BRICS nations failed on Tuesday to resolve differences over funding for and the location of a proposed joint development bank, indicating the emerging powers group would not achieve the goal at a summit in South Africa.
Agreeing on the share of funding contributions for the BRICS bank from each of the members - Brazil, Russia, India, China and South Africa - had already been a thorny issue for a group which brings together vastly disparate economies and governments.
BRICS summit ... South African Finance Minister Pravin Gordhan (centre) poses with his counterparts (left to right) Minister Chidambaram Palaniappan of India, Minister Xiaochuan Zhou of China, Minister Guido Mantega of Brazil and Minister Anto Siluanov of Russia.Credit: AFP/South African government/Elmond Jiyane
They want to set up their own development bank to reduce their reliance on Western financial institutions.
"There is positive movement, but there is no decision on the creation of the bank," Russian Finance Minister Anton Siluanov said after finance ministers met before a formal summit of the BRICS heads of state in the port of Durban.
BRICS leaders would seek to maintain momentum by including a reference to the bank in their final summit communique.
"Instructions will be given to speed up the process," Siluanov said, adding the finance ministers would tackle the issues again in April at a G20 meeting.
The five countries represent a fifth of global GDP and share high growth and geopolitical importance in their separate regions, but have struggled to find common ground that would convert their economic weight into joint political clout.
The two biggest economies of the group, China and Brazil, marked their determination to make changes in the world's trade and financial architecture by signing a three-year currency swap agreement covering up to $30 billion ($28.6 billion) a year in bilateral trade.
Brazilian officials said the aim was to ensure their fast-growing commercial ties would not suffer if a new banking crisis caused dollar trade finance to dry up.
"Our interest is not to establish new relations with China, but to expand relations to be used in the case of turbulence in financial markets," Brazilian Central Bank Governor Alexandre Tombini told reporters after the signing.
Brazil's mineral resources and farm products have helped fuel China's industrial growth and feed its people while bringing prosperity to the Latin American giant.
Bilateral trade totalled around $US75 billion last year, with Brazil selling iron ore, soy products and crude oil, and buying Chinese machinery, electronics and manufactured goods.
BRICS nations want to set up their own development bank to reduce their reliance on Western financial institutions.
RESERVES POOL PLANS
Brazilian officials have said they hope to have the trade and currency deal operating in the second half of 2013.
"If there were shocks to the global financial market, with credit running short, we'd have credit from our biggest international partner, so there would be no interruption of trade," said Economy Minister Guido Mantega.
At the Durban summit, the group's fifth since 2009, the BRICS leaders were also expected to endorse plans to create a joint foreign exchange reserves pool.
The proposed development bank and reserves pool reflect frustration among emerging nations at having to rely on the World Bank and International Monetary Fund, which some see as reflecting the interests of rich nations.
The reserves pool of central bank money would be available to emerging economies facing balance of payments difficulties or could be tapped to stabilise economies during crises, according to documents obtained by Reuters outlining it.
Officials had said BRICS states aimed to inject an initial $US50 billion into a new infrastructure bank, but there was disagreement over whether each should contribute $US10 billion or if contributions should vary by the size of their economies.
China's economy is about 20 times the size of South Africa's and four times as big as Russia's or India's.
The bank would support financing needs in emerging and developing nations for roads, ports, power and rail services.
The BRICS leaders were also due to discuss economic ties with Africa, at a time when many on the continent are seeking more balance and a different focus in trade and investment, especially from China.
New Chinese President Xi Jinping is attending on his first visit as head of state to Africa. In Tanzania on Monday, Xi told Africans he wanted a relationship of equals that would help the continent develop, responding to concerns that Beijing is only interested in its raw materials.
Reuters