[Asia Economy Reporter Park Byung-hee] The Brazilian government announced plans to use its foreign exchange reserves to pay its contribution to the BRICS New Development Bank (NDB). Due to financial difficulties, the Brazilian government has been unable to pay its NDB contributions for the past year and a half.
According to Brazilian media on the 4th (local time), Paulo Guedes, Brazil's Minister of Economy, stated in a video conference that $200 million of the foreign exchange reserves would be used to pay the NDB contribution. Minister Guedes said that using foreign exchange reserves is the only way to pay the contribution without increasing government spending.
Currently, Brazil's foreign exchange reserves stand at around $370 billion, which is relatively ample compared to the early 2000s. The reserves were $37.7 billion in 2002 but have increased by an average of 25% annually due to continuous economic growth and expanded foreign investment, reaching nearly $400 billion by mid-2019.
BRICS, consisting of Brazil, Russia, India, China, and South Africa, agreed to establish the NDB at a summit held in Fortaleza, northeastern Brazil, in 2014, and officially launched it in Shanghai, China, in July 2015.
The NDB primarily focuses on providing financial support for infrastructure expansion in emerging and developing countries. Its initial capital was set at $5 billion, with a goal to raise $10 billion by 2022.
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