U.S. International Development Finance Corporation (DFC)

February 20, 2020
U.S. International Development Finance Corporation (DFC)
The U.S. International Development Finance Corporation
The CEO reports to the Board and is responsible for DFC
(DFC), a wholly owned U.S. government corporation, is
operations and management. The Deputy CEO assists the
charged with promoting private investment in developing
CEO in these activities. The CEO and Deputy CEO are
countries to support U.S. global development goals and
presidentially appointed and Senate confirmed. On
economic interests. DFC seeks to transform U.S. support
September 26, 2019, the Senate confirmed Adam S.
for private sector investment in less-developed countries.
Boehler as the CEO. Other DFC officers include a Chief
Part of the U.S. policy response to China’s state-directed
Risk Officer and Chief Development Officer (CDO), who
overseas financing model and its Belt and Road Initiative
are appointed by the CEO.
(BRI), DFC aims to promote a U.S. model that is market-
Authorities and Products
driven and emphasizes transparency, environmental and
DFC’s activities are backed by the full faith and cre
social safeguards, and debt sustainability for partner
dit of
countries. DFC aims to “ensure projects produce positive
the U.S. government. DFC charges fees and premiums for
developmental impacts, apply best practices with respect to
its support. The DFC currently offers the following
environmental and social safeguards, and respect human
rights, including worker rights.”
Direct loans and loan guarantees of up to $500 million
and for terms up to 20 years, subject to federal credit
DFC was authorized by the Better Utilization of
law and other requirements. Under this authority, the
Investments Leading to Development Act of 2018 (BUILD
DCA program facilitates lending to small and medium
Act, P.L. 115-254). The BUILD Act consolidated all of the
enterprises in developing countries by guaranteeing up
functions of the Overseas Private Investment Corporation
to 50% of loans from local financial institutions that
(OPIC) (see text box) and the Development Credit
these lenders would otherwise deem too risky.
Authority (DCA) function of the U.S. Agency for
International Development (USAID), aiming to achieve
Political risk insurance to private sector entities and
greater cost-saving and efficiency. DFC launched
qualifying sovereign entities with coverage of up to
operations after a funding delay that was resolved in late
$500 million against losses due to political risks (e.g.,
December 2019 with the enactment of the Further
currency inconvertibility, expropriation, and political
Consolidated Appropriations Act, 2020 (P.L. 116-94).
violence, including terrorism), and reinsurance to
increase underwriting capacity.
New DFC vs. OPIC

While DFC carries over OPIC’s authorities and many of its
Equity financing directly into specific projects as a
policy requirements, some key distinctions include that DFC
minority investor or in investment funds. DFC exposure
is limited to no more than 30% per project and no more
than 35% of DFC’s overall exposure.

more “tools” (e.g., authority to make limited equity

investments, provide technical assistance, and conduct
Feasibility studies and technical assistance to support
feasibility studies);
project identification and preparation, including for the
energy sector, women’s economic empowerment,

more capacity ($60 bil ion exposure cap vs. OPIC’s $29
microenterprise households, or other small business
bil ion);
activities. To the maximum extent practicable, DFC

a longer authorization period (seven years vs. OPIC’s year-to-
must require cost-sharing by those receiving funds.
year authorization in recent years); and
Requirements and Limitations

more specific oversight (e.g., its own Inspector General (IG)
DFC is allowed to provide support only if it is necessary to
vs. OPIC, which was under USAID’s IG).
alleviate a credit market imperfection or to achieve a U.S.
Structure and Organization
development or foreign policy goal. By statute, DFC must
DFC is led by a nine-member Board of Directors,
prioritize support for less-developed countries and restrict
comprising a Chief Executive Officer (CEO), four other
its support in upper-middle-income economies unless
U.S. government officials (the Secretary of State, USAID
presidential certification and development benefit
Administrator, Secretary of the Treasury, and Secretary of
requirements are met. Among other factors, the BUILD Act
Commerce, or their designees); and four nongovernment
requires that DFC must
members, subject to presidential appointment and Senate
 give preferential consideration to projects involving
confirmation. The Chairperson is the Secretary of State, and
private-sector entities that are U.S. persons (but has no
the Vice Chairperson is the USAID Administrator (or their
requirement for a U.S. nexus);
designees). All DFC powers are vested in the Board, which
 give preferential consideration to countries complying
provides direction and general oversight as well as
authorizing major DFC decisions. The Board must meet no
(or making substantial progress to comply) with
less than quarterly, and a quorum is five members.
international trade obligations;

