United States International Development Finance Corporation
The United States International Development Finance Corporation (USIDFC or IDFC) will be an executive agency of the United States federal government responsible for providing foreign aid through the financing of private development projects. Its creation was mandated by the Better Utilization of Investments Leading to Development (BUILD) Act of 2018, which was signed into law by President Donald Trump on October 5, 2018. The IDFC consolidates the Development Credit Authority (DCA) of the U.S. Agency for International Development (USAID) with the Overseas Private Investment Corporation (OPIC), providing $60 billion in loans, loan guarantees, and insurance to U.S. companies that invest or operate in developing nations. The IDFC is slated to be operational by the end of 2019, pending the submission of a transition plan to Congress by the Trump Administration.
The official objective of the IDFC is to stimulate economic growth in less developed countries by promoting market-based, private-sector development, namely by providing capital to private investors to support commercial projects. The BUILD Act directs the agency to focus its efforts particularly on lower-income and lower middle income countries. The IDFC will more than double the lending capacity of the preceding OPIC and is granted more expansive powers, including the ability to:
- Make equity investments
- Provide technical assistance
- Use local currency loans, first loss guarantees, and small grants to reduce risk
- Raise the spending cap of investments to $60 billion
- Provide a seven-year authorization
- Create a "preference" for U.S. investors, rather than a requirement, thereby expanding partnership opportunities with foreign investors
- Initiate and support feasibility studies on proposed projects
These expanded measures and parameters will allow the IDFC to target countries that have traditionally had low investment activity due to instability and security concerns. By consolidating and replacing existing development aid programs, the agency is also intended to increase efficiency and cost effectiveness. The Act also stipulates that the IDFC's goal is to provide an alternative to "state-directed investments by authoritarian governments", which some analysts have identified as a reference to China's growing overseas aid.
As with existing federal aid agencies, the IDFC will fall under the purview of the executive branch and is officially aligned with the U.S. government's foreign policy and development goals. The BUILD Act gives the President and Congress wide latitude over the agency's organization, staffing, activities, and development priorities. The Trump Administration must submit a transition plan to Congress by February 1, 2019 that will detail the functions, assets, personnel, and initiatives of the IDFC.
- "President Donald J. Trump Signs H.R. 302 into Law". WhiteHouse.gov. White House. Retrieved 15 October 2018.
- Thrush, Glenn. "Trump Embraces Foreign Aid to Counter China's Global Influence". www.nytimes.com. The New York Times. Retrieved 15 October 2018.
- Runde, Daniel; Bandura, Romina. "The BUILD Act Has Passed: What's Next?". www.csis.org. Center for Strategic and International Studies. Retrieved 23 November 2018.
- "U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT ADMINISTRATOR MARK GREEN ON THE CREATION OF THE U.S. INTERNATIONAL DEVELOPMENT FINANCE CORPORATION (USIDFC)". USAID.gov. USAID -- Office of Press Relations. Retrieved 22 November 2018.
- Kliman, Daniel. "Leverage the new US International Development Finance Corporation to compete with China". thehill.com. The Hill. Retrieved 22 November 2018.