Jakarta. The BRICS grouping wants to tap guarantees to lure foreign investment into its members and the developing economies of the Global South, as it seeks to narrow infrastructure gaps. 

Last year, the China-backed bloc of major emerging nations introduced a guideline that could lead to the creation of a BRICS Multilateral Guarantee (BMG). This guarantee fund aims to help slash financing costs across its member nations. The group will experiment with the guarantee mechanism at the New Development Bank (NDB): the multilateral lender formed by BRICS nations.

When BRICS leaders gathered in New Delhi over the weekend, members, including Indonesia and Russia, unanimously agreed to advance this initiative.

“We recognize the potential of the [BMG] initiative to mobilize private capital, improve creditworthiness, and reduce financing costs for development projects in BRICS and the Global South,” the group’s joint statement reads.

The leaders called for “continued technical work and the development of pilot transactions”. 

According to the 2025 guideline document, BRICS expects the volume of guarantees during the pilot run to “leverage public capital at a 1:5 to 1:10 ratio” for more private investment.

NDB will use its existing capital to see whether the guarantee system will work, hence eliminating the need to ask for additional contributions from the lender’s shareholders. The guarantee rollout will likely focus on renewable energy, climate resilience, and sustainable infrastructure-related projects.

The BMG took inspiration from the World Bank’s MIGA mechanism, whose issued guarantees already totaled at least $94 billion.

South African President Cyril Ramaphosa made a brief comment on the initiative at the New Delhi conference, saying that he “welcomed the continued discussion” on the BMG.

Originally formed by Brazil, Russia, India and China, the BRICS eventually accepted South Africa. The club later brought Egypt, Ethiopia, Iran, the United Arab Emirates, and Indonesia into its fold. 

As talks on the guarantee fund progress, the NDB itself is in the midst of possibly accepting new family members. Ramaphosa told the New Delhi gathering that he wished to see a "balanced and gradual expansion".

BRICS’ early founding members established the bank about a decade ago.

Some non-BRICS nations such as Bangladesh, Algeria, and Uzbekistan eventually joined, with Dhaka already requesting funding for its energy projects. Egypt and the United Arab Emirates (UAE) are also in the NDB. Jakarta has expressed interest in being part of the bank to speed up domestic economic transformation. The bank has greenlit around $42.9 billion in financing.

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