U.S. International Development Finance Corporation (DFC)

Updated January 12, 2021
U.S. International Development Finance Corporation (DFC)
Direct loans and loan guarantees of up to $1 billion and
The U.S. International Development Finance Corporation
for terms up to 25 years, subject to federal credit law
(DFC) is a new U.S. government agency that aims to
and other requirements, for investment projects and
promote private investment in developing countries to
funds. The Development Credit Office facilitates
support U.S. global development, foreign policy, and
lending of up to $50 million to small and medium
economic interests. DFC emerged from a general
enterprises in developing countries.
congressional consensus, supported by the Trump
Political risk insurance with coverage of up to $1 billion
Administration, to elevate U.S. efforts to respond to
against losses due to political risks (e.g., currency
China’s Belt and Road Initiative (BRI) and China’s
inconvertibility, expropriation, and political violence,
growing economic influence in developing countries,
including terrorism), and reinsurance to increase
modernize U.S. development finance tools for private
underwriting capacity.
capital mobilization, and streamline bureaucracy.
Direct equity investment into specific projects or in
Authorized by the Better Utilization of Investments
investment funds, with exposure limited to no more than
Leading to Development Act of 2018 (BUILD Act, Div. F
30% per project and 35% of overall DFC exposure.
of P.L. 115-254, 22 U.S.C §9612 et seq.) for seven years
Feasibility studies and technical assistance to support
through October 2025, DFC assumed the development
project identification and preparation. DFC must aim to
finance functions of the Overseas Private Investment
require cost-sharing by those receiving funds.
Corporation (OPIC, now terminated) and the U.S. Agency
for International Development (USAID) Development
Requirements and Limitations
Credit Authority (DCA). The BUILD Act also expanded its
By statute, DFC operates under the foreign policy guidance
authorities and increased its exposure cap to $60 billion,
of the Secretary of State. The BUILD Act imposes various
compared to OPIC’s former $29 billion exposure cap. DFC
requirements and limitations on DFC support. DFC is
launched operations in December 2019.
allowed to provide support only if it is necessary to
Structure and Organization
alleviate a credit market imperfection or to achieve a U.S.
development or foreign policy goal. In general, DFC must
DFC is led by a nine-member Board of Directors,
prioritize support for less-developed countries, and the
comprising a Chief Executive Officer (CEO), four other
President must certify that U.S. economic or foreign policy
U.S. government officials (the Secretary of State, who is the
interests are at stake to support upper-middle income
Chairperson of the Board, the USAID Administrator, who
countries. One exception is that DFC may support certain
is the Vice Chairperson, the Secretary of the Treasury, and
energy infrastructure projects in high-income parts of
the Secretary of Commerce, or their designees); and four
Europe and Eurasia (Div. P, Title XX, P.L. 116-94).
nongovernment members (for three-year terms, renewable
once). All Board positions are presidentially appointed and
Based on statute, DFC aims for projects to produce positive
subject to Senate confirmation. All DFC powers are vested
development impacts, apply best practices with respect to
in the Board, which provides direction and general
environmental and social safeguards, and respect human
oversight, as well as approves major DFC decisions. The
rights, including worker rights. Among other things, the
CEO acts on the Board’s direction. The Board meets
DFC board must reject any project likely to have
quarterly, and a quorum is five members.
“significant adverse environmental or social impacts”
unless DFC provides a public notification. DFC’s
Other DFC officers include the Deputy CEO (also a Senate-
Environmental and Social Policy and Procedures (ESPP)
confirmed, presidentially appointed position), Chief Risk
outline how DFC considers project applications and
Officer, Chief Development Officer, and Inspector General
monitors ongoing projects. While initially carrying over
(IG). The Senate confirmed DFC’s first CEO on September
OPIC’s policies, DFC subsequently revisited them and
26, 2019, and two nongovernment board members on
issued an updated ESPP in July 2020, in which it removed
December 26, 2020; it did not act upon other nominations,
OPIC’s prohibition on support for nuclear energy projects.
including for the Deputy CEO, in the 116th Congress.
DFC’s activities are backed by the full faith and credit of
Congress appropriates to DFC through a Corporate Capital
Account (CCA), comprising collections from fees for
the U.S. government. DFC charges fees and premiums for
services, interest earnings, returns on investments, and
its support. DFC attained the authorities of OPIC
transfers of unexpended balances from predecessor
(financing, insurance, special projects) and USAID
agencies. Because DFC forecasts its collections to exceed
(technical assistance, enterprise funds), and also acquired
outlays, Congress designates a portion of CCA collections
new authorities under the BUILD Act (e.g., equity
that may be retained for operating and program expenses.
investment, feasibility studies)—discussed briefly below.
Any excess collections are a net credit to the Treasury.

