Cabinet has approved the tabling in Parliament for ratification the treaty establishing the Brazil, Russia, India, China and South Africa (Brics) Contingent Reserve Arrangement (CRA) and agreement on the New Development Bank, Cabinet said on Thursday.

“The Contingent Reserve Arrangement is being established to respond to short-term balance of payment pressures. Further it will serve as a precautionary measure to help the Brics countries forestall short- term liquidity pressures, provide mutual support and further strengthen the global financial safety net,” said Minister for Performance, Monitoring and Evaluation in the Presidency Jeff Radebe on Thursday.

He was briefing media on the Cabinet meeting which was held in Cape Town this week.

In July last year, Cabinet welcomed the agreement to launch the New Development Bank (NDB) at the sixth Brics Summit in Brazil as well as to establish the bank’s regional office in Johannesburg.

The five members of the group - Brazil, Russia, India, China and South Africa (Brics) - laid out the designs of the bank and the CRA in a declaration released following their sixth summit.

The new bank will be based in Shanghai, China, while an African regional centre of the bank will be located in South Africa. The regional centre will be opened concurrently with the headquarters before the first loan in 2016.

The bank will have a starting authorised capital of $100-billion, of which $50-billion will be pledged.

At the summit, the leaders agreed on plans for the CRA. At its core, the CRA is a pledge to help one another in times of financial crisis.

Each country will achieve this by together pledging a total of $100-billion to a common pool - with China contributing the most ($41-billion), Brazil, Russia and India contributing US$18-billion each, and South Africa contributing $5-billion.

These pledges will not be physically put aside, but will be made available in times of crisis.

Additionally on Thursday, Cabinet noted the handover of the chairperson of the South African component of the Brics Business Council from Patrice Motsepe to Brian Molefe.

Motsepe was the inaugural chair of both the South African component and the Brics Business Council as a whole.

Minister Radebe said that during his tenure Motsepe succeeded in establishing the body as an integral component of the Brics architecture and served as chair with distinction.

“Cabinet thanks Mr Motsepe for his service and wishes Mr Molefe well as he takes over this important task,” said the Minister.