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1 1 (January 12, 2021)

handle is hein.crs/govebra0001 and id is 1 raw text is: C o gr s io a R e ea c Ser ic 0 Updated January 12, 2021 U.S. International Development Finance Corporation (DFC) Overview The U.S. International Development Finance Corporation (DFC) is a new U.S. government agency that aims to promote private investment in developing countries to support U.S. global development, foreign policy, and economic interests. DFC emerged from a general congressional consensus, supported by the Trump Administration, to elevate U.S. efforts to respond to China's Belt and Road Initiative (BRI) and China's growing economic influence in developing countries, modernize U.S. development finance tools for private capital mobilization, and streamline bureaucracy. Authorized by the Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act, Div. F of P.L. 115-254, 22 U.S.C §9612 et seq.) for seven years through October 2025, DFC assumed the development finance functions of the Overseas Private Investment Corporation (OPIC, now terminated) and the U.S. Agency for International Development (USAID) Development Credit Authority (DCA). The BUILD Act also expanded its authorities and increased its exposure cap to $60 billion, compared to OPIC's former $29 billion exposure cap. DFC launched operations in December 2019. Structure and Organization 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, who is the Chairperson of the Board, the USAID Administrator, who is the Vice Chairperson, the Secretary of the Treasury, and the Secretary of Commerce, or their designees); and four nongovernment members (for three-year terms, renewable once). All Board positions are presidentially appointed and subject to Senate confirmation. All DFC powers are vested in the Board, which provides direction and general oversight, as well as approves major DFC decisions. The CEO acts on the Board's direction. The Board meets quarterly, and a quorum is five members. Other DFC officers include the Deputy CEO (also a Senate- confirmed, presidentially appointed position), Chief Risk Officer, Chief Development Officer, and Inspector General (IG). The Senate confirmed DFC's first CEO on September 26, 2019, and two nongovernment board members on December 26, 2020; it did not act upon other nominations, including for the Deputy CEO, in the 116th Congress. Authorities DFC's activities are backed by the full faith and credit of the U.S. government. DFC charges fees and premiums for its support. DFC attained the authorities of OPIC (financing, insurance, special projects) and USAID (technical assistance, enterprise funds), and also acquired new authorities under the BUILD Act (e.g., equity investment, feasibility studies)-discussed briefly below. * Direct loans and loan guarantees of up to $1 billion and for terms up to 25 years, subject to federal credit law and other requirements, for investment projects and funds. The Development Credit Office facilitates lending of up to $50 million to small and medium enterprises in developing countries. * Political risk insurance with coverage of up to $1 billion against losses due to political risks (e.g., currency inconvertibility, expropriation, and political violence, including terrorism), and reinsurance to increase underwriting capacity. * Direct equity investment into specific projects or in investment funds, with exposure limited to no more than 30% per project and 35% of overall DFC exposure. * Feasibility studies and technical assistance to support project identification and preparation. DFC must aim to require cost-sharing by those receiving funds. Requirements and Limitations By statute, DFC operates under the foreign policy guidance of the Secretary of State. The BUILD Act imposes various requirements and limitations on DFC support. 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. In general, DFC must prioritize support for less-developed countries, and the President must certify that U.S. economic or foreign policy interests are at stake to support upper-middle income countries. One exception is that DFC may support certain energy infrastructure projects in high-income parts of Europe and Eurasia (Div. P, Title XX, P.L. 116-94). Based on statute, DFC aims for projects to produce positive development impacts, apply best practices with respect to environmental and social safeguards, and respect human rights, including worker rights. Among other things, the DFC board must reject any project likely to have significant adverse environmental or social impacts unless DFC provides a public notification. DFC's Environmental and Social Policy and Procedures (ESPP) outline how DFC considers project applications and monitors ongoing projects. While initially carrying over OPIC's policies, DFC subsequently revisited them and issued an updated ESPP in July 2020, in which it removed OPIC's prohibition on support for nuclear energy projects. Appropriations Congress appropriates to DFC through a Corporate Capital Account (CCA), comprising collections from fees for services, interest earnings, returns on investments, and transfers of unexpended balances from predecessor agencies. Because DFC forecasts its collections to exceed outlays, Congress designates a portion of CCA collections that may be retained for operating and program expenses. Any excess collections are a net credit to the Treasury. ittps://Crsreports.congress.g(

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