The BRICS Contingent Reserve Arrangement: A Subversive Power Against the IMF’s Conditionality?

Abstract

In 2014, the BRICS countries established the Contingent Reserve Arrangement (CRA) purportedly to compensate for the BRICS’ frustration over the non-materialization of reforms in the International Monetary Fund (IMF) that had long been promised but blocked by the United States until late 2015. A contractual analysis of the CRA reveals that though all BRICS countries enjoy equality for strategic decisions, the CRA strongly resembles the IMF’s quota-based voting distribution where operational decisions are taken. It nevertheless provides a more balanced voting system, as it does not provide one single party with a veto position. The CRA further lacks legal personality and other fundamental features such as its own staff or macroeconomic research facilities. Financing approvals are thus linked to IMF on-track arrangements, which undermines the CRA’s significance. The CRA nonetheless holds the potential to be developed into a viable BRICS alternative to the IMF in the long term.