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U.S. International Development Finance Corporation (DFC)
FY2021 appropriations designate $569 million of CCA
to Eastman Kodak Company to produce pharmaceutical
collections for DFC activities. DFC may transfer funds to
components has been on hold amid scrutiny from Congress
the “program account” (which funds direct loans, loan
and the Securities and Exchange Commission (SEC).
guarantees, investment promotion, feasibility studies, and
DFC is a partner in the Blue Dot Network, an initiative with
technical assistance). USAID and the State Department may
U.S. allies to establish common transnational standards for
also transfer funds to DFC to fund activities that support
infrastructure investments. It also coordinates with other
their projects, such as those previously funded through
bilateral development finance institutions (DFIs) through
DCA (see Figure 1).
the DFI Alliance.
Figure 1. FY2021 DFC Appropriations
Monitoring and Impact
DFC monitors projects for credit risks and compliance with
statutory and policy requirements. It recently launched a
new tool for measuring development impact, the Impact
Quotient, and its inaugural development strategy. Given
DFC’s early stage, the agency has not issued an evaluation
of its overall performance in meeting development goals.
Issues for Congress
As DFC matures, Congress may examine whether DFC is
advancing U.S. development, foreign policy, and economic

interests, and whether it is addressing U.S. strategic
Source: CRS, based on P.L. 116-260.
concerns, especially vis-à-vis China. Recent developments
Activities and Priorities
amplified tensions that may be inherent in these objectives.
In its first year, DFC widened its financing activities based,
The easing of DFC’s income restrictions for energy projects
in part, on private sector demand for its services. It also
in Europe and Eurasia has garnered criticism that this may
continued to manage the portfolios it inherited from OPIC
subordinate development results to strategic interests. By
and DCA. DFC new project commitments totaled $4.8
contrast, private sector advocates assert that commercial
billion in FY2020 and included projects under its new
opportunities in upper-middle-income countries may have
equity investment and technical assistance authorities.
both strategic and development benefits. Development
DFC’s total FY2020 portfolio exposure exceeded the
advocates also remain concerned that any future DFC-DPA
former OPIC exposure cap of $29 billion, starting to take
domestic activities may distract the DFC from its legislative
advantage of DFC’s higher exposure cap of $60 billion (see
mandate to support private investment overseas.
Figure 2). DFC reported that in FY2020, its revenue
These dynamics present oversight issues, including the role
exceeded its costs by $232 million, and that it maintained
of the Chief Development Officer, how DFC measures the
corporate reserves of $6.2 billion in Treasury securities.
development impact of its projects, DFC’s relationship with
Figure 2. DFC FY2020 Investment Commitments
other federal trade and investment financing and promotion
agencies whose statutory missions may differ, and its role
in interagency processes and decision-making.
Congress may assess DFC’s balancing of geographic,
sectoral, and risk profile to advance DFC goals. Some
issues may include whether DFC is an effective
counterbalance to China-driven efforts in key markets and
how DFC uses the Impact Quotient in decision-making.
Congress may track DFC use of its new authorities, such as
its role in new Enterprise Funds and the sovereign loan
portfolio. Another issue is how composite tools such as

Source: CRS, based on DFC, FY2020 annual management report.
blended finance and impact bonds fit with DFC’s products.
Note: Regional categories as reported by DFC.
Congress also could consider DFC partnerships with other
In FY2020, DFC priorities included supporting the Indo-
DFIs, such as whether to encourage negotiating global rules
Pacific Strategy, the 2X Women’s Initiative, Prosper Africa
for development finance to create a level playing field for
(which the DFC CEO heads), the America Crecé initiative
U.S. firms and to highlight best practices to enhance
in Latin America and the Caribbean, and the Portfolio for
development impact, comparable to existing rules for
Innovation and Impact. DFC may work with other foreign
export credit.
assistance and trade promotion agencies on its activities.
In its deliberations, Congress may examine DFC’s policies
In addition, President Trump delegated authority to the
and any needed adjustments. Congress may also consider
CEO of the DFC to use domestic lending authorities of the
changes to the BUILD Act to achieve desired outcomes.
Defense Production Act (DPA, 50 U.S.C. §4501 et seq.) to
Shayerah I. Akhtar, Specialist in International Trade and
respond to the ongoing Coronavirus Disease 2019 (COVID-
19) pandemic. On November 19, 2020, DFC approved a
$590 million loan for domestic production of injectors for
Nick M. Brown, Analyst in Foreign Assistance and
COVID-19 vaccines. In contrast, a potential financing deal
Foreign Policy

U.S. International Development Finance Corporation (DFC)


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