BRICS to launch guarantee fund to boost investment in member nations, sources say

BRASILIA: The BRICS group of developing nations is set to announce a new guarantee fund backed by the New Development Bank (NDB) to lower financing costs and boost investment, two people familiar with the matter told Reuters.

The initiative, modeled on the World Bank’s Multilateral Investment Guarantee Agency (MIGA), aims to address global investment shifts amid uncertainty surrounding U.S. economic policy, the sources said on condition of anonymity.

Brazilian officials view the fund as the centerpiece of the BRICS financial agenda during the country’s rotating presidency. The fund is expected to be mentioned in the joint statement at the BRICS summit in Rio de Janeiro next week, said the sources.

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Originally formed by Brazil, Russia, India and China, the BRICS group later added South Africa and recently expanded to include other developing nations to increase its influence in global governance.

The proposed BRICS Multilateral Guarantee (BMG) mechanism, incubated within the NDB, has received technical approval from member states and awaits final signoff from BRICS finance ministers, considered a formality, one of the sources said.

The initiative will not require additional capital from member countries at this stage. Instead, it aims to channel existing NDB resources to projects in developing nations.
No initial funding value has been disclosed, but officials involved in the talks expect each dollar in guarantees provided by the NDB to mobilize between five and ten dollars in private capital for pre-approved projects.

“This is a politically significant guarantee instrument. It sends a message that BRICS is alive, working on solutions, strengthening the NDB and responding to today’s global needs,” one source said.

Technical preparations setting up the fund are expected to conclude by the end of this year, paving the way for pilot projects to receive guarantees in 2026.

BRICS countries face challenges common to developing nations in attracting large-scale private investment in infrastructure, climate adaptation and sustainable development.

Officials argue that guarantees issued by the NDB, whose credit rating is higher than that of most member countries, could help mitigate perceived risks for institutional investors and commercial banks.