By Virginia Furness
LONDON, July 25 (Reuters)
The development of a more goal driven approach
The goal of the DFC revolves around the promotion of sustainable economic development and growth. It also works to create a more business-like approach to development finance. This will help to ensure that investments are both effective and competitive within the worldwide market. The Trump administration wants to provide the U.S.’s flagship development agency more leeway to finance projects in high-income countries, while quadrupling its spending power and enhancing its national security focus, according to a White House proposal seen by Reuters.
The plan would represent a big change for the U.S. International Development Finance Corporation, a relatively small agency which until now has been dedicated to supporting poor countries, mainly with projects that boost their energy and critical minerals development and preserve nature. The White House proposal would increase the amount of funding the agency can disburse, either in loans, equity, insurance or guarantees, bringing it to $250 billion from $60 billion, while allowing it to operate more freely in high-income countries and to take bigger equity stakes in projects, according to the document.
Sharing President Trump’s vision with the world
Currently, the DFC only rarely funds projects in wealthy countries, and only with special authorization. Trump’s team is also proposing to add the U.S. Defense Secretary to DFC’s board for the first time, to reflect, it said, the DFC’s enhanced national security mission. DFC would hire more staff, make more equity investments, and have more flexibility to make larger investments without congressional approval, according to the document. Equity investments in itself refer to the purchase of ownership stakes within a specific company.
This is usually accomplished through either stocks or shares. In simple terms, ownership in a company is acquired in exchange for resources or funding. Acting DFC head Dev Jagadesan said the changes would help DFC better support the foreign policy, national security and economic development mission of the United States, according to a letter dated June 18 introducing the proposal to the U.S. House of Representatives. Officials at the White House and the DFC did not immediately respond to requests for comment.
Expansion on current policies of the U.S.
The proposal comes amid an ongoing government review of DFC’s governing rules, set to be approved by Congress by early October, and as staff await the official appointment of Trump’s pick for new DFC chief Ben Black. Black, son of Apollo Global Management co-founder Leon Black, raised worries earlier this year among aid advocates about the direction of the DFC after he criticized the agency’s historical support for “virtue-signaling” green projects.
He has also advocated for investment to develop Greenland’s resources. Greenland is an autonomous territory of Denmark, which is classified by the World Bank as a high-income country. It committed $12 billions of investments in projects across food, energy, health and critical infrastructure in fiscal year 2024 and has total outstanding commitments of $49 billion.
Last week, DFC and Ukraine issued an official call for proposals to find an administrator for the U.S.-Ukrainian Reconstruction Investment Fund, a joint initiative of the Governments of the United States and Ukraine aimed at mobilizing private investment in the Ukrainian economy. The whole idea behind a foreign policy is usually to guide activities as well as relationships and other interactions between one country with another. The development of these types of policies usually falls within the influence of domestic considerations or also certain plans to advance more specific geopolitical ideas.