New Development Bank 9th Annual Meeting: President Dilma Rousseff’s Opening Remarks

Remarks by H.E. Mrs. Dilma Rousseff, President of the New Development Bank
Ninth Annual Meeting of the Board of Governors of the New Development Bank –
Opening Session
First, I would like to extend my cordial greetings to:
His Excellency Paul Mashatile, Vice-President of South Africa
I would like to greet all the ministers
His Excellency Enoch Godongwana, Minister of Finance (South Africa)
His Excellency Mohamed Bin Hadi Al Hussaini, Minister of Finance (United Arab
Emirates)
My dear friend Her Excellency Rania Al Mashat, Minister of International Cooperation
(Egypt)
His Excellency Ivan Chebeskov, Deputy-Minister of Finance (Russia)
His Excellency Liao Min, Vice-Minister of Finance (China)
His Excellency Guilherme Mello Vice-Minister of Finance (Brazil)
Her Excellency Manisha Sinha, Secretary, Department of Economic Affairs (India)
Her Excellency Shahriar Kader Siddiky, Secretary of Economic Relations (Bangladesh)
On behalf of the New Development Bank, I would like to warmly thank Vice President Paul Mashatile and the Government of South Africa for hosting us in the
beautiful city of Cape Town.

Also, I would like to greet all the authorities,
representatives of our member countries, international organizations, multilateral
development banks and business leaders present at this opening session of the Ninth
Annual Meeting of the NDB.
The central theme of this meeting — “Investing in a Sustainable Future” — is
at the core of the Bank’s activities and is one of the most priorities for the
international community.

It is rooted in the idea that economic growth, social inclusion, and
environmental protection are interconnected and should be pursued simultaneously.
This is the meaning of sustainable development. This vision was crystallized in the
2015 United Nations Sustainable Development Goals (SDGs), which provide a
comprehensive framework for addressing this global challenge.
For our countries, sustainable economic development requires also an
industrial basis and capacity in science, technology and innovation that contribute to
an expansion of productivity and better jobs. It also calls for collaboration among
governments, businesses, and individuals to create systems that are both
economically viable and environmentally friendly. On the other hand, systemic
changes, especially in the international financial architecture, are urgently needed.
As we know, emerging markets and developing countries face significant
challenges to achieve sustainable development, such as inequality, extreme poverty,
inadequate infrastructure, and an insufficient access to education, health, and
housing. For us just transition requires a huge amount of resources and long term
financing.
However, it seems unlikely to mobilize more investments to sustainable
development without tackling the issue of indebtedness. According to World Bank
estimation, the tenth developed economies on the planet have a combined debt of
around US$ 87 trillion. Financing such high public debts drains a significant portion of
the huge liquidity available in international markets. This liquidity could otherwise be
channeled into financing the debt of EMDC and thus the necessary investments to
sustained development.
For developing countries, indebtedness becomes an excessive burden. As we
know, fiscal space is essential to ensure that governments can simultaneously invest
in development actions, combat climate change, and achieve the Sustainable
Development Goals(SDGs). Nevertheless, the debt of developing countries is growing
too much and too fast. For instance, interest payments in developing countries have
increased more quickly than public spending on infrastructure, health, education, and
housing over the past decade. External shocks, such as rises in interest rates in
international markets, and excessive depreciations of their currencies, end up fueling
a vicious cycle of indebtedness. The mismatch between debt in strong currency and
the income generated by the projects criate a barrier to sovereign and non-sovereign
investment in developing economies.
For that, we need to put in place two actions: i) firstly, it is necessary to channel
the international liquidity to developing countries and reduce the burden of high
interest rates; ii) secondly, develop alternatives like the financing in local currency to
provide to wider the fiscal space to invest.
So new financial solutions are needed for EMDC. Diversifying funding sources
and using a broader currency basket improves economic resilience against shocks
associated with monetary policy decisions. It can strengthen the fiscal situation to
enabling financing logistic, social and digital infrastructure, housing, water and
sanitation, education and health.
The use of local currency is therefore one strategic option. The availability of
credit in local currency and/or currency swaps helps to tackle exposure to exchange
rate and interest rate risks. The fact is that the hegemonic currency has two roles: an
international and a domestic one. When the US faces inflation the monetary policy is
used raise interest rates, creating a lot of trouble to EMDCs. If the US economy needs,
they can use a strong dollar what can provoke a debt soar on EMDCs. The volatility is
the rule not the exception.
By promoting transactions in local currencies, we also facilitate investment
growth, helping governments and the private sector overcome the cash flow
mismatch between projects and financing. This approach provides greater
predictability and reduces the high costs associated with hedging needs.
That is the reason why expanding the use of local currencies is one of the New
Development Bank’s (NDB) key strategic objectives for the 2022-2026 period. The
bank is putting in place local currency sustainable development-oriented platforms
and recognizes the urgency of making green financing available to the membercountries. Therefore, it aims to provide 30% of total financing in the local currencies
of borrowing members.
For this annual meeting, the challenges of just transition and finance for
development will be brought to center stage. Discussions and presentations on
cutting-edge financialsystemsforsustainable development, prospectsforsustainable
investment and strategies for local currency financing as well as thought-provoking
panel discussions and keynote addresses by prominent figures will take place. We will
have the opportunity to discuss and examine cooperative initiatives that address
urgent social and environmental issues and promote best practices for cultivating
new engines of sustainable growth.
I am confident that we will have particularly fruitful discussions around these
themes and advance both the understanding and practice of financing sustainable
development.
I'd like to thank you all again for being here with the NDB team in our ninth year
of existence. I'm sure the event will be a success.

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