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1 1 (February 20, 2020)

handle is hein.crs/govcafe0001 and id is 1 raw text is: FF. , iE SE .$r - & , February 20, 2020 U.S. International Development Finance Corporation (DFC) The U.S. International Development Finance Corporation (DFC), a wholly owned U.S. government corporation, is charged with promoting private investment in developing countries to support U.S. global development goals and economic interests. DFC seeks to transform U.S. support for private sector investment in less-developed countries. Part of the U.S. policy response to China's state-directed overseas financing model and its Belt and Road Initiative (BRI), DFC aims to promote a U.S. model that is market- driven and emphasizes transparency, environmental and social safeguards, and debt sustainability for partner countries. DFC aims to ensure projects produce positive developmental impacts, apply best practices with respect to environmental and social safeguards, and respect human rights, including worker rights. DFC was authorized by the Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act, P.L. 115-254). The BUILD Act consolidated all of the functions of the Overseas Private Investment Corporation (OPIC) (see text box) and the Development Credit Authority (DCA) function of the U.S. Agency for International Development (USAID), aiming to achieve greater cost-saving and efficiency. DFC launched operations after a funding delay that was resolved in late December 2019 with the enactment of the Further Consolidated Appropriations Act, 2020 (P.L. 116-94). New DFC vs. OPIC While DFC carries over OPIC's authorities and many of its policy requirements, some key distinctions include that DFC has: * more tools (e.g., authority to make limited equity investments, provide technical assistance, and conduct feasibility studies); * more capacity ($60 billion exposure cap vs. OPIC's $29 billion); * a longer authorization period (seven years vs. OPIC's year-to- year authorization in recent years); and * more specific oversight (e.g., its own Inspector General (IG) vs. OPIC, which was under USAID's IG). ~~r~~n zC~ rg wnztcon DFC is led by a nine-member Board of Directors, comprising a Chief Executive Officer (CEO), four other U.S. government officials (the Secretary of State, USAID Administrator, Secretary of the Treasury, and Secretary of Commerce, or their designees); and four nongovernment members, subject to presidential appointment and Senate confirmation. The Chairperson is the Secretary of State, and the Vice Chairperson is the USAID Administrator (or their designees). All DFC powers are vested in the Board, which provides direction and general oversight as well as authorizing major DFC decisions. The Board must meet no less than quarterly, and a quorum is five members. The CEO reports to the Board and is responsible for DFC operations and management. The Deputy CEO assists the CEO in these activities. The CEO and Deputy CEO are presidentially appointed and Senate confirmed. On September 26, 2019, the Senate confirmed Adam S. Boehler as the CEO. Other DFC officers include a Chief Risk Officer and Chief Development Officer (CDO), who are appointed by the CEO. DFC's activities are backed by the full faith and credit of the U.S. government. DFC charges fees and premiums for its support. The DFC currently offers the following products: * Direct loans and loan guarantees of up to $500 million and for terms up to 20 years, subject to federal credit law and other requirements. Under this authority, the DCA program facilitates lending to small and medium enterprises in developing countries by guaranteeing up to 50% of loans from local financial institutions that these lenders would otherwise deem too risky. * Political risk insurance to private sector entities and qualifying sovereign entities with coverage of up to $500 million against losses due to political risks (e.g., currency inconvertibility, expropriation, and political violence, including terrorism), and reinsurance to increase underwriting capacity. * Equity financing directly into specific projects as a 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. * Feasibility studies and technical assistance to support project identification and preparation, including for the energy sector, women's economic empowerment, microenterprise households, or other small business activities. To the maximum extent practicable, DFC must require cost-sharing by those receiving funds. DFC is allowed to provide support only if it is necessary to alleviate a credit market imperfection or to achieve a U.S. development or foreign policy goal. By statute, DFC must prioritize support for less-developed countries and restrict its support in upper-middle-income economies unless presidential certification and development benefit requirements are met. Among other factors, the BUILD Act requires that DFC must * give preferential consideration to projects involving private-sector entities that are U.S. persons (but has no requirement for a U.S. nexus); * give preferential consideration to countries complying (or making substantial progress to comply) with international trade obligations; ~fl:O~ gogmko 'pmg,\\m ggmm g 'M M X

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