Pakistan seeks China support to join BRICS bank amid likely India objection

ISLAMABAD -- Pakistan has sought China's support to secure its membership in the BRICS-backed New Development Bank (NDB) in a bid to diversify its credit options, while one of the bank's founding members, India, is expected to oppose Islamabad's participation.

The NDB was established in 2015 by Brazil, Russia, India, China and South Africa -- the group of countries known as BRICS -- each of which currently holds an 18.76% stake in the bank. Latecomers to the group, Egypt, Bangladesh, Algeria and the UAE also hold respective stakes of 2.24%, 1.77%, 1.15% and 1.04%. The Shanghai-based lender finances infrastructure and development projects in emerging economies and is seen as an alternative to the Western-led global financial order.

Pakistan's Ministry of Finance posted on its official X account that Finance Minister Muhammad Aurangzeb "sought China's support for Pakistan's membership in the New Development Bank" in his meeting with China's Deputy Finance Minister Liao Min on the sidelines of the International Monetary Fund/World Bank meetings in Washington last week.

"Pakistan has already applied for NDB membership earlier this year, which is under process," a Pakistan government official told Nikkei Asia.

Experts believe that Beijing will support Islamabad's application to join the NDB despite the setbacks it has faced while funding Belt and Road infrastructure projects in Pakistan.

China has so far spent $25.4 billion on the China-Pakistan Economic Corridor, the Pakistan component of the Belt and Road Initiative. Beijing has grown increasingly frustrated over the killing of 21 Chinese nationals in Pakistan since 2021, prolonged payment delays to Chinese power producers, and persistent governance challenges.

"To address the disappointing performance of many Belt and Road projects, Beijing is increasingly outsourcing risk management to state-owned commercial banks [shifting the role from policy banks] with stronger standards and loan repayment safeguards," Bradley Parks, executive director of AidData, a university research lab at William & Mary in Virginia, U.S., told Nikkei Asia, adding, "One way that it is doing so is via multilateralization [of lenders]."

For its part, the NDB "is welcoming a broader set of countries into its membership," he said. "Given that Pakistan is one of China's closest allies, Beijing may want Islamabad to jump on the NDB bandwagon."

Ikram ul Haq, who runs a legal and tax consultancy in Lahore, shares a similar view that Beijing would support Islamabad's participation in the NDB.

"The Chinese disappointment over the mishandling of [Belt and Road] projects by Pakistan and concerns over the safety of its citizens are not going to stop the Chinese from helping Pakistan to avail the benefits of the NDB," he said.

Pakistan's membership in the NDB would help diversify Islamabad's credit sources and reduce its reliance on the IMF and World Bank. Muhammad Shoaib, a postdoctoral fellow at George Mason University in the U.S, said, "Access to NDB funds is quicker, less stringent politically, and infrastructure-oriented."

Haq agrees with this view. "NDB funds for long-term infrastructure development can solve the main impediment for accelerated growth and improvement of human capital in Pakistan," he said.

Entry to the NDB requires the approval of at least four of the five founding members. While India has historically opposed Pakistan's inclusion in BRICS forums, Chinese support may help the country secure the required approvals from Brazil, Russia and South Africa, in addition to China itself.

"The likelihood is that India will not agree due to its longstanding acrimonious relations with Pakistan," said Jeremy Garlick, an associate professor at the Prague University of Economics and Business. In his view, China is also unlikely to "push very hard for Pakistan's inclusion because of Pakistan's poor track record with handling its own finances."

However, other experts, including Parks, Haq and Shoaib, said that China will lobby on Pakistan's behalf with the three countries.

"The Pakistani authorities are reading the room and they understand that Beijing wants other external creditors to have skin in the game," Parks added.

The article was published in the asia.nikkei