Non-Western Financial Markets and Russia: New Opportunities
The shift in Russia’s economic policy toward the nations of the East is creating brand new opportunities in terms of access to direct investment, investment loans, and other sources of financing. This approach is entirely in keeping with the recommendations from the recent summit of the heads of states and governments of the BRICS countries (held in Ufa July 8-10), including the suggestion that multilateral cooperation be expanded by providing access to sources of funding from the countries that are part of this group.
The first investment credits from the BRICS Development Bank will be disbursed to the countries of that group as early as 2016, and one of those loans is intended to help implement a Russian-South African project to explore, mine, and process ore and metallurgical raw materials.
According to the working groups within the BRICS Business Council, the interest rates of these loans will be at least 25% lower, with payment periods that are 33-50% longer, than the credit terms offered by the International Monetary Fund (IMF) and other Western financial institutions. One crucial detail is that the BRICS Development Bank will be able to offer its loans in various national currencies, thus avoiding the need for settlements in dollars or euros. This is an advantage, because due to fluctuations of the dollar and the euro against most of the world’s currencies, the credits and loans granted in these “global” currencies end up at least 10% more expensive for the borrowers.
