The New Development Bank (NDB), also known as the “BRICS bank,” is in talks with Saudi Arabia on admitting the Middle Eastern nation as its ninth member, which would strengthen the NDB’s funding options amid the impact of the Russia-Ukraine conflict, according to media reports.
“In the Middle East, we attach great importance to the Kingdom of Saudi Arabia and are currently engaged in a qualified dialogue with them,” the NDB said in a statement, per the report from the Financial Times.
The NDB was established in 2015 to mobilize resources for infrastructure development and sustainable development projects in the BRICS countries and other emerging economies, according to China’s Foreign Ministry.
The BRICS – Brazil, Russia, India, China and South Africa – represent 25 percent of global GDP. They’re the founding members, while the UAE, Uruguay, Bangladesh and Egypt were the first batch of new members of the NDB.
Since the NDB’ s establishment, the bank has approved more than 90 projects with loans totaling $32 billion, yicai.com reported in October 2022.
Experts noted that Saudi Arabia’s potential accession to the NDB will further enhance the capability of BRICS nations to hedge against risks amid the sweeping global wave of de-dollarization.
The NDB has a major role to prevent financial crises in BRICS countries and will be more efficient in crisis assistance, Pan Helin, joint director of the Research Center for Digital Economics and Financial Innovation affiliated with Zhejiang University’s International Business School, told the Global Times.
Pan added that Saudi Arabia is in stable financial condition with a relatively small risk potential, so its inclusion in the NDB would enhance the financial strength of the BRICS fund pool, while elevating the nations’ capability for crisis management and response.
The latest yield on NDB bonds was 5.1 percent, 100 basis points higher than the likes of the World Bank, according to a report from Modern Diplomacy, which also noted that Saudi Arabia’s potential inclusion in the NDB will accelerate the economic diversification and development of the nation and reduce its dependence on Western blocs.
Some developing economies are losing confidence in the US dollar amid the dollar crisis, with de-dollarization becoming a consensus among developing countries, and they are seeking an alternative, Dong Dengxin, director of the Finance and Securities Institute of the Wuhan University of Science and Technology, told the Global Times.
Saudi Arabia has been reportedly seeking to join the BRICS, which will be discussed by the members at the summit in August, domestic outlet guancha.cn reported.
Zhu Jie, a professor at Fudan University, said that Saudi Arabia can start by applying to join the NDB first before joining the BRICS, adding that the NDB has a strong will to expand its membership, and the conditions in all aspects are relatively available, according to media reports.
China’s Foreign Ministry Spokesperson Wang Wenbin said in October 2022 that BRICS leaders reached an important consensus on BRICS expansion and expressed support for the discussion on the standards and procedures of the expansion at the 14th BRICS Summit on June 23, 2022 and many countries expressed the desire to join BRICS cooperation.
Wang noted that China will work with other BRICS members to jointly advance the expansion process so that more partners will join the BRICS family.