The BRICS group of five emerging countries has reached agreement on a fund aiming to stabilize their currencies. The fund, worth $100 billion, seeks to stem an outflow of capital once the US changes monetary policy.
Brazil, Russia, India China and South Africa had reached agreement on a rescue fund dedicating $100 billion (75 billion euros) to the fight against the depreciation of their currencies, the countries, which are also known as the BRICS group, announced Thursday.
Speaking on the fringes of the G20 Summit due to begin in St. Petersburg on Thursday, China’s Vice Finance Minister Zhu Guangyao said that his country would take the lion’s share of funding.
Russian Deputy Finance Minister Sergei Storchak told Reuters news agency that details of the fund still had to be worked out.
“Politically, the countries are ready, but technically they are not,” he said, and admitted that the rescue mechanism was much smaller than the $240 billion originally envisaged by the BRICS nations.
BRICS members are trying to cope with a huge financial shock that has seen massive outflows of capital and a steep fall in currency values especially in India and Brazil. The shock is expected to worsen as a result of tighter US monetary policy which is said to include a reduction in the supply of cheap money to investors.
However, China’s Zhu said the situation was not yet as bad as to require a special bailout program for any of the BRICS members. The economic fundamentals of these countries were sound, and they had enough means to handle the problems themselves, he added.