U.S. International Development Finance Corporation (DFC)



Updated June 1, 2023
U.S. International Development Finance Corporation (DFC)
DFC is a U.S. government agency that uses financial tools
applications through sector-specific requests for proposals
to promote private investment in less-developed countries.
and other outreach.
It seeks to support partners’ economic development, U.S.
Requirements and Limitations. In general, DFC must
economic interests, and U.S. foreign policy aims.
prioritize support for low- and lower-middle-income
Authorized by the Better Utilization of Investments
economies. DFC may support activities in upper-middle-
Leading to Development Act of 2018 (BUILD Act, Div. F
income economies if such support is certified to have U.S.
of P.L. 115-254, 22 U.S.C. §9612 et seq.), DFC emerged
economic or foreign policy interests at stake and is
from congressional intent to enhance U.S. development
designed for development impact. In addition, DFC may
finance tools and respond to China’s “One Belt, One Road”
support energy projects in Europe and Eurasia regardless of
initiative (OBOR). DFC, launched in December 2019,
country income classification, intended in part to reduce
assumed the functions of and replaced the Overseas Private
their dependence on Russian natural gas. DFC must give
Investment Corporation (OPIC) and the U.S. Agency for
preference to projects involving U.S. persons as project
International Development’s (USAID’s) Development
sponsors or participants, as well as projects in countries
Credit Authority (DCA). DFC’s authorities exceed those of
complying with international trade obligations and
its predecessors, including a higher lending cap ($60
embracing private enterprise. Additional factors relate to
billion, compared to OPIC’s $29 billion cap) and a longer
environmental and social impact, worker rights, and human
authorization (seven years, while OPIC’s was often a year).
rights, among other considerations. DFC also seeks to
Overview
complement, and not compete with, the private sector.
Organization. The BUILD Act vests DFC powers in a
Policies and Processes. Pursuant to the BUILD Act, DFC
nine-member Board: a Chief Executive Officer (CEO); the
sets and maintains internal policies to guide programs.
Secretaries of State, the Treasury, and Commerce; the
DFC’s corporate bylaws and all Board resolutions guide
USAID Administrator; and four nongovernment members
overall management and agency structure. DFC’s
(for three-year terms, renewable once). Chaired by the
Environmental and Social Policy and Procedures (ESPP)
Secretary of State, the Board oversees the agency, guides
outline how DFC is to consider project applications and
policy, and approves major projects. It has delegated some
monitor ongoing projects. DFC uses a quantitative
powers to the CEO. The Board meets quarterly, and a
assessment tool, the “Impact Quotient” (IQ) to indicate
quorum is five members. Board members are presidentially
likely development impact. A Transparency Policy to guide
appointed and Senate confirmed. The Senate confirmed
DFC’s public information processes does not yet appear to
Scott A. Nathan to be the CEO of DFC in 2022. Other
be finalized, including for publicizing IQ information per
statutory officers are a Deputy CEO, Chief Risk Officer,
the BUILD Act. DFC also monitors projects for credit risks
Chief Development Officer, and Inspector General (IG). On
and compliance with statutory and policy requirements.
its own authority, DFC created a Chief Climate Officer and
a Chief Diversity and Inclusion Officer, among others.
Funding. Congress appropriates funding for DFC through a
Corporate Capital Account (CCA), consisting of
Tools. DFC is authorized to provide:

appropriations and collections. DFC funding designates a
Direct loans and loan guarantees of up to $1 billion for
portion of CCA collections that may be retained for
terms between 5 and 25 years, subject to federal credit
operating expenses, and excess collections to date have
law and other requirements, for projects and funds.

been credited to the Treasury. DFC may transfer funds to
Political risk insurance coverage of up to $1 billion
the “program account,” which finances most DFC credit
against losses due to political risks (e.g., currency
activities. USAID and the State Department may also fund
inconvertibility, expropriation, and political violence),
DFC activities through a transfer. In FY2021, DFC’s
and reinsurance to increase underwriting capacity.
revenue exceeded costs by $162 million. In contrast, in
Equity investment in specific projects or investment
FY2022, costs exceeded revenue by $16 million. Per DFC,
funds, with exposure limited to no more than 30% per
a key cost driver was increased insurance claims related to
project and 35% of overall DFC exposure.
political violence in Ukraine. For both FY2021 and
Feasibility studies and technical assistance to support
FY2022, DFC maintained corporate reserves of $6.2 billion
project identification and preparation. DFC must aim to
in Treasury securities.
require cost-sharing by those receiving funds.
The Biden Administration requested $1.02 billion for DFC
DFC’s activities are backed by the U.S. government’s full
for FY2024 (see Figure 1), up slightly from FY2023
faith and credit. DFC charges interest and other fees,
appropriations ($1.01 billion) and a nearly 50% increase
generally at market rates. It considers support through a
from FY2022. It justifies the request as key to U.S. support
competitive application process. Use of DFC services
for the G7-led Partnership for Global Infrastructure
depends on client demand DFC also seeks to attract
Investment (PGII) and more effective responses to
challenges from strategic competitors. The Administration,
https://crsreports.congress.gov



