Brics backs measures to draw private capital into infrastructure

Finance ministers and central bank governors from the Brics group have endorsed measures to attract private capital to infrastructure projects in emerging markets. These measures include enhancing public-private partnership frameworks, implementing de-risking mechanisms, and establishing multilateral guarantees. The focus on de-risking is crucial due to substantial infrastructure financing gaps in emerging markets and the need to mitigate risks related to construction, demand, currency, and regulations.

The Brics Multilateral Guarantees initiative, overseen by the New Development Bank, aims to attract private capital by enhancing project creditworthiness and reducing financing costs through guarantees prepared by the bank. Brics countries recognize the importance of local-currency trade to reduce dependence on major currencies like the dollar and strengthen intra-bloc economic ties.

The group also supports a robust project pipeline and active engagement with private investors, emphasizing best practices on risk allocation for technically viable projects. The New Development Bank is developing pilot transactions under its existing guarantee policy, with the potential to mobilize private capital and improve project creditworthiness.

Brics encourages the bank to expand local-currency financing, diversify funding sources, and support high-impact infrastructure projects. Additionally, Brics emphasizes the need for greater representation and inclusive decision-making in global financial institutions like the IMF and World Bank, particularly for emerging and developing economies.

The finance ministers and central bank governors also highlighted the importance of cooperation on climate finance, cybersecurity, artificial intelligence, and quantum computing to build financial systems resilient to various risks.