Brics supports measures to attract private capital to infrastructure | Today’s news
Brics finance ministers and central bank governors have backed measures to make infrastructure projects in emerging markets more attractive to private investors, including stronger public-private partnership (PPP) frameworks, risk mitigation mechanisms and multilateral guarantees.
The measures come at a time when emerging markets are facing large infrastructure financing gaps, while fiscal pressures are limiting governments’ ability to finance projects themselves. In a joint statement after a meeting of Brics finance ministers and central bank governors in Mumbai on Thursday, the grouping said stronger development financing, private investment and infrastructure spending will be essential for economic resilience amid geopolitical tensions, trade fragmentation and financial vulnerabilities.
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The meeting in Mumbai was held ahead of the Brics leaders’ summit in the national capital on September 12-13.
Ensuring bankability of projects
Quick answers to key questions
•5 QUESTIONS
Brics supports stronger public-private partnership (PPP) frameworks, risk mitigation mechanisms and multilateral guarantees to make infrastructure projects more attractive to private investors.
The focus on de-risking is driven by large infrastructure financing gaps in emerging markets and the need to reduce construction, demand, currency and regulatory risks to attract private capital.
The Brics Multilateral Guarantees Initiative seeks to mobilize private capital, increase project creditworthiness and reduce financing costs through guarantees prepared by the New Development Bank.
Yes, the Brics countries should prioritize local currency trade cooperation to facilitate smoother transactions, reduce dependence on major currencies such as the dollar and strengthen economic ties within the bloc.
PPPs are essential in Brics infrastructure projects as they help create a framework for private sector engagement and ensure that projects are viable and financially attractive amid fiscal pressures on governments.
The Group welcomed the work of its Working Group on PPPs and Infrastructure, which explored PPP models, risk allocation frameworks and mechanisms to de-risk infrastructure projects. Its technical report is intended to serve as a reference for member countries seeking to strengthen their PPP ecosystems.
The statement emphasized the need for a strong pipeline of projects and active involvement of private investors, along with best practices in risk allocation. This is aimed at technically viable projects that are struggling to attract private capital due to construction, demand, currency, regulatory or other risks.
The grouping also welcomed progress on the Brics Multilateral Guarantees initiative being prepared by the New Development Bank (NDB). NDB is preparing pilot transactions within its existing guarantee policy. Brics finance directors said the initiative could help mobilize private capital, improve project creditworthiness and reduce financing costs across Brics and other developing and emerging economies.
The focus on guarantees comes as the NDB enters what Brics has described as its “second golden decade”. The grouping called on the bank to expand local currency financing, strengthen project preparation facilities, diversify funding sources and support high-impact infrastructure and development projects. She also called for greater institutional capacity and operational efficiency in the NDB, while supporting further expansion of membership.
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In India, the emphasis on PPPs and infrastructure financing comes at a time when the government is seeking to increase private participation in roads, railways, ports and urban infrastructure. Better allocation of risk and collateral could potentially make long-term projects more successful and reduce the risk premium demanded by private investors and lenders.
Wider financial pressure
Brics has also advanced the proposed New Investment Platform (NIP), with members broadly supporting a phased, consensual and managed approach while respecting national regulatory frameworks and institutional mandates. The creation of a specialized study group is being considered, which would deepen discussions on its structure and operational modalities.
The grouping also pushed for changes to the global financial architecture and called for greater representation of emerging and developing economies in the International Monetary Fund (IMF) and the World Bank. It sought faster implementation of the latest increase in IMF quotas and a meaningful adjustment of quotas in the next review.
Read also | Diplomacy and an economic stress test await India at the Brics summit
Brics has called for a stronger role for NDBs and greater mobilization of development finance as protectionism, high debt and geopolitical tensions weigh on global growth.
Separately, the Brics continued to work on cross-border payments, including the interoperability of payment and messaging systems and greater use of local currencies for trade and investment. The aim is to develop payment mechanisms that are faster, cheaper, more accessible, more transparent and more secure, while recognizing that there is no one-size-fits-all model for all members.
Finance ministers and central bank governors also supported cooperation on climate finance, cyber security, artificial intelligence and quantum computing, reflecting broader efforts to build financial systems resilient to technological and climate risks.
