Young Helps Introduce Bill to Modernize U.S. Approach to Development Finance
Legislation Would Establish Single, Self-Sustaining U.S. International Development Finance Corporation
WASHINGTON, D.C. – U.S. Senator Todd Young (R-Ind.), a member of the Senate Foreign Relations Committee, joined Senators Bob Corker (R-Tenn.) and Chris Coons (D-Del.) yesterday in introducing bipartisan legislation to promote sustainable growth in developing economies through U.S. business investment and to provide more accountability for taxpayers at no expected cost. The legislation continues Senator Young’s leadership on development reform.
Last year, Senator Young co-chaired a Center for Strategic and International Studies (CSIS) Bipartisan Task Force focused on reforming and reorganizing U.S. development assistance in order to achieve increased efficiency and effectiveness. The Task Force’s final report identified the need to “crowd in” private investment in poor and fragile states, highlighted the difficulty these states confront in attracting private finance, and recommended that U.S. development finance entities be strengthened.
The Task Force’s report can be found here.
Senator Young said, “This legislation will help catalyze the power of the private sector to better promote development and fight poverty—all in a manner that recognizes the federal government’s fiscal constraints and serves our national security interests. I appreciate the opportunity to team-up with Senators Corker and Coons on this legislation, and I look forward to working to advance this legislation.”
The Better Utilization of Investments Leading to Development Act of 2018 (BUILD Act) would establish a single, full-service, self-sustaining international development finance entity to reform and streamline the tools of multiple agencies with an emphasis on free-market principles. The concept was outlined in the President’s FY 2019 budget request (p.81). The development finance corporation would leverage the U.S. private sector’s expertise and investment capital to generate economic growth in the developing world that will support American interests.
The BUILD Act would establish the U.S. International Development Finance Corporation (IDFC), assuming the activities of the Overseas Private Investment Corporation (OPIC), USAID’s Development Credit Authority, USAID’s Enterprise Funds, and USAID’s Office of Private Capital and Microenterprise. The IDFC would operate in low and lower middle-income countries where it furthers the U.S. national security and economic interests and where the project can be shown to have a demonstrable development outcome. Congress would maintain oversight of the IDFC by reviewing the agency’s public reports on its development impact and through independent audits and the establishment of an inspector general in the corporation.
The IDFC would have the authority to: issue direct loans, including local currency loans; issue guaranties, including local currency guaranties; provide political risk insurance; fund first losses; participate in equity investments; provide technical assistance; make limited grants to unlock larger investments; and attract private sector talent.
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