BRICS plans new guarantee fund to boost investment, backed by new development bank: Report

The fund is seen by Brazilian officials as a core feature of their BRICS financial agenda for 2025.

The BRICS group of emerging economies is preparing to launch a new guarantee fund through the New Development Bank (NDB) in a bid to lower financing costs and attract more private capital to key development projects, two people familiar with the matter told Reuters.

The initiative is expected to be highlighted during next week's BRICS summit in Rio de Janeiro, where Brazil currently holds the rotating presidency.

A guarantee model inspired by the World Bank

The fund is being modelled on the World Bank’s Multilateral Investment Guarantee Agency (MIGA), which provides political risk insurance and credit guarantees to encourage private investment in developing countries.

According to Reuters, the proposed BRICS Multilateral Guarantee (BMG) mechanism has already received technical approval from all member countries and awaits formal sign-off from BRICS finance ministers, a step one source described as a “formality.”

No extra capital needed for now

One key aspect of the BMG fund is that it won’t require fresh capital from BRICS nations at this stage. Instead, the NDB will use its existing resources to back select investment projects.

Officials expect that every dollar in guarantees issued by the NDB could unlock five to ten dollars of private capital for pre-approved infrastructure, climate, and sustainable development projects across BRICS and other developing countries.

Boosting NDB’s global role

“This is a politically significant guarantee instrument,” a source told Reuters. “It sends a message that BRICS is alive, working on solutions, strengthening the NDB and responding to today’s global needs.”

The fund is seen by Brazilian officials as a core feature of their BRICS financial agenda for 2025. Technical work is expected to be completed by the end of the year, with the first pilot guarantees rolling out in 2026.

Helping de-risk projects in the global South

BRICS nations, which include Brazil, Russia, India, China, South Africa, and newly added members from the Global South, all face a common hurdle: the difficulty of attracting private sector investment for large-scale projects due to high perceived risk.

Officials believe that leveraging the NDB’s stronger credit rating, which stands higher than most individual member countries, could help reduce investor concerns and drive more commercial funding into critical areas like climate adaptation and infrastructure.

The fund is being rolled out at a time when developing nations face shifting investment flows, partly due to policy uncertainty in the U.S. and rising global interest rates.

By providing institutional guarantees, BRICS hopes to position the NDB as a competitive alternative to Western-dominated multilateral lenders.

Brazil’s Finance Ministry declined to comment on the matter, according to Reuters.