BRICs Rating Agency Being Discussed At Expert Level, Russian Envoy Says

Photo courtesy of The Russian International Affairs Council (RIAC)

The establishment of an independent rating agency of the BRICs grouping of emerging economies — which comprises of Brazil, Russia, India, China, and South Africa — is being discussed at the expert level, Russian Foreign Ministry Ambassador-at-Large Vadim Lukov said on Friday, TASS news agency reports.

The idea of establishing the BRICs rating agency — an alternative to the western ‘big three’ — was announced by the Brazilian Ambassador to Russia back in January.

“After the well-known events when the big three rating agencies issued politicized and intentionally biased ratings on the state and prospects of the Russian economy, this issue becomes especially important,” the Russian envoy said.

“Now the issue of creating the BRICs rating agency is being discussed among experts,” Lukov said.

“It is important to ensure that the agency’s establishment should not be perceived as a political counterbalance to the agencies that already exist because in this case its ratings would be perceived by opponents as politicized and deserving no attention,” the Russian envoy said.

The comments from the envoy come as Russia took over the rotating presidency of the BRICs group from Brazil on Wednesday.

Sergey Katyrin, the President of the Russian Chamber of Commerce, will now assume the duties as the head of the BRICs Business Council.

Lukov said that the first step in creating the new rating agency is to hold negotiations between China’s rating agency Dagong and interested Russian economic associations.

Russia aims to become the first country in the BRICs group to ratify an agreement on the $100 billion foreign currency reserve pool for the the New Development Bank (NDB), or BRICs bank, Lukov said.

“An agreement will be ratified soon on establishing a pool of foreign currency reserves. Russia will most likely be the first country to do this,” Lukov said on Friday.

Once the New Development Bank is established, BRICs member nations will be able to urgently replenish their liquidity from the currency reserve pool in different proportions to resolve problems with their balances of payments, Lukov said.

“Specifically, China will be able to take out only 50% — while Russia, India, and Brazil will be entitled to 100%, and South Africa to 150%,” Lukov said.

The summit of SCO and BRICs is set to take place in Ufa – the capital city of the Republic of Bashkortostan, Russia – on July 8-10, 2015.

The BRICs grouping of emerging market economies was established in 2010, when South Africa joined Brazil, Russia, India and China in what was previously known as BRIC. The BRICS economies total around $16 trillion and make up approximately 40 percent of the world’s population.