Why in news?
On 17 October 2025, Pakistan’s Finance Minister Muhammad Aurangzeb met China’s Deputy Finance Minister Liao Min during the annual IMF and World Bank meetings in Washington. Aurangzeb sought Beijing’s support for Pakistan’s bid to join the New Development Bank (NDB), often referred to as the BRICS Development Bank. The NDB’s membership currently includes the five BRICS founders and a handful of additional countries; Pakistan hopes to secure entry to finance infrastructure projects.
Background
The New Development Bank is a multilateral development bank created by Brazil, Russia, India, China and South Africa (BRICS) to mobilise resources for infrastructure and sustainable‑development projects in emerging economies. The idea was first mooted at the 2012 BRICS summit, and the founding agreement was signed in Fortaleza, Brazil, on 15 July 2014. The bank began operations in July 2015 and is headquartered in Shanghai.
Formation and governance
- Capital structure: The NDB’s initial authorised capital is US $100 billion, divided into one million shares. Half of this, US $50 billion, constitutes the initial subscribed capital, with US $10 billion paid‑in and US $40 billion callable. The five founding members each hold equal shares and equal voting power.
- Membership: Although established by BRICS countries, the NDB’s Articles of Agreement allow any UN member state to join, subject to approval by the Board of Governors and adherence to the bank’s terms. Bangladesh, the United Arab Emirates and Uruguay joined in 2021–22, signalling gradual expansion.
- Governance: The Board of Governors, comprising the finance ministers of each member, is the highest decision‑making body. A Board of Directors oversees general operations and approves projects. The bank’s president is elected from one of the founding countries and rotates among members.
Focus areas and lending
- Infrastructure and sustainable development: NDB funds projects in sectors such as clean energy, transportation, water and sanitation, environmental protection, social infrastructure and digital connectivity.
- Local currencies: A unique feature is the use of local currencies for lending, which reduces exchange‑rate risk and supports domestic bond markets. NDB has issued “Panda bonds” in China and “Rand bonds” in South Africa.
- Borrowers: Both public and private entities can apply for financing, though sovereign guarantees are often required. The bank emphasises projects that promote sustainable growth and environmental stewardship.
Pakistan’s membership bid
Pakistan’s Economic Coordination Committee approved the purchase of shares worth about US $582 million earlier in 2025 to meet the minimum equity requirement for NDB membership. By joining, Pakistan hopes to secure low‑cost financing for infrastructure, energy and digital‑connectivity projects. Support from founding member China is seen as pivotal to the application’s success. Pakistan also seeks closer economic ties with the BRICS bloc through membership.
Source: Dawn · IT · New Development Bank