Saudi Arabia is in Membership talks with the BRICS Bank

According to reports, Saudi Arabia is in talks to join the BRICS New Development Bank (NDB), which would make it the group’s ninth member.

Saudi Arabia Plans to Enter BRICS

According to media sources, the New Development Bank (NDB), often known as the “BRICS bank,” is in negotiations with Saudi Arabia about accepting the Middle Eastern country as its ninth member. If successful, this would increase the NDB’s financing possibilities in light of the effect of the Russia-Ukraine war. 

According to China’s Foreign Ministry, the NDB was founded in 2015 to mobilize funding for infrastructure development and sustainable development projects in the BRICS nations and other developing economies. It was also established as an alternative to the global financial system that is based on the US dollar, and intends to promote public and commercial enterprises in the BRICS countries via loans, equity participation, and other means.

The British publication said that the discussions are taking place as the NDB prepares to evaluate its potential for collecting money during its annual conference, which starts on Tuesday and is influenced by the sanctions against Russia as a consequence of its invasion of Ukraine.

“In the Middle East, we attach great importance to the Kingdom of Saudi Arabia and are currently engaged in a qualified dialogue with them,” the New Development Bank said in a statement to the newspaper.

Brazil, Russia, India, China, and South Africa, together known as the BRICS, account for 25% of the world’s GDP. They are the organization’s founder members, joining the NDB before the UAE, Uruguay, Bangladesh, and Egypt.

NDB’s Progress

Since its founding, the NDB has granted loans worth $32 billion in October 2022 to more than 90 projects.

Dependency on Russia, which holds a 19% interest in the NDB, has raised significant red flags. The bank’s credit rating was reduced to double-A from double-A plus by rating agency Fitch in July, with a warning that “reputational risk” would restrict its access to the U.S. dollar bond market.

As a consequence, the NDB was compelled to stop supporting new Russian projects and suspend its $1.7 billion (or 6.7% of its total assets) exposure to Russia. The purpose of the action was to convince investors that Moscow was in compliance with Western sanctions. In May of this year, the agency revised its outlook from “negative” to “stable,” taking into consideration the bank’s measures.

Statement of General Manager of NDB

According to Ashwani Muthoo, general manager of the NDB’s independent assessment office, the bank is only just beginning to accumulate resources. The “most important thing” at the moment, he said, is fundraising opportunities.

He remarked, “We are having trouble mobilizing resources. The board wants to look at alternate securities and currencies, Muthoo noted.

Although Muthoo refused to comment on the NDB’s discussions with the Saudis, he claims that his division is looking at “alternative instruments and currencies” to increase the bank’s funding.

Zhu Jie, a professor at Fudan University, reportedly advised Saudi Arabia to apply for membership in the NDB before requesting to join the BRICS. He said that the NDB has a great desire to grow its membership and that the circumstances are generally favorable.  

Luiz Inácio Lula da Silva, president of Brazil, said earlier this month at a G7 gathering that the BRICS alliance should have its own currency for commercial exchanges among the members.

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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