OPIC, USAID, and Proposed Development Finance Reorganization

Summary

Members of Congress and Administrations have periodically considered reorganizing the federal government’s trade and development functions to advance various policy objectives. In its 2019 budget request, the Trump Administration included a proposal to consolidate the Overseas Private Investment Corporation (OPIC) and other agency development finance functions, specifically noting the Development Credit Authority (DCA) of the U.S. Agency for International Development (USAID), into a new U.S. development finance agency. The policy objectives that the new agency would aim to support include enhancing the efficiency and effectiveness of government functions and advancing U.S. national security interests.

In February 2018, two proposed versions of the Better Utilization of Investments Leading to Development (BUILD) Act, H.R. 5105 in the House and S. 2463 in the Senate, were introduced on a bipartisan, bicameral basis to create a new U.S. International Development Finance Corporation (IDFC). The nearly identical bills would consolidate all of OPIC’s functions and the DCA, enterprise funds, and development finance technical support functions of USAID. Stakeholders differ in their views of particular aspects of the proposal and certain issues remain open questions.

Congress would play a major role in any reorganization of federal development finance functions. The proposal to create a new U.S. government agency involves legislative, oversight, and appropriations functions. Key questions for Congress may include the following:

What are the rationales for and against modifying and expanding OPIC’s functions?

Should development finance functions be reorganized or should alternative approaches be considered?

If reorganization is pursued, how should a new development finance institution (DFI) be structured?

How should a proposed new DFI be funded?

What implications would a proposed new DFI have for USAID and U.S. development objectives?

How can adequate coordination be ensured between the new DFI and other U.S. government agencies involved in development?

What are the competitiveness and other strategic implications of the proposed DFI?