Ministers expressed their support to the further expansion of the NDB membership and early consideration of applications of BRICS Member countries as per the NDB approved policies,” the statment added.

Moreover, the Ministers also expressed the intention to promote energy cooperation among the BRICS countries.

They urged for resilient global supply chains to ensure universal access to affordable, accessible, reliable, sustainable, and modern energy sources.

Concern expressed for ongoing situations in Ukraine, West Asian regions

The Ministers recalled their national positions concerning the situation in and around Ukraine as expressed in the appropriate fora, including the UN Security Council and UN General Assembly.

“They noted with appreciation relevant proposals of mediation and good offices aimed at peaceful resolution of the conflict through dialogue and diplomacy,” the statement read.

The Ministers expressed serious concern over continued conflicts in the Middle East and North Africa (MENA) region and noted the Joint Statement by BRICS Deputy Foreign Ministers and Special Envoys at their meeting of April 25, 2024.

Notably, Russian Foreign Minister Sergey Lavrov opened the BRICS Ministerial with a minute of silence in memory of the deceased former Iran President Ebrahim Raisi and Iranian Foreign Minister Hossein Amir-Abdollahian.

He offered condolences to the people of Iran and the families of the victims.

This is the first meeting of foreign ministers since the expansion of BRICS in 2023. The 10 full members of the association include Brazil, Russia, India, China, and South Africa with new members Egypt, Iran, UAE, Saudi Arabia, and Ethiopia joining the grouping in 2023.

Russia took over the chairmanship of BRICS on January 1, 2024.