Extreme Poverty and the New Development Bank of Brics

Abstract

Eradication of poverty and extreme poverty has received attention from economists, sociologists and policy planners for a long time. The past two decades have witnessed significant progress in reducing the incidence of global poverty largely due to the efforts of the United Nations and the World Bank Group. The International Development Association (IDA), an affiliate of the World Bank Group focuses exclusively on the reduction and ultimately elimination of extreme poverty.  However, the newly founded BRICS Bank, which also calls itself New Development Bank (NDB) appears to deviate from the focus of poverty reduction, and considers stabilization of global financial markets as its primary goal. Extreme poverty exists in four of the five founding countries of the NDB. This paper examines the events leading up to the formation of the NDB and evaluates its charter, its resources and its initial lending decisions. Such evaluations lead to the conclusion that the NDB does not have a goal of alleviating poverty nor does it address the issues of social and economic inequalities, denial of basic freedom and human dignity which are considered as consequences of extreme poverty. While the NDB is still in its formative stage, its shift of emphasis as a development bank from elimination of extreme poverty to global financial stability is likely to have a negative impact in fulfilling the Millennium Development Goals adopted by the United Nations.