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US Introduces Legislation to Compete with China on Development Finance

 

On February 27, 2018, a new bill (BUILD Act of 2018) was introduced out of the Senate Foreign Relations committee to establish the United States International Development Finance Corporation which would enable private sector money and skills towards economic development activity in lower to middle income countries and countries transitioning from nonmarket to market economies in order to complement U.S. assistance and foreign policy objectives.

The new corporation would likely overlay the Overseas Private Investment Corporation (OPIC) and add a key investment focused bureau from USAID the Development Credit Authority (DCA) to be effective in (1.) making loans or loan guarantees, (2) invest in entities by purchasing equity, (3) Insure or reinsure private sector entities (3) provide technical assistance, (5) administer special projects, (6) establish enterprise funds, (7) issue obligations, and (8) charge service fees.  They are seeking to authorize the corporation to operate through the fiscal year 2038.  At $60 billion, USIDFC’s maximum contingent liability limit will be double that of OPIC

The Center for Strategic and International Studies (CSIS) recently facilitated a panel of experts to discuss the proposed Development Finance Corporation.  This discussion set out to answer several questions including the following: what would be the best institutional arrangement between USAID and the new IDFC? Should DCA, future enterprise funds, and the Private Capital Group move to the new IDFC? What are the benefits and what are the downsides of doing this?

The Proceeding are below:

If you have trouble accessing the link, you may access the proceedings directly from their webpage 

While the House Foreign Affairs Committee appoved their version of the bill out of committee the Senate Foreign Relations Committee held a hearing recently which is included below as well.

Improving Development Finance Senate Hearing, May 2018

 

 

 

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