Joe Issa’s call for Brics Bank to Lend on Concessionary Terms Heard?

Indications are that Businessman Joe Issa’s call last year for the multi billion dollar BRICS bank to provide concessionary funding to hardship-ridden developing countries like Jamaica may have been answered.

In October 2014, following the Brazil meeting of the owners of the BRICS Bank �" Brazil, Russia, India, China and South Africa- Issa, in an article welcomed its formation as an alternative to Bretton Woods �" the system of monetary management that established the rules for commercial and financial relations among the United States, Canada and western Europe, under which the World Bank (WB) and the International Monetary Fund (IMF) operate.

According to the October 2, 2014 article published by PRWeb, “Chairman of Cool Corp, Joseph John Issa, says in an interview that he welcomes the bank and contingency reserve facility formed by the BRICS countries, and urges them to become a source of finance for developing countries like Jamaica, on terms befitting their current development challenges.”

Issa posited then, that concessionary funding to all the CARICOM countries except Haiti, for infrastructure and industrialization projects was no longer available from the WB and IMF, which had graduated them under new criteria not supported by the regional countries.

With this in mind and the need for Jamaica to get over its unemployment problem, which is causing hardship, Issa was pleased that the BRICS Bank would serve as an alternative source of development finance.

One year later, the name of the bank was changed to New Development Bank (NDB) and its lending policy ratified, to include funding primarily for infrastructure projects for developing countries.

However, it is not yet clear whether such funds will be available on concessionary terms befitting the challenges of developing countries, as Issa put it, including funding for industrialization. What other commentators say is that the owners “will, ultimately, determine whether the developing world has finally found a viable alternative to Bretton Woods,” which is what Issa hopes for.

But if what the NDB’s first President, Kundapur Vaman Kamath, says at the recent launch of the bank is true, it will not be competing with the WB and IMF, but rather, in its own way (not the Bretton Woods way), improve and compliment what they are already doing.

Kamath’s remarks can be interpreted as an indication that the emerging BRICS economies would be doing things differently to the traditional western nations, including making concessionary funding available for infrastructure and industrializing projects, to boost employment for struggling developing countries.

In the past, the BRICS nations have criticized the World Bank and the IMF for not giving developing nations enough voting rights, presumably to change some of the ways they do business, which in fact, is what led to the formation of the NDB.

Now, commentators await with baited breath as the bank prepares to issues its first loans early next year, as it is not clear to whom and on what terms, which is believed may very well hinge on the extent to which the owners are comfortable with their individual monitoring capabilities.

This was the case with the ill-fated Bank of the South, a development bank financed and run by South American countries, formed in 2009 and according to Wikipedia, by 2013 remained in name only, because the Latin America  countries which formed it to replace the WB and the IMF, could resolve their differences.

For Venezuela’s Hugo Chavez, Banco del Sur was his dream of supplanting the Bretton Woods institutions, their focus and ways of doing business, but was “foundered on a series of disagreements on issues such as: the role of concessional finance, the bank’s tax-free status, relationships with the private sector, transparency rules, and the need for environmental safeguards.”

According to an article in the Economist, Hugo Chavez moves into banking Venezuela and Brazil battle quietly over the shape of a planned regional development bank, published on May 10^th 2007 / CARACAS AND SAO PAULO, “Brazil’s finance minister, Guido Mantega, (at the time of the formation of the bank) had already rejected the idea that the new bank might called for ‘modesty and parsimony’ in any new body.”

The article also said that much of the disagreements were between the two most powerful South American countries-Brazil, which was quite friendly with the US and Venezuela which was not. The remaining five-member countries are Argentina, Paraguay, Uruguay, Ecuador and Bolivia.