May 24, 2017
Overseas Private Investment Corporation (OPIC)
OPIC, a wholly-owned U.S. government corporation and
development finance institution (DFI), operates under the
Foreign Assistance Act of 1961 (FAA), as amended (22
U.S.C. §2191 et seq.). Spun out of the U.S. Agency for
International Development (USAID) in 1971 to focus on
market-oriented investment, OPIC aims to promote
economic growth in developing and emerging economies
by financing overseas investments and insuring against
political risks of investing abroad, such as currency
inconvertibility, expropriation, and political violence, for
qualifying U.S. private investors. OPIC presents
reauthorization, organizational structure, funding and other
issues for Congress.
Table 1. OPIC Financial Products Overview
OPIC Financial Product
Examples of OPIC
Political risk insurance:
Protects against political
risks of investing overseas,
up to $250 million per
Since 2004, has committed over
$300 million in political risk
insurance to Apache Corp. for
oil and gas development in
Financing: Up to $250
million and up to 20 years
through either fixed-rate
direct loans for projects
significantly involving U.S.
small business, or investment
guarantees of OPIC
repayment of loan if the
borrower defaults. Can
project finance (structured
so that loan repayment
comes from project).
Approved a $750,000 loan in
2009 for a Utah-based small
business to expand heavy
equipment rental business in
Nigeria, and $95 million in
financing in 2013 for a wind
power plant in Pakistan with
General Electric wind turbines.
In 2013, completed a $245
million, 20-year project finance
loan for a hydroelectric power
plant in Chile, sponsored in part
by a Virginia-based subsidiary of
a Chilean firm.
Investment fund support:
Provides senior debt
financing to supplement
equity raised by funds
(privately owned and
managed capital sources).
Approved $125 million in
financing in 2009 for a microfinance fund in Latin America,
and $80 million in financing in
2014 for an affordable housing
fund in sub-Saharan Africa.
Source: CRS, based on OPIC publications, various years.
Authorization status. Since reauthorizing OPIC in
December 2003 for nearly four years through FY2007 (P.L.
108-158), Congress generally has extended its authority
through appropriations legislation. The FY2017 omnibus
appropriations act (P.L. 115-31) extended OPIC’s authority
until September 30, 2017. Certain bills introduced in the
114th Congress to expand electricity access in sub-Saharan
Africa would have renewed OPIC on a multi-year basis, but
these provisions were not included in the final legislation
(P.L. 114-121). OPIC may face more scrutiny in the 115th
Congress, resulting in part from President Trump’s FY2018
budget request to eliminate OPIC funding, the ongoing
debate over the Export-Import Bank (Ex-Im Bank), and
debate over the U.S. government’s size and scope.
Leadership. OPIC, by statute, has a Board of Directors
with 15 members appointed by the President with the
advice and consent of the Senate. The Board has eight
“private sector” Directors (with requirements for small
business, labor, and other representation), appointed to
three-year terms, and seven “federal government” Directors
(including the OPIC President, the USAID Administrator,
the U.S. Trade Representative, and a Labor Department
officer), who serve at the pleasure of the President. A
quorum for the Board to transact business requires eight
Directors. The Board provides policy guidance, and major
OPIC commitments require its approval. The Board meets
four times a year. OPIC participates in the interagency
Trade Promotion Coordinating Committee (TPCC), and
collaborates periodically on projects with USAID, Ex-Im
Bank, and the Trade and Development Agency (TDA).
Requirements. OPIC operates under the Secretary of
State’s policy guidance. OPIC must take into consideration
economic and social development impacts when
determining whether to support a project. Other criteria
include investor eligibility based on sufficient connection to
the United States, U.S. economic impact, environmental
impact, worker rights, and development effects on the
country receiving the investment. U.S. small businesses and
sub-Saharan Africa are focus areas. Military production and
sales are among “categorically prohibited sectors.”
Funding. The FY2017 appropriations act provided $70
million for OPIC’s administrative expenses to carry out its
credit and insurance programs and a transfer of $20 million
from its noncredit account for credit program costs. OPIC
had an estimated 281 full-time equivalent employees in
FY2017. The President’s FY2018 budget requests $60.8
million to manage OPIC’s existing portfolio and start
“orderly wind-down activities.”
The FAA directs OPIC to operate “on a self-sustaining
basis, taking into account... the economic and financial
soundness of projects.” OPIC charges interest, premia, and
other fees for its services to cover operations. OPIC returns
more funds to the U.S. Treasury than it receives in
appropriations. On a cash basis, OPIC reported remitting
$239 million in FY2016. On a budgetary basis, it finances
loans by borrowing from the U.S. Treasury, and investment
guarantees by issuing certificates of participation in U.S.
debt capital markets. It repays the Treasury through
collection of loan fees, repayments, and default recoveries.
