Chinese Finance Minister Lou Jiwei (C), Shanghai Mayor Yang Xiong (R) and President of the New Development Bank (NDB) of BRICS K.V. Kamath attend the launching ceremony of the bank in Shanghai, east China, July 21, 2015 [Xinhua]
The BRICS New Development Bank (NDB) has approved two loans – for a water infrastructure project in India and the other is for a transport infrastructure project in Russia.
The Board of Directors (BoD) of the NDB approved two infrastructure projects with a loan value of US$413.8 million during the 12th BoD meeting in Shanghai on November 20.
“The NDB was established to mobilize resources for infrastructure and sustainable development in BRICS and other emerging economies and developing countries, and the two projects approved today are fully in line with the Bank’s mandate and national development plans of our member countries,” said Mr. K.V.Kamath, the NDB President.
The larger loan of $345 million will be lent to the Government of the Republic of India, which will forward it to the Government of Rajasthan for rehabilitating the Indira Gandhi canal system.
It will be a multi-tranche facility so it will be drawn down in stages as the project progresses.
Moody’s Investors Service upgraded India’s credit rating to Baa2 last week from Baa3 and changed the outlook to stable from positive. Its decision was underpinned by expectations that continued progress on economic and institutional reforms will, over time, enhance India’s high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term.
S&P Global Ratings rate India at BBB- with stable outlook, while Fitch Ratings has the same rating at BBB- with stable outlook.
The smaller loan of $68.8 million will be lent to the Government of the Russian Federation who will use it for the construction of a toll transport corridor connecting the Ufa city centre to the M-5 federal highway.
The Russian economy expanded by 1.8 per cent year-om-year (y/y) in the third quarter after a near five-year high of a 2.5% y/y gain in the second quarter.
While the NDB gave the go-ahead for loans to seven projects reaching $1.5 billion in 2016, the amount of approved loans is expected to reach $2.5 in 2017.
“We want to fund projects that are creative and bring benefits to the local people and environment,” NDB Vice-President Zhu Xian said earlier.
By Helmo Preuss in Cape Town, South Africa for The BRICS Post
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