China-led AIIB gives Brazil and South Africa extra year to join

Two of multilateral lender’s biggest members missed deadline to ratify entry

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MARCH 28, 2017 by: Emily Feng and Tom Mitchell in Beijing The China-led Asian Infrastructure Investment Bank has given two of its largest members an extra 12 months to complete the formal process for joining the institution after they missed a deadline at the end of last year. 

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Brazil and South Africa were among the highest-profile countries to join the multilateral lender, which was established by Beijing to make its mark in international finance and was opposed in its infancy by the US. Of the bank’s 57 inaugural members, Brazil was the only South American country while South Africa was one of only two African nations. 

 Both countries are also members of the so-called Brics club alongside Russia, India and China, which recently joined forces to form the Shanghai-based New Development Bank. 

 “AIIB matters are currently being processed,” a South African finance official told the Financial Times. 

“Our immediate focus has been on the New Development Bank.” Brazilian officials declined to comment on why they missed the December 31 2016 deadline, which was stipulated in the AIIB’s articles of association. 

Members can receive an extension if approved by a majority of the bank’s governors. 

 Under former president Dilma Rousseff, Brazil fell behind on payments to dozens of international organisations, blaming a lack of funds. 

Ms Rousseff’s impeachment in August 2016 may have led to further delays. “We extended the deadline because some members needed more time based on the different domestic processes they had to ratify,” an AIIB spokesperson said, adding that “everything is on track” for them to join by the end of this year. 

 Three other inaugural AIIB members — Malaysia, Kuwait and Spain — also missed last year’s deadline. 

Malaysian and Spanish officials said they would be formally admitted by the end of 2017. 

Kuwaiti officials could not be reached for comment. 

 Last week the AIIB approved 13 new applicants including two additional countries from South America and two from Africa. 

A surge in applications from Africa and Latin and South America is expected to change the complexion of the bank, whose original members hailed largely from Asia and western Europe. 

 The AIIB can only support projects in its member countries. 

On Tuesday it announced it would lend $285m to three new infrastructure projects in Indonesia and Bangladesh. 

 The AIIB has earmarked $225m for municipal infrastructure and improvements to 63 dams and reservoirs in Indonesia, while the remaining $60m will fund gas pipelines in Bangladesh. 

Indonesian officials had previously requested environmentally controversial financing for coal-fired plants, which the AIIB is still deliberating.

 AIIB will co-finance the projects with the World Bank and the Asian Development Bank. In building up its portfolio, the bank has largely relied on partnerships. Since its formal establishment last year the AIIB has lent $2bn to 12 projects, mainly in the areas of energy and transport. 

 Additional reporting by David Pilling, Joe Leahy, Tobias Buck and Jeevan Vasagar Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web. Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) 0 Save Latest on Asian Infrastructure Investment Bank beyondbrics China ramps up role in global finance as US backs off The Exchange Yukon Huang Conflict and commonality between Donald Trump and Xi Jinping FirstFT AIIB expansion, Trump trade pact withdrawal China-led investment bank attracts 25 new members Amitav Acharya Emerging powers can save global liberal order