Brics Backs Measures To Draw Private Capital Into Infrastructure

(MENAFN- Live Mint) Brics finance ministers and central bank governors have backed measures to make infrastructure projects in emerging markets more attractive to private investors, including stronger public-private partnership (PPP) frameworks, de-risking mechanisms and multilateral guarantees.

The measures come as emerging markets grapple with large infrastructure financing gaps while fiscal pressures limit governments' ability to fund projects on their own. In a joint statement following the Brics Finance Ministers and Central Bank Governors meeting in Mumbai on Thursday, the grouping said stronger development finance, private investment and infrastructure spending would be critical to economic resilience amid geopolitical tensions, trade fragmentation and financial vulnerabilities.

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The Mumbai meeting came ahead of the Brics leaders' summit in the national capital on 12-13 September.

Making projects bankable

Quick answers to key questions

.5 QUESTIONS1What measures is Brics implementing to attract private investment in infrastructure projects?⌵

Brics is backing stronger public-private partnership (PPP) frameworks, de-risking mechanisms, and multilateral guarantees to make infrastructure projects more attractive to private investors.

2Why is there a focus on de-risking infrastructure projects within the Brics framework?⌵

The focus on de-risking is due to large infrastructure financing gaps in emerging markets and the need to reduce risks associated with construction, demand, currency, and regulations to attract private capital.

3How does the Brics Multilateral Guarantees initiative aim to improve project financing?⌵

The Brics Multilateral Guarantees initiative seeks to mobilize private capital, enhance project creditworthiness, and lower financing costs through guarantees prepared by the New Development Bank.

4Should Brics countries prioritize cooperation on local currency trade?⌵

Yes, Brics countries should prioritize cooperation on local currency trade to facilitate smoother transactions, reduce dependence on major currencies like the dollar, and strengthen intra-bloc economic ties.

5What role do public-private partnerships (PPPs) play in Brics infrastructure projects?⌵

PPPs are critical in Brics infrastructure projects as they help create a framework for private sector involvement, ensuring projects are viable and financially attractive amid fiscal pressures on governments.

The grouping welcomed the work of its Task Force on PPPs and Infrastructure, which has examined PPP models, risk-allocation frameworks and mechanisms to de-risk infrastructure projects. Its technical report is intended to serve as a reference for member countries seeking to strengthen their PPP ecosystems.

The statement stressed the need for a robust project pipeline and active engagement with private investors, along with best practices on risk allocation. This is aimed at technically viable projects that struggle to attract private capital because of construction, demand, currency, regulatory or other risks.

The grouping also welcomed progress on the Brics Multilateral Guarantees initiative, being prepared by the New Development Bank (NDB). The NDB is preparing pilot transactions under its existing guarantee policy. Brics finance chiefs said the initiative could help mobilise private capital, improve project creditworthiness and lower financing costs across Brics and other emerging and developing economies.

The focus on guarantees comes as the NDB enters what Brics described as its“second golden decade”. The grouping encouraged the bank to expand local-currency financing, strengthen project-preparation facilities, diversify funding sources and support high-impact infrastructure and development projects. It also called for greater institutional capacity and operational effectiveness at the NDB, while encouraging further membership expansion.

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For India, the emphasis on PPPs and infrastructure financing comes as the government seeks to increase private participation in roads, railways, ports and urban infrastructure. Better risk allocation and guarantees could potentially make long-gestation projects more bankable and reduce the risk premium demanded by private investors and lenders.

Wider financial push

Brics also made progress on a proposed New Investment Platform (NIP), with members broadly supporting a phased, consensus-based and member-driven approach while respecting national regulatory frameworks and institutional mandates. A dedicated study group is being considered to deepen discussions on its structure and operational modalities.

The grouping also pushed for changes to the global financial architecture, calling for greater representation of emerging and developing economies in the International Monetary Fund (IMF) and World Bank. It sought faster implementation of the IMF's latest quota increase and meaningful quota realignment under the next review.

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Brics called for a stronger role for the NDB and greater mobilisation of development finance as protectionism, high debt and geopolitical tensions weigh on global growth.

Separately, Brics countries continued work on cross-border payments, including interoperability of payment and messaging systems and greater use of local currencies for trade and investment. The objective is to develop payment mechanisms that are faster, cheaper, more accessible, transparent and secure, while recognising that there is no single model suitable for all members.

The finance ministers and central bank governors also endorsed cooperation on climate finance, cybersecurity, artificial intelligence and quantum computing, reflecting a broader effort to build financial systems resilient to technological and climate-related risks.

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