December 10, 2024 (WASHINGTON) – This month marks the five-year anniversary of the creation of the U.S. International Development Finance Corporation (DFC). Established through the Better Utilization of Investments Leading to Development (BUILD) Act of 2018, the DFC was created because of strong bipartisan recognition that mobilizing more private investment in the developing world is vital for addressing a host of development needs and U.S. foreign policy priorities, including competition with China.
In its first five years, the DFC has built a portfolio nearing $50 billion, with over $12 billion in private financing commitments in Fiscal Year 2024 alone. The DFC’s investments span over 100 countries, across five continents. From preparing for the next pandemic by boosting vaccine production capacity and extending access to electricity to improving sourcing and processing of critical mineral that are vital for current and future technological innovation, DFC projects are mobilizing private sector capital that spurs economic growth, improves the lives of millions, and enhances U.S. national security.
The DFC’s investments also benefit key conservation initiatives, including through innovative debt-for-nature swaps such as the recent financing of El Salvador’s debt repurchase. The DFC, the Government of El Salvador, the Development Bank of Latin America and the Caribbean (CAF), Catholic Relief Services, and others, have partnered to secure $1 billion in financing for El Salvador’s repurchase of $1.03 billion in bonds at a discount. The savings will fund the$350 million Rio Lempa Conservation and Restoration Program, improving conservation, water security, and ecosystem restoration in the Lempa River Watershed.
As an early leader in 2016 calling for the creation of the DFC, MFAN has closely monitored its work over the past five years to ensure that the agency lives up to the intent of the BUILD Act. Those goals include maintaining a strong focus on investments that contribute to economic development in low-income and lower-middle-income economies and incorporating best practices in evaluation and transparency.
Early this year, in anticipation of congressional action on legislation to reauthorize the DFC, MFAN issued a comprehensive set of policy recommendations for strengthening the work of the agency. These include adjusting the scoring of the DFC’s equity authority to better reflect future returns, enabling far more early-stage investments in low- and lower-middle-income countries; increasing the agency’s risk appetite; and improving the transparency of the agency’s investment data.
This summer, the House Foreign Affairs Committee approved a comprehensive bipartisan bill to reauthorize and strengthen the DFC. MFAN was pleased the bill incorporated several important provisions from our recommendations. The leaders of the Senate Foreign Relations Committee have yet to put forward their reauthorization bill. With the end of this session of Congress just a couple weeks away, the reauthorization effort will have to wait until next year. All eyes will be on the Trump Administration and the new Congress to see where they stand on reauthorizing the agency. MFAN hopes reauthorization will be a priority for both ends of Pennsylvania Avenue next year in recognition of the DFC’s many contributions to U.S. foreign policy and development objectives.