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U.S. International Development Finance Corporation (DFC)
 give preferential consideration to projects in countries
Figure 2.DFC Inherited Active Commitments
that embrace private enterprise;
 make efforts to ensure that at least 50% of all DFC-
supported projects are associated with U.S. small
 reject any project that is likely to have “significant
adverse environmental or social impacts” unless DFC
provides an impact notification;
 work only in countries that are taking steps to adopt and
implement worker rights protections; and
 cap the agency’s support for a single entity at no more

than 5% of DFC’s overall portfolio.
Source: CRS, based on DFC data, accessed February 20, 2020.
Issues for Congress
DFC is funded through a Corporate Capital Account
As DFC is a new entity, its organizational structure and
(CCA), comprising collections from fees for services,
agency mission may take some time to coalesce. As DFC
interest earnings, returns on investments, and transfers of
matures, Congress may examine whether DFC is advancing
unexpended balances from predecessor agencies. Rather
U.S. commercial interests and development goals, and
than an outlay from Treasury funds, DFC appropriations
whether it is addressing U.S. strategic concerns, especially
designate a portion of CCA collections that may be retained
vis-à-vis China. For instance, some have questioned DFC’s
for operating and program expenses. Such collections are
statutory focus on less-developed countries—a debate that
meant to offset expenses and make DFC self-sustaining,
is amplified by the European Energy Security and
with any excess collections a net credit to the Treasury.
Diversification Act of 2019 (P.L. 116-94, Div. P, Title XX),
which eases the less-developed country requirement for
FY2020 appropriations designate $299 million of CCA
energy infrastructure projects in Europe and Eurasia. Some
collections for DFC activities. A portion of those funds is
authorized for transfer to the “
development advocates have voiced concern that this may
program account” (which
signal subordination of development results to strategic
includes direct loans, loan guarantees, investment
interests, while private sector advocates have highlighted
promotion, feasibility studies, and technical assistance).
commercial opportunities in upper-middle-income countries
USAID and the State Department have also been authorized
that may have both strategic and development benefits.
to transfer a portion of foreign assistance appropriations to
DFC to fund activities that support their projects, such as
These dynamics present oversight issues, including the role
those previously funded through DCA (see Figure 1).
of the Chief Development Officer, how DFC measures the
Figure 1.U.S. DFC, FY2020 Appropriations
development impact of its projects, DFC’s relationship with
other federal trade and investment financing and promotion
agencies whose statutory missions may differ, and its role
in interagency processes and decisionmaking.
As DFC approves new projects, various considerations may
arise. Congress may assess DFC’s geographic and sectoral
concentration, and whether it advances DFC’s various goals
while managing credit and other risks. A key issue in this
regard is whether DFC is an effective counterbalance to
China-driven efforts in key markets—a major rationale for
the BUILD Act. Congress may also track DFC use of new
authorities, such as equity investments and technical

assistance. DFC’s authority to establish new Enterprise
Source: CRS, based on P.L. 116-94.
Funds and to manage sovereign loan may arise as an issue.
Activities and Priorities
Another issue is whether tools on the horizon in
development finance, such as blended finance and impact
DFC’s activities are “demand-driven” in that utilization of
its programs depends largely on alignment with commercial
bonds, should be added to DFC’s product line.
interests. DFC is implementing previously OPIC-managed
Congress also could consider whether to encourage the
active projects, and is expected to pursue new projects (see
Administration to pursue international rules on
Figure 2). DFC priorities include supporting
development finance comparable to export credit financing.
 the 2X Women’s Initiative to empower women across
In its deliberations in these various areas, Congress may
the developing world;
consider if any changes to the BUILD Act are needed to
Connect Africa to invest $1 billion over three years to
achieve desired outcomes for DFC and for its role in
support economic growth and connectivity in Africa;
advancing U.S. policies.
 “impact investing” focused on generating positive social
Shayerah Ilias Akhtar, Specialist in International Trade
or environmental impacts; and

and Finance
the Indo-Pacific region, including partnerships with
regional allies to support infrastructure development.

U.S. International Development Finance Corporation (DFC)

Nick M. Brown, Analyst in Foreign Assistance and
Foreign Policy

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