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Updated February 3, 2022
U.S. International Development Finance Corporation (DFC)
The U.S. International Development Finance Corporation
competitive application process. Usage of DFC services
(DFC) is a U.S. government agency that uses financial tools
depends on client demand, but the agency seeks to attract
to promote private investment in less-developed countries.
applications through sector-specific requests for proposals
It seeks to support economic development, U.S. economic
and other outreach activity.
interests, and U.S. foreign policy aims. Authorized by the
Separate from its BUILD Act authorities, DFC also has
Better Utilization of Investments Leading to Development
delegated lending authorities of the Defense Production Act
Act of 2018 (BUILD Act, Div. F of P.L. 115-254, 22 U.S.C
(DPA, 50 U.S.C. §4501 et seq.) to support the domestic
§9612 et seq.), DFC emerged from congressional interest to
response to the COVID-19 pandemic.
enhance U.S. development finance tools and respond to
China’s “One Belt, One Road” (OBOR) initiative. DFC
Requirements and Limitations. In general, DFC must
launched in December 2019. It assumed the functions of
prioritize support for low- and lower-middle-income
and replaced the Overseas Private Investment Corporation
economies. Upper-middle-income economy support may be
(OPIC) and the U.S. Agency for International
approved if it is certified to have U.S. economic or foreign
Development’s (USAID’s) Development Credit Authority
policy interests at stake and is designed for development
(DCA). DFC has expanded authorities, a higher lending cap
impact. DFC is limited from investing in high-income
of $60 billion, and a longer authorization of seven years.
countries, except for certain energy infrastructure projects
Overview
in Europe and Eurasia (Div. P, Title XX, P.L. 116-94).
Organization. The BUILD Act vests DFC powers in a
DFC must give preference to projects involving U.S.
nine-member Board: a Chief Executive Officer (CEO); the
persons as project sponsors or participants, as well as
Secretaries of State, the Treasury, and Commerce; the
projects in countries complying with international trade
USAID Administrator; and four nongovernment members
obligations and embracing private enterprise. Projects must
(for three-year terms, renewable once). Chaired by the
take into account factors relating to environmental and
Secretary of State, the Board oversees the agency, guides
social impact, worker rights, and human rights, among
policy, and approves major DFC projects. It has delegated
other considerations. DFC also seeks to complement, and
some powers to the CEO, who manages day-to-day
not compete with, the private sector.
operations. The Board meets quarterly, and a quorum is five
members. Board members are presidentially appointed and
Policies and Processes. Pursuant to the BUILD Act, DFC
Senate confirmed. DFC is currently under acting CEO
sets and maintains internal policies to guide programs.
DFC’s corporate bylaws and all Board resolutions guide
leadership.
overall management and agency structure. DFC’s
Other DFC officers include the Deputy CEO, Chief Risk
Environmental and Social Policy and Procedures (ESPP)
Officer, Chief Development Officer, and Inspector General
outline how DFC is to consider project applications and
(IG). DFC also established a new Chief Climate Officer
monitor ongoing projects. DFC uses a quantitative
position for climate finance efforts. Various offices,
assessment tool, the “Impact Quotient,” to indicate likely
departments, and advisory units carry out DFC’s functions.
development impact. A Transparency Policy is to guide
DFC’s public information processes, though it remains in
Authorities. DFC’s authorities include:
draft form. DFC also monitors projects for credit risks and
Direct loans and loan guarantees of up to $1 billion for
compliance with statutory and policy requirements.
terms between 5 and 25 years, subject to federal credit
law and other requirements, for investment projects and
Funding. Congress appropriates funding for DFC through a
funds.
Corporate Capital Account (CCA), consisting of
Political risk insurance coverage of up to $1 billion
appropriations and collections. DFC funding designates a
against losses due to political risks (e.g., currency
portion of CCA collections that may be retained for
inconvertibility, expropriation, and political violence),
operating expenses, and excess collections to date have
and reinsurance to increase underwriting capacity.
been credited to the Treasury. DFC may transfer funds to
the “program account
,” which finances most DFC credit
Equity investment in specific projects or investment
activities. USAID and the State Department may also fund
funds, with exposure limited to no more than 30% per
DFC activities through a transfer.
project and 35% of overall DFC exposure.
Feasibility studies and technical assistance to support
In FY2021, DFC’s revenue exceeded its costs by $162
project identification and preparation. DFC must aim to
million, and it had corporate reserves of $6.2 billion in
require cost-sharing by those receiving funds.