Overseas Private Investment Corporation (OPIC)
Activity. OPIC is “demand-driven,” providing services
based on user interest. OPIC support is available in over
160 countries, while barred in some other countries due to
sanctions laws and other restrictions (such as the U.S.
prohibition on operations in China since the Tiananmen
Square incident). OPIC makes commitments in various
sectors, including infrastructure, energy, financial services,
technology, education, and health care. OPIC reported
making $3.7 billion in new commitments in FY2016. Its
overall portfolio reached $21.5 billion— below its $29
billion statutory cap but nearly double its 2008 portfolio.
Figure 1. OPIC Portfolio, FY2016
Source: CRS, based on OPIC data.
Risk management. OPIC’s activities are backed by the full
faith and credit of the U.S. government. OPIC must conduct
its operations with regard to risk management principles. It
assesses credit and other risks of proposed transactions,
monitors commitments, and guards against potential losses
through reserves ($5.6 billion in reserves in FY2016). OPIC
works to avoid potential claim situations before they arise.
It reports total recoveries of 103% (including interest) of
total claims settlement.
Impact. OPIC monitors the impact of active projects by site
visits of randomly selected projects and the annual selfreporting that it requires of clients. OPIC estimates that its
FY2015 commitments of $4.4 billion will bring $14.2
billion in new investment, and over a five-year period from
FY2015, create about 20,000 host country jobs, and support
400 U.S. jobs through $264 million in U.S. exports.
Issues for Congress
Reauthorization debate. One possible issue before
Congress is whether to reauthorize, reorganize, privatize, or
terminate OPIC. The Trump Administration’s interest in
government-wide reorganization to increase the
effectiveness, efficiency, and accountability of the
government may factor into congressional consideration.
Supporters argue that OPIC fills gaps in private sector
investment support arising from market failures (e.g.,
financial crises, risk levels) and helps U.S. businesses
compete against competitors backed by OPIC’s foreign
counterparts. Critics argue that OPIC diverts capital away
from efficient uses and crowds out viable, private
alternatives, and they take issue with OPIC assuming risks
unwanted by the private sector. OPIC also intersects with
the broader investment debate: some tie U.S. outbound
investment with U.S. job loss through offshoring, while
others argue that overseas investment supports U.S. jobs
and exports. Regarding foreign policy, supporters contend
that OPIC advances U.S. foreign policy interests by
contributing to economic development in poor and conflictaffected countries through positive results and on a
demand-driven basis; opponents question OPIC’s
development benefits, criticizing, for instance, its support
for particular projects or overall portfolio composition.
Products. The range of financial products that OPIC offers
is another possible issue for Congress. In recent budget
justifications, OPIC has requested to use part of its budget
to invest in private equity funds that serve its mission.
Equity authority could enable OPIC to exert greater
influence on a project’s strategic goals and policies and
allow OPIC to use the higher returns associated with equity
investments to support more projects. Yet, it also involves
the U.S. government taking an ownership stake in a private
enterprise, requires greater resources, and entails financial
risks. Many foreign DFI counterparts have equity authority.
Policies. Specific OPIC policies, especially environmental
policies, have been contested. Based on the FY2010
appropriations act (P.L. 111-117, §7079(b)) and other
factors, OPIC has aimed to reduce its projects’ greenhouse
gas emissions and expand its support for renewable energy.
Recent appropriations acts have barred OPIC from using its
funds, under certain conditions, to enforce action pursuant
to the FY2010 appropriations act or a proposed 2013 policy
change to limit financing for coal-fired power plants. This
prohibition could expand opportunities for OPIC support
for overseas coal projects, which could help OPIC to
advance its development mandate in energy-poor countries,
but it also could raise environmental concerns.
Internal oversight. USAID’s Inspector General conducts
reviews, investigations, and inspections of OPIC’s
operations, while external auditors review OPIC’s financial
statements and report findings to OPIC’s Board. Congress
could examine this process.
International context. OPIC and foreign DFIs are playing
a more prominent role as foreign assistance has declined,
private investment has risen, and capital needs for
infrastructure and other projects have grown overseas.
Transformative changes in the DFI landscape, with the
growing role of China and other emerging markets and the
establishment of new multilateral institutions, raise
questions about OPIC’s competitiveness and whether new
international rules are needed to govern DFI activity.
More information. See CRS Report 98-567, The Overseas
Private Investment Corporation: Background and
Legislative Issues, by Shayerah Ilias Akhtar.
Shayerah Ilias Akhtar, Specialist in International Trade
Overseas Private Investment Corporation (OPIC)
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