New Development Bank asked to expedite Bangladesh's membership

Isa Khan

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Bangladesh has called on the New Development Bank (NDB) to expedite awarding its membership of the Shanghai-based multilateral lending institution, officials said.

Finance Minister AHM Mustafa Kamal made the request to NDB President Marcos Prado Troyjo at a virtual meeting on Thursday.

Meanwhile, the government has formed a team, headed by the additional secretary of the Economic Relations Division (ERD), to expedite the process of obtaining the membership through meeting the requirements, said an official at the Ministry of Finance (MoF).

He said the team is scheduled to sit on July 15 next to work out all the necessary processes and documentation as required by the bank, formed by the BRICS member nations, he told the FE.

Earlier at a meeting in February last, Mr Kamal had informed the NDB president about Bangladesh's formal decision to join the development bank as a shareholder.

The NDB president has assured the finance minister of expediting the process, according to a press release issued here by the MoF.

Mr Troyjo expressed the bank's willingness to stand beside Bangladesh, which is achieving a ballooning economic development.

The NDB, led by BRICS members - Brazil, Russia, India, China, and South Africa, had already offered shares to the UN member countries, including Bangladesh.

At the last meeting in February, Bangladesh sought at least 1.0 per cent stake in the bank, which was established in July 2015 through an agreement reached in Brazil.

The initial authorised capital of the bank is US$100 billion divided into 1.0 million shares having a face value of $100,000 each.

The initial subscribed capital of the NDB is $50 billion divided into paid-in shares ($10 billion) and callable shares ($40 billion).

The initial subscribed capital of the bank was equally distributed among the founding members.

The agreement on the NDB specifies that every member will have one vote and no one would have any veto powers.

Meanwhile, a MoF official told the FE that Bangladesh had been offered nearly 0.76 per cent shares in the NDB initially.

If the UN member countries join the bank, the share of Bangladesh would ultimately reach 0.42 per cent.

Dhaka will have to pay some $382 million in the next seven years for becoming a shareholder of the bank, he added.

According to the NDB's plan, the BRICS countries would offload 49 per cent share among the aspirant countries.

In 2016, Bangladesh joined the China-led Asia Infrastructure Investment Bank (AIIB).

The Beijing-based lender has been financing many projects in Bangladesh in several sectors such as power, transportation, water supply and sanitation.

After the independence in 1971, many multilateral and bilateral donors, including the World Bank, the Asian Development Bank, Japan, Islamic Development Bank, UKAID, and USAID have been providing loans and grants for developing the country's infrastructure and reducing hunger.

Meanwhile, Mr Kamal had another meeting with Asian Development Bank (ADB) Vice President Shixin Chen on Thursday and requested the lender to continue the extended support to Bangladesh.

Mr Kamal thanked the ADB for its quick financial support amid the COVID-19 pandemic.

Expressing the ADB's willingness to support Bangladesh's economic and social recovery amid the coronavirus pandemic, Mr Chen said the ADB would remain with the country in the future days amid the coronavirus pandemic.

ADB in last month provided US$ 940 million worth of loans to Bangladesh government for procuring vaccine.

In addition, the Manila-based lender had also confirmed more than $ 850 million worth of financial supports, including a budgetary support for economic recovery, and COVID preparedness works.

Finance secretary Abdur Rouf Chowdhury, ERD Secretary Fatima Yasmin and high officials from the ERD and MoF were present at both meetings.

 

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Bangladesh finally attains 1.0- per cent share in the Shanghai-based New Development Bank (NDB) as the country has been offered one of three fortunate shareholders after the five founding BRICS nations.

Officials said Saturday -- close on the heels of the China-sponsored bloc's summit -- that Dhaka is now taking preparation to pay its subscription to the NDB, formerly known as BRICS Bank.

Earlier, the Shanghai-based multilateral bank had offered Bangladesh some 0.76-per cent share as a new member after the five founding members -- Brazil, Russia, India, China and South Africa (BRICS).

A senior Ministry of Finance (MoF) official gave the latest developments, saying: "If other United Nations member-countries join the bank, the share of Bangladesh would ultimately reach 0.42 per cent."

Another MoF official said Dhaka will have to pay some $400 million in the next seven years for becoming a shareholder of the bank.

The board of the Shanghai-based multilateral development lender approved membership of three countries -- Bangladesh, the United Arab Emirates and Uruguay.

Bangladesh then negotiated with the lender for getting 1.0-percent stake in the newly established BRICS bank.

Finance Minister AHM Mustafa Kamal at a meeting with NDB President Omarcos Troyjo in February last sought at least 1.0-percent stake.

Another MoF official said: "We are now working to prepare the 'Instrument of Accession (IoA)' to the NDB. When the NDB will accept our IoA, then Bangladesh will formally be a member of the NDB."

Besides, they are waiting for NDB notice for paying the subscription fees for the regular share and for the callable share, he added.

The bank of the newly emerging economies, including the second-largest world economy, China -- boasts an authorized capital of US$100 billion, which is divided into 2.0 million shares that have a par value of US$100,000 each.

The NDB's founding members made an initial subscription of 500,000 shares totaling US$50 billion, which include 100,000 thousand shares corresponding to a paid-in capital of US$10 billion and 400,000 shares corresponding to a callable capital of US$40 billion.

The initial subscribed capital was equally distributed amongst the founding members of BRICS nations. Membership of the Bank is open to members of the United Nations.

According to the NDB plan, the BRICS countries would offload 49-percent shares among the aspirant countries.

The MoF official said Bangladesh's effort to strengthen the South-South cooperation would also get a boost by joining the Shanghai-based lending agency.

In 2016, Bangladesh joined the China-led Asian Infrastructure Investment Bank (AIIB).

The Beijing-based lender has been financing many projects in Bangladesh in several sectors, such as power, transportation, water supply and sanitation.

After the independence of Bangladesh in 1971, many multilateral and bilateral donors, including the World Bank, the Asian Development Bank, Japan, the Islamic Development Bank, UKAID, and USAID, have provided loans and grants for developing the country's infrastructure and reducing hunger.

In December 2019, India's Prime Minister Narendra Modi invited his Bangladeshi counterpart, Sheikh Hasina, to join the bank.

As part of its expansion effort, the NDB has finalised its membership policy and begun the process of drafting the new membership rule.

After adopting a policy where any members of the United Nations can apply for the NDB membership, each member-state would be required to nominate two countries in the bank.

The expansion of membership was also raised in the virtual BRICS Summit held in November 2020.

 

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Prime Minister Sheikh Hasina has termed Bangladesh's membership in the New Development Bank as a time-befitting achievement that will open a new avenue of foreign financing.

She said it will play a supportive role in achieving the country's development goals.

Bangladesh has joined the New Development Bank (NDB), a multilateral development bank set up by Brazil, Russia, India, China and South Africa (BRICS), as a member state.

The joining was confirmed after the country submitted its "Instrument of Accession" to the Brazilian government on September 16, said the Bangladesh Permanent Mission at UN yesterday.

The NDB -- established by BRICS in 2015 -- earlier initiated its membership expansion and welcomed the admission of Bangladesh, the UAE, and Uruguay as new members.

NDB's board of governors authorised the bank to conduct formal negotiations with prospective members in late 2020.

After a round of successful negotiations, the NDB approved the admission of the UAE, Uruguay and Bangladesh as its first new members.

The NDB was set up by Brazil, Russia, India, China and South Africa to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries, complementing the existing efforts of multilateral and regional financial institutions for global growth and development.

The multilateral development bank has an authorised capital of $100 billion, which is open for subscription by members of the United Nations.

 

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