In a bold move to reshape the global climate finance landscape, BRICS leaders have called for expanded use of local currencies and unveiled plans for a multilateral guarantee fund aimed at easing investment constraints in developing nations.
These announcements come amid growing concerns over currency volatility, rising debt costs, and uncertainty stemming from U.S. monetary policy.
In their latest climate finance declaration, BRICS leaders emphasized that “the cost of hedging foreign exchange (FX) risks poses a significant challenge to cross-border investments in developing countries.” To mitigate this, they urged the New Development Bank (NDB) and other multilateral development banks to increase lending in local currencies—an approach gaining traction across the Global South.
NDB President Dilma Rousseff, addressing the summit held earlier this month, warned that borrowing in U.S. dollars leaves developing economies “exposed to unpredictable policy shifts from institutions like the Federal Reserve,” leading to systemic risk and delayed progress on climate goals. The declaration praised the NDB as “a robust and strategic agent of development and modernization in the Global South.”
The most significant development, however, is the expected announcement of the BRICS Multilateral Guarantee (BMG) mechanism, modeled after the World Bank’s MIGA. According to sources familiar with the talks, the fund has already received technical approval from BRICS members and is awaiting final sign-off from finance ministers—a formality, they say.
“This is a politically significant guarantee instrument. It sends a message that BRICS is alive, working on solutions, strengthening the NDB and responding to today’s global needs,” said one source involved in the negotiations.
The guarantee fund will use existing NDB resources to unlock private capital without requiring fresh capital injections from member states. Early projections suggest that each dollar guaranteed by the NDB could mobilize between five and ten dollars in private investment.
Officials see this initiative as a central pillar of Brazil’s BRICS presidency. By leveraging the NDB’s higher credit rating, the mechanism aims to attract institutional investors and commercial banks to fund infrastructure and climate adaptation projects across the bloc.
With technical preparations expected to conclude by year-end and pilot guarantees slated for 2026, the BRICS group is positioning itself as a key innovator in sustainable development finance—balancing financial sovereignty with climate urgency.
