House subcommittee urges prompt reauthorization of U.S. International Development Finance Corporation with equity, cap and transparency fixes

The House Foreign Affairs Committee’s East Asia and the Pacific Subcommittee opened a hearing Oct. 12 on reauthorizing the U.S. International Development Finance Corporation, emphasizing urgency as the agency approaches the end of its seven‑year authorization and nears its current $60 billion lending cap.

Committee leaders and a panel of witnesses told members that a prompt reauthorization should include changes to how DFC counts equity investments, a larger maximum contingent liability, clearer country‑eligibility rules and better coordination with other U.S. development tools to speed deal origination and improve competitiveness with China’s Belt and Road Initiative.

The hearing chair, Chairwoman Kim, told the panel that “in the fiscal year 2023, the DFC’s revenue exceeded cost by $341,000,000,” and noted the agency’s seven‑year authorization expires in October, raising urgency for Congress to act. Witnesses described a portfolio that has expanded rapidly since the BUILD Act created DFC, and said the statute’s original designers intended equity investments to be scored on a net present value basis rather than treated like dollar‑for‑dollar grants.

Former Rep. Ted Yoho, a panel witness and an author of the BUILD Act, said DFC’s central purpose is to help countries move “from aid to trade.” He and other witnesses argued that the Office of Management and Budget’s current treatment of direct equity investments—counting each dollar as a lost appropriation—undercuts DFC’s ability to use equity as a catalytic tool. “It was designed in the bill … it should be on a net present value basis,” Yoho said.

Rob Mosbacher, former CEO of DFC’s predecessor agency, said fixing equity scoring would increase the agency’s ability to attract private capital and recommended greater risk tolerance and more flexible authorities, including the ability to operate in additional countries where doing so advances U.S. strategic interests. Mosbacher urged congressional and agency leaders to allow net present value accounting for equity so DFC can leverage limited appropriations and mobilize more private investment.

Erin Collinson of the Center for Global Development urged prompt reauthorization and recommended a multiyear authorization to provide market certainty. She cautioned that while DFC could gain from some expanded flexibility, its principal development focus should remain on lower‑income countries where private capital is most scarce. “Reauthorize DFC promptly,” Collinson said, characterizing timely action as essential for deal continuity.

Members and witnesses discussed a package of commonly proposed changes: raising the maximum contingent liability (MCL) cap (suggestions in the hearing ranged from raising it to $120 billion up to proposals near $150 billion or higher), allowing DFC to work in a broader set of countries under defined conditions (including certification for upper‑middle income cases), speeding deal processing and expanding DFC’s overseas presence either through new offices or partnerships with like‑minded DFIs such as IDB Invest.

Committee members also pressed the panel on coordination with USAID and other agencies. Multiple witnesses warned that reductions or structural changes at USAID could hamper DFC’s ability to originate and monitor projects because USAID mission staff often served as “boots on the ground” for deal origination and early-stage de‑risking. Collinson said dismantling USAID would “make DFC’s job harder” by removing a source of field‑level deal origination and monitoring.

Energy and environmental policy surfaced as a substantive operational issue. Several members said DFC should not categorically exclