BUILD Act: Frequently Asked Questions About the New U.S. International Development Finance Corporation

International Development Finance Corporation (IDFC) is a wholly owned Government corporation established by the Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act). The IDFC consolidates and expands existing U.S. government development finance functions, primarily conducted by the Overseas Private Investment Corporation (OPIC) and some components of the U.S. Agency for International Development (USAID). The IDFC aims to advance U.S. influence in developing countries by incentivizing private investment as an alternative to a state-directed investment model. The IDFC has more tools to provide investment support compared to OPIC, including authority to make limited equity investments and provide technical assistance. It also has a higher capacity, with a $60 billion exposure cap compared to OPIC's $29 billion exposure cap. The IDFC has a longer authorization period, seven years compared to OPIC's year-to-year authorization through appropriations legislation. Additionally, the IDFC has more specific oversight and risk management, including its own Inspector General (IG), compared to OPIC, which is under the USAID IG's jurisdiction. The BUILD Act was enacted in response to China's Belt and Road Initiative (BRI) and China's growing economic influence in developing countries. The IDFC aims to increase the effectiveness and efficiency of U.S. government development finance functions, as well as achieve greater cost savings through consolidation. The IDFC is expected to become operational within 90 days after the President has transmitted the reorganization plan to Congress. The IDFC's mission is to support the development of emerging markets and promote economic growth, stability, and prosperity. The IDFC will be managed by a Board of Directors, which will be responsible for overseeing the corporation's operations and making strategic decisions. The IDFC will have a Chief Executive Officer (CEO) who will be responsible for implementing the corporation's policies and programs. The IDFC will also have an Inspector General who will be responsible for overseeing the corporation's risk management and oversight functions. The IDFC will have a range of financial authorities and tools, including the ability to make loans, guarantees, and equity investments. The IDFC will also have the authority to provide technical assistance and advisory services to support the development of emerging markets. The IDFC's activities will have U.S. government backing, and the corporation will be subject to certain terms and conditions of support. The IDFC will have an exposure limit of $60 billion and will be funded through a combination of appropriations and self-generated income. The IDFC will be authorized to operate in a range of countries, including those with significant economic and strategic importance to the United States. The IDFC will consider a range of factors when deciding whether to support projects, including the potential for economic growth and job creation, the potential for poverty reduction and improved living standards, and the potential for environmental and social benefits. The IDFC will also be subject to certain limitations on its support, including a requirement to avoid market distortion and a requirement to ensure that its activities are consistent with U.S. foreign policy objectives. The IDFC will be subject to a range of monitoring and transparency requirements, including the submission of annual reports to Congress and the publication of certain information on its website. The IDFC will also be subject to a range of performance measures and evaluation requirements, including the use of metrics to track the corporation's progress in achieving its development objectives.