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In BRICS with its own PPP
The Russian International Affairs Council (RIAC) report, “Public-Private Partnership as a Factor in De-Dollarization of BRICS Economic Cooperation,” published yesterday, examines an unexpected approach to global financial restructuring. A system that is not oriented toward the West. In the absence of a “basic” agreement between the authorities of Brazil, Russia, India, China, and South Africa and countries seeking reconciliation with the union on issues of common plans and mechanisms, RIAC provides private initiative in creating a new world of global finance. . I suggest you do this. Accelerate the promotion of the “de-dollarization” slogan by developing public-private partnerships (PPP) to build infrastructure and form the BRICS market as a method of real settlements in national currencies.
“The lack of adequate infrastructure financing continues to be a constraint on growth not only in the BRICS but also in other developing and emerging market economies. Removing these constraints would not only improve growth prospects but would also have positive implications for the global economy,” say the authors of the RIAC report, Irina Yarygina of MGIMO and Andrey Shelepov of the Russian Institute of Economics and Management. The authors argue that “state-owned enterprises and governments in the group’s countries have created infrastructure that is conducive to growth,” but acknowledge that this is “not enough for these countries to develop further,” and call for the inclusion of the private sector in the construction of the BRICS. . . “Public goods and services can be provided effectively.”
This work leaves a dual impression. On the one hand, it demonstrates the Association’s intention to create a regulatory and institutional framework for PPPs, and on the other, it recognizes “both problems and opportunities.” The effective use of the PPP mechanism in the BRICS countries is associated with the dynamics of unification of the common financial and economic agenda, adoption and implementation of decisions in key areas, including mutual settlements in national currencies, payment infrastructure, and interaction of financial institutions.
The section on specific prospects and instruments for public-private partnerships in BRICS acknowledges the heterogeneity of approaches within the Association’s member states, which complicates the agreement on a single approach to such projects. For example, the negative experience of Brazil in the 1990s, when a significant portion of infrastructure contracts were revised “due to increased operational risks associated with the structure and methods of capital management during project implementation,” is balanced by positive aspects: Private funds for road construction – their share in the cost reaches 45%. As a topic for future discussion, the RIAC report presents an extensive list of PPP instruments: from traditional concessions to “agency” plans, in which private partners act as more efficient operators of facilities built with public funds than the state.
The authors see the New Development Bank (NDB, which prioritizes investments in infrastructure and sustainable development of the association's countries) as a common structure that could finance BRICS PPPs. The document has much in common with the IMF, including the IMF's insistence on using local alternatives to the international Bretton Woods agreement on monetary regulation. The IMF also actively supports infrastructure projects in developing countries. The NDB's loan portfolio ($35 billion) is 68% Chinese loans, with some of the 96 PPP projects approved by the bank financed using the national currency (26% of the loan portfolio in the first half of 2024, the plan is 30%). by 2026). But even here, the authors admit that most borrowers prefer dollar loans. The report argues for the use of national currencies to finance PPPs by taking into account the currency risks in long-term implementation, as well as the fact that the revenues from these projects are primarily focused on the BRICS markets and currencies. Reduce financial risk.
Overall, the work of the RIAC creates the impression that there are several instruments for increasing the activity of private partners in BRICS structures, but in general they will be constrained by the fragmentation of the approach and imbalances in BRICS PPPs. Supply and demand. This is what happens when we discuss the creation of associative bodies at the interstate level.