U.S. International Development Finance Corporation (DFC)
as part of its proposed “Out-Compete China” initiative, also
DFC supports various policy initiatives, both ones that it
seeks $2 billion in mandatory funding for DFC to create an
leads and others in collaboration with partners. DFC-
equity investment revolving fund outside of its annual
specific initiatives include the 2X Women’s Initiative and
appropriations.
the Health and Prosperity Initiative. “Whole-of-
government” initiatives
Figure 1. FY2023 DFC Appropriations
in which DFC participates include
the U.S. International Climate Finance Plan, Power Africa,
and the trade-focused Prosper Africa. In addition to
supporting PGII, DFC also supports other international
efforts, such as partnering with other DFIs on COVID-19
pandemic responses, and supporting the Blue Dot Network,
an international infrastructure standards-setting initiative.
Select Issues for Congress
Mandates and Effectiveness.
While the BUILD Act
garnered widespread support as an opportunity to enhance
U.S. strategic competition with China, some policymakers
see both risks and opportunities for U.S. development

finance. Some Members continue to debate elevating
Source: CRS, based on P.L. 117-228 P.L. 117-328.
DFC’s role in countering China’s OBOR, the financing
Recent Activity. In FY2022, DFC made $7.4 billion in new
scale of which has been assessed to exceed that of DFC and
investment commitments (up from $6.8 billion in FY2021),
other major DFIs. Issues include whether to: tightly focus
resulting in a total projected portfolio of $35.7 billion (up
DFC on offering alternatives to OBOR support; give DFC
from $32.8 billion in FY2021). The FY2022 new
more resources to counter OBOR; emphasize particular
commitments spanned 183 new projects in 56 countries.
project-specific approaches (e.g., to exclude Chinese
DFC expects 131 of the new commitments to be in low-
suppliers from DFC projects, or focus on infrastructure and
and lower-middle-income economies. New commitments
projects with standards-setting potential); or use DFC to
seek to address various issues, such as climate, energy
help diversify critical U.S. supply chains.
security, food security, Russia’s war against Ukraine, small
Such efforts may raise tensions with DFC’s development
and women-owned business financing, and health system
mandate, which other Members seek to prioritize. Some
resiliency and pandemic preparedness. PGII support was
stakeholders argued that easing DFC’s income restrictions
69% of new FY2022 commitments. By region, the Western
for higher-income countries, for example, may diminish
Hemisphere and Sub-Saharan Africa have had the largest
development impact. Congress also may examine whether
shares of DFC’s active portfolio (see Figure 2).
DFC needs to adjust its approach to transparency to
Figure 2. DFC Active Portfolio by Region
improve the agency’s effectiveness and accountability.
Equity Authority. Some stakeholders express concern that
current budgetary treatment constrains DFC’s new equity
authority, which they view as a key tool for DFC to have
more flexibility to invest in firms in earlier growth stages,
partner more effectively with other DFIs, and support more
impactful investments. Such concerns prompted legislative

Source: CRS, with data from DFC website, accessed 4/13/23.
proposals in the 117th Congress to change such budget
Note: DFC-reported categories; country classification aligns with
treatment of equity, and the President’s FY2024 budget
State Department regions. DFC’s Central Asia category included
proposal for an equity revolving fund. Critics previously
under Asia; MENA=Middle East and North Africa; Global reflects
have voiced concerns that equity investments give the
projects that may operate in multiple regions.
government an undue stake in private enterprise.
DFC has taken steps to clarify or revise its operations and
International DFI Landscape. Congress may assess
decision-making. For example, DFC
DFC’s current cooperation with foreign DFIs on key policy
• Updated its ESPP in 2020 to remove an OPIC-era ban
goals, and consider whether to direct DFC to intensify such
on support for nuclear energy projects, and is now
cooperation or to seek to emphasize particular policy goals.
working on a broader update to align the ESPP more
Congress also may seek more authoritative information on
closely with the best practices and standards of its peer
how DFC compares with other foreign DFIs’ activities,
development finance institutions (DFIs).
policies, and impact. Data challenges may be especially
• Issued a development strategy in 2020 that set overall,
pronounced with respect to China.
sectoral, and geographic priorities, targeting $75 billion
Interagency Relations. Congress may seek to shape DFC’s
in catalyzed investments by 2025. It is also updating its
work with other federal foreign policy, aid, and trade
priorities, but the timeline is unclear.

agencies, and in particular, DFC’s ongoing linkages to
Launched an operational strategic plan for FY2022-
USAID. DFC’s agency relationships and interagency
2026, setting four key goals, oriented on private sector
engagement may signal DFC’s policy emphasis.
outreach, development impact, internal performance
management, and scaling up operations. The plan
For more, see CRS Report R47006, U.S. International
includes new priority sectors, subject to change.
Development Finance Corporation: Overview and Issues.
https://crsreports.congress.gov

U.S. International Development Finance Corporation (DFC)

Nick M. Brown, Analyst in Foreign Assistance and
Foreign Policy
Shayerah I. Akhtar, Specialist in International Trade and
Finance
IF11436


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https://crsreports.congress.gov | IF11436 · VERSION 8 · UPDATED