Brazil became this week a founding member of the Asian Infrastructure Investment Bank (AIIB), the China-led multilateral bank, which can now support projects in South America´s largest economy.
According to the Brazilian Embassy in China, Brazil’s joining means the lender will be able to finance Brazilian projects and Brazil will participate in governance of the bank.
The AIIB, that began operating in 2015 with a mandate to finance development projects around the world, can support projects only in member countries.
Brazil signed the agreement to join the AIIB as the only South American founding member in 2015, but it needed to go through a formal process for joining the institution, including making payments for its stake in the AIIB.
In August, the Brazilian Senate Plenary approved the text of the agreement that makes Brazil a founding member of the AIIB, signed in June 2015. Based in Beijing, the bank started its activities in 2016.
In a message sent to the National Congress, the federal government explained that the bank can finance projects in countries outside the Asian region.
Like the New Brics Development Bank, the Asian Infrastructure Investment Bank would be a complementary mechanism to the activities of other multilateral banks.
The bank’s objectives are to promote sustainable economic development, create wealth and improve infrastructure connectivity in Asia through investments in infrastructure and other productive sectors, promote regional cooperation and partnership to face development challenges, through collaboration with other multilateral and bilateral development institutions.
In addition to Brazil, 56 other countries have signed the treaty and are now potential founding members. To be effective, countries must sign the agreement, ratify it in their respective legislative powers and pay up the bank’s share capital.
Initially, Brazil was to buy shares worth a total of USD 3.18 billion, but the expenditure was later downsized to USD 5 million, limiting Brazil’s influence in the institution, as well as its access to financing.
BAII already finances 63 major infrastructure projects in the world, involving an amount of more than USD 12 billion.
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