FAQs on BUILD Act Implementation
Q. What will the new agency be called?
- The U.S. International Development Finance Corporation will go by the acronym “DFC.”
Q. Why is the U.S. government creating a new agency?
- The Administration recognizes the important role of development finance to advance our development and foreign policy goals, as was articulated in the National Security Strategy. Yet the U.S. government’s development finance tools have not been significantly updated since OPIC’s inception in 1971. The new DFC will modernize the U.S. government’s capabilities to better partner with allies and provide financially-sound alternatives to state-led initiatives from countries like China.
Q. How will the DFC be different?
- Equity Authority: In addition to OPIC and DCA’s current financial capabilities (loans, loan guarantees, political risk insurance, and investment funds), DFC will have the ability to make limited equity investments. This will give the U.S. the “full suite” of financial tools, allowing the DFC to better partner with allies and partners for greater development impact.
- A Higher Investment Cap: The BUILD Act raises the total investment limitation for DFC to $60 billion - more than double OPIC’s $29 billion investment cap - along with increased oversight.
- Technical Assistance/Feasibility Studies: DFC will have the ability to provide technical assistance and conduct feasibility studies specific to development finance projects.
- Increased Integration and Coordination with the State Department and USAID: DFC will work side by side with State and USAID to leverage each other’s tools and international presence.
- Focus on the low-income and lower-middle income countries: Prioritizes low-income and low-middle income countries, where DFC’s services will have the greatest impact.
Q: How is this different than China?
- DFC will advance private-sector-led development, resulting in projects that adhere to high standards and are financially viable over the long haul. Contracts will be transparent, financing is sustainable, economic and social impacts are properly assessed, and projects will help the local economy in many ways.
- DFC will help countries sidestep opaque and unsustainable debt traps being laid by Beijing throughout the developing world and help more American businesses invest in emerging markets, including many places that are of key strategic importance to the United States.
Q. Is this a replacement for grant-based foreign aid?
- No. DFC will be a strong complement to the work of other U.S. government aid programs.
Q. What does this mean for EXIM Bank?
- DFC will be the U.S. Government’s development finance institution, and EXIM will continue to be its export credit agency.