Treasury securities. Congress provided $569 million for
DFC activities in FY2021 (see Figure 1), and the Biden
DFC’s activities are backed by the U.S. government’s full
Administration requested $601 million for FY2022.
faith and credit. DFC charges interest and other fees for its
Congress has yet to enact full-year FY2022 appropriations.
support. DFC considers potential activities through a
https://crsreports.congress.gov
U.S. International Development Finance Corporation (DFC)
Figure 1. FY2021 DFC Appropriations
priorities and direct its interagency engagement, among
other things. Key issues before Congress include:
Scope and Priorities. DFC’s scope of authorities and the
balance of its portfolio have prompted extensive
congressional involvement. Legislative deliberations
continue regarding whether to expand DFC’s $60 billion
lending cap, modify or remove restrictions on support to
upper-middle-income and high-income countries, prioritize
DFC’s lending in certain sectors or regions, and encourage
more equity investments by revising how they are evaluated
in federal budget accounting. Other areas of congressional
interest include DFC’s prioritization and modification of its
Source: CRS, based on P.L. 116-260.
policies, such as on the environment, climate change, and
transparency.
Recent Activity. In FY2021, DFC committed $6.8 billion
for new projects (up from $4.8 billion in FY2020), resulting
Mandates and Effectiveness. While the BUILD Act
in a total portfolio of $32.8 billion (up from $29.7 billion in
garnered widespread support as an opportunity to enhance
FY2020). Finance and infrastructure were the largest
U.S. strategic competition with China, policymakers saw
sectors of support, and the Western Hemisphere and sub-
both risks and opportunities for U.S. development efforts.
Saharan Africa were the largest regions (as of June 30,
DFC’s balance of these aims remains actively debated.
2021, see Figure 2).
Many Members are interested in DFC’s role in countering
DFC has taken several steps to reorient its operations and
China’s OBOR, the financing scale of which is generally
decision-making. In 2020, DFC updated its ESPP to remove
assessed to exceed that of DFC and other major DFIs.
an OPIC-era prohibition on support for nuclear energy
Issues include whether to: tighten DFC’s focus on offering
projects. DFC also issued its inaugural development
alternatives to OBOR support, afford DFC greater
strategy in 2020. Its stated priorities are, among others, the
resources, and emphasize particular project-specific
Indo-Pacific region, women’s economic empowerment,
approaches, e.g., to attach conditions to exclude Chinese
investment in Africa and the Western Hemisphere,
suppliers, focus on infrastructure and other projects with
innovation, and climate change. DFC is revising its
standards-setting potential and economic impact, and
development strategy to emphasize climate change.
support U.S. supply chains for critical sectors. These issues
DFC also supports several federal multi-agency initiatives,
may tie in to broader scrutiny of DFC’s role in advancing
including Feed the Future, Power Africa, and the trade-
U.S. economic competitiveness by offering commercial
focused Prosper Africa. DFC also has its own initiatives,
opportunities for U.S. firms, disseminating U.S. values, and
including the 2X Women’s Initiative and the Health and
providing footholds for U.S.-centric global value chains.
Prosperity Initiative to improve health systems amid the
Such efforts, however, may raise tensions with DFC’s
Coronavirus Disease 2019 (COVID-19) pandemic.
development mandate. Debate over easing DFC’s income
Additionally, DFC launched new cooperative efforts with
restrictions elicited criticism that development impact was
other development finance institutions (DFIs), including
getting ignored, and DFC-DPA activities provoked further
concern over distracting from DFC’s mission
through the DFI Alliance, which is engaged in COVID-19
. DFC asserted
pandemic responses. DFC also is a partner in an
that DPA activities are “walled off” from BUILD Act
international infrastructure standards-setting initiative.
activity and that development impact and foreign policy
interests often overlap, but concern continues.
Figure 2. DFC Active Portfolio (as of June 30, 2021)
International DFI Landscape. Congress may consider
directing DFC to partner more intensively with foreign
DFIs on key policy goals; and whether to encourage the
Administration to pursue negotiations on global rules for
development finance to create a level playing field for U.S.
firms and to highlight best practices. Congress also may
seek more authoritative information on how DFC compares
with other foreign DFIs; such comparisons face data
challenges especially with respect to China.
Interagency Relations. Congress may seek to shape DFC’s
work with other federal foreign policy, aid, and trade
agencies. DFC’s agency relationships and interagency
Source: CRS, based on latest available data from DFC,
engagement may signal DFC’s policy emphasis. For further
“Transparency and Accountability” webpage, accessed 1/28/22.
discussion, see CRS Report R47006, U.S. International
Select Issues for Congress
Development Finance Corporation: Overview and Issues.
In the 117th Congress, major bills introduced address some
Shayerah I. Akhtar, Specialist in International Trade and
issues raised in its first two years, as part of broader sets of
Finance
measures to counter China (S. 1260, H.R. 3524, H.R.
4521). Other bills introduced would seek to shape DFC
https://crsreports.congress.gov
U.S. International Development Finance Corporation (DFC)
IF11436
Nick M. Brown, Analyst in Foreign Assistance and
Foreign Policy
Disclaimer
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