The 2nd Meeting of Heads of Export Credit Agencies of BRICS (BRICS ECAs) was held at New Delhi , as part of a series of events being organised under the chairmanship of India of BRICS Forum.
About BRICS :
BRICS is the acronym for an association of five major emerging national economies: Brazil, Russia, India, China and South Africa. Originally the first four were grouped as “BRIC” (or “the BRICs”), before the induction of South Africa in 2010.
- The BRICS members are all leading developing or newly industrialized countries, but they are distinguished by their large, sometimes fast-growing economies and significant influence on regional affairs; all five are G-20 members.
- However, BRICS countries have significantly slowed down with South Africa only growing 1% in 2015 similar to the 6% a year from 1994 to 2009,Brazil in its worst recession since the 1930s by some measures, Russia in a recession as oil prices tailspin and sanctions weigh, and China’s slowdown is set to be a drag on global growth and is reported to be the slowest in the last 25 years.
- Since 2009, the BRICS nations have met annually at formal summits. Russia hosted the group’s seventh summit in July 2015. India is going to host the BRICS conference in Goa in 2016.
- The term does not include countries such as South Korea, Mexico and Turkey for which other acronyms and group associations were later created.
- As of 2015, the five BRICS countries represent over 3.6 billion people, or half of the world population; all five members are in thet op 25 of the world by population, and four are in the top 10.
- The five nations have a combined nomina lGDP of US$16.6 trillion, equivalent to approximately 22% of the gross world product, combined GDP (PPP) of around US$ 37 trillion and an estimated US$ 4 trillion in combined foreign reserves.
- The BRICS have received both praise and criticism from numerous commentators. Bilateral relations among BRICS nations have mainly been conducted on the basis of non-interference, equality, and mutual benefit.
About ECA :
An export credit agency or investment insurance agency is a private or quasi-governmental institution that acts as an intermediary between national governments and exporters to issue export financing.
- The financing can take the form of credits or credit insurance and guarantees (pure cover) or both, depending on the mandate the ECA has been given by its government.
- ECAs can also offer credit or cover on their own account. This does not differ from normal banking activities. Some agencies are government-sponsored, others private, and others a combination of the two.
- ECAs currently finance or underwrite about US$430 billion of business activity abroad – about US$55 billion of which goes towards project finance in developing countries – and provide US$14 billion of insurance for new foreign direct investment, dwarfing all other official sources combined.
- As a result of the claims against developing countries that have resulted from ECA transactions, ECAs hold over 25% of these developing countries’ US$2.2 trillion debt.
BRICS ECA’s Meet :
The meeting was part of series of events being organised under the Chairmanship of India of BRICS Forum. It was organized parallel with meetings of BRICS Trade Ministers. The meeting was hosted by ECGC Limited, a premier Export Credit Agency of India.
- Members of the BRICS ECAs Forum are also the members of the International Union of Export Credit and Investment Insurers, London (U.K.) which is also known as Berne Union. BRICS ECAs are actively involved in facilitating cross-border trade by supporting export credits and foreign investments.
- BRICS countries had a share of around 22 percentage of World Trade with a Total Exports of about USD 3.5 trillion in 2015. BRICS ECAs supported more than USD 473 billion of exports from the Member countries. Members exchanged notes about various credit insurance products, business sectors and major destinations covered by the group. Members also discussed business trends and the rising defaults and claims in the light of heightened political and economic risk.
- The highlight of the meeting was an interactive session with Mr Xian Zhu, Vice President and COO, New Development Bank (NDB). BRICS ECAs initiated discussion on working in close co-operation with NDB to promote intra-BRICS trade and to support projects by BRICS exporters. ECGC updated members about the upcoming Technical Workshop which is being organized under India’s BRICS Chairmanship.
- The Terms of Reference for co-operation finalized in the last BRICS heads of ECAs meeting held at Russia were signed by the CEOs of BRICS ECAS.
- It is noted that the next BRICS Heads of ECAs meeting will be hosted by SINOSURE, China under the chairmanship of China.