IMF seeks details on BRICS cross-border payment system

The International Monetary Fund (IMF) has expressed interest in learning more about the cross-border payments system recently discussed by the BRICS group of countries.

The initiative, which aims to promote non-dollar transactions, was a key focus at a BRICS meeting in Kazan, Russia, coinciding with the IMF and World Bank annual meetings in Washington.

BRICS, which includes Brazil, Russia, India, China, and South Africa, has expanded over the years to include countries like Iran, Egypt, and the UAE. This growing coalition represents a significant portion of the global economy, and their discussions on alternative payment systems could have broader implications for global financial systems. The IMF’s managing director emphasized the importance of understanding this system and its potential impact.

At the Kazan summit, Russia secured a joint declaration encouraging the “strengthening of correspondent banking networks within BRICS and enabling settlements in local currencies in line with BRICS Cross-Border Payments Initiative (BCBPI).”

The system is designed to rival the European-headquartered SWIFT payments system, from which Russia was barred following its 2022 invasion of Ukraine.

Speaking to reporters at the IMF’s headquarters in Washington on Thursday, IMF managing director Kristalina Georgieva said the Fund wanted additional information about the proposed payments system before taking a firm stance on it.

“The idea of having a payments system of a group of countries is not new,” she said.

“What we need to see is more details,” she added. “What is it in this idea? How that may translate into reality? And then we will be able to assess it.”

During her press conference, Georgieva said the Fund was focused on two main objectives going forward: Ensuring inflation rates return to central bank targets without spurring a deep recession; and fixing the current “low growth, high debt path” that many countries are on.

She also addressed what she called the tragedy in the Middle East, which she said was affecting both citizens and regional economies.

“Egypt is losing 70 percent of the revenues it used to collect from the Suez canal because of the impact of the conflict,” she said, adding that the IMF had downgraded the MENA region by 0.6 percentage points since April.

Earlier this month, Egyptian President Abdel Fattah El-Sisi said the country had lost “$6-7 billion” this year, in an apparent reference to Suez Canal revenues.

Georgieva also welcomed the progress made in helping countries facing debt crises, notably via the Global Sovereign Debt Roundtable (GSDR) forum for dialogue between creditors and countries in debt distress.

While the GSDR was helping to make the process of debt restructuring “more predictable and efficient,” there was more work to do, she said.

“We need to do more to help countries in debt distress get back on their feet faster,” she added.

AFP