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1 1 (February 22, 2022)

handle is hein.crs/govegua0001 and id is 1 raw text is: Congressional Research Servi informning thw IegisIathve debate sinco 1914 0 Updated February 22, 2022 U.S. International Development Finance Corporation (DFC) The U.S. International Development Finance Corporation (DFC) is a U.S. government agency that uses financial tools to promote private investment in less-developed countries. It seeks to support economic development, U.S. economic interests, and U.S. foreign policy aims. 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.), DFC emerged from congressional interest to enhance U.S. development finance tools and respond to China's One Belt, One Road (OBOR) initiative. DFC launched in December 2019. It assumed the functions of and replaced the Overseas Private Investment Corporation (OPIC) and the U.S. Agency for International Development's (USAID's) Development Credit Authority (DCA). DFC has expanded authorities, a higher lending cap of $60 billion, and a longer authorization of seven years. Organization. The BUILD Act vests DFC powers in a nine-member Board: a Chief Executive Officer (CEO); the Secretaries of State, the Treasury, and Commerce; the USAID Administrator; and four nongovernment members (for three-year terms, renewable once). Chaired by the Secretary of State, the Board oversees the agency, guides policy, and approves major DFC projects. It has delegated some powers to the CEO, who manages day-to-day operations. The Board meets quarterly, and a quorum is five members. Board members are presidentially appointed and Senate confirmed. On February 9, 2022, the Senate confirmed Scott A. Nathan, nominated by President Biden, to be the CEO of DFC (72-24 vote). Other DFC officers include the Deputy CEO, Chief Risk Officer, Chief Development Officer, and Inspector General (IG). DFC also established a new Chief Climate Officer position for climate finance efforts. Various offices, departments, and advisory units carry out DFC's functions. Authorities. DFC's authorities include * Direct loans and loan guarantees of up to $1 billion for terms between 5 and 25 years, subject to federal credit law and other requirements, for investment projects and funds. * Political risk insurance coverage of up to $1 billion against losses due to political risks (e.g., currency inconvertibility, expropriation, and political violence), and reinsurance to increase underwriting capacity. * Equity investment in specific projects or 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. DFC's activities are backed by the U.S. government's full faith and credit. DFC charges interest and other fees for its support. DFC considers potential activities through a competitive application process. Usage of DFC services depends on client demand, but the agency seeks to attract applications through sector-specific requests for proposals and other outreach activity. Separate from its BUILD Act authorities, DFC also has delegated lending authorities of the Defense Production Act (DPA, 50 U.S.C. §4501 et seq.) to support the domestic response to the Coronavirus Disease 2019 (COVID-19) pandemic. Requirements and Limitations. In general, DFC must prioritize support for low- and lower-middle-income economies. Upper-middle-income economy support may be approved if it is certified to have U.S. economic or foreign policy interests at stake and is designed for development impact. DFC is limited from investing in high-income countries, except for certain energy infrastructure projects in Europe and Eurasia (Div. P, Title XX, P.L. 116-94). DFC must give preference to projects involving U.S. persons as project sponsors or participants, as well as projects in countries complying with international trade obligations and embracing private enterprise. Projects must take into account factors relating to environmental and social impact, worker rights, and human rights, among other considerations. DFC also seeks to complement, and not compete with, the private sector. Policies and Processes. Pursuant to the BUILD Act, DFC sets and maintains internal policies to guide programs. DFC's corporate bylaws and all Board resolutions guide overall management and agency structure. DFC's Environmental and Social Policy and Procedures (ESPP) outline how DFC is to consider project applications and monitor ongoing projects. DFC uses a quantitative assessment tool, the Impact Quotient, to indicate likely development impact. A Transparency Policy is to guide DFC's public information processes, though it remains in draft form. DFC also monitors projects for credit risks and compliance with statutory and policy requirements. Funding. Congress appropriates funding for DFC through a Corporate Capital Account (CCA), consisting of appropriations and collections. DFC funding designates a portion of CCA collections that may be retained for operating expenses, and excess collections to date have been credited to the Treasury. DFC may transfer funds to the program account, which finances most DFC credit activities. USAID and the State Department may also fund DFC activities through a transfer. In FY2021, DFC's revenue exceeded its costs by $162 million, and it had corporate reserves of $6.2 billion in Treasury securities. Congress provided $569 million for DFC activities in FY2021 (see Figure 1), and the Biden Administration requested $601 million for FY2022. Congress has yet to enact full-year FY2022 appropriations.

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