BRICS to launch guarantee fund to boost investment in member nations
The BRICS group of developing nations is set to announce a new guarantee fund backed by the New Development Bank (NDB) to reduce financing costs and encourage investment, according to two sources familiar with the matter who spoke to Reuters.
The initiative, inspired by the World Bank's Multilateral Investment Guarantee Agency (MIGA), is designed to address global shifts in investment amidst uncertainty surrounding US economic policy, the sources said, speaking on the condition of anonymity.
Brazilian officials view the new guarantee fund as a central element of BRICS' financial agenda while Brazil holds the presidency of the group. The fund is expected to be mentioned in a joint statement during the upcoming BRICS summit in Rio de Janeiro next week.
The sources indicated that the guarantee fund has already received technical approval from member countries, and the final signature from BRICS finance ministers is all that remains. However, Brazil's Ministry of Finance declined to comment on the matter.
The technical preparations for the establishment of the fund are expected to be completed by the end of this year, with a pilot project set to receive guarantees in 2026.
This guarantee fund initiative does not require additional capital from BRICS members but aims to deploy existing resources from the NDB to support projects in developing countries.
Although the initial capital value has not been disclosed, officials involved in the negotiations expect that every US$1 guaranteed by the NDB could attract between $5 and $10 in private sector investment for approved projects.
This reflects the potential of the fund to stimulate and accelerate investment in key projects, particularly in developing nations, as NDB funds will act as a "creditworthiness certificate" that boosts investor confidence.
Additionally, the guarantees issued by the NDB are a significant strength, as the bank holds a higher credit rating than most BRICS member states, which helps reduce risk for investors and encourages increased investment in these projects.
“This is a politically significant guarantee instrument,” a source told Reuters. “It sends a message that BRICS is alive, working on solutions, strengthening the NDB and responding to today’s global needs.”
In the past, BRICS nations have faced similar challenges to other developing countries, particularly in attracting large-scale private sector investment in critical areas such as infrastructure, climate adaptation, and sustainable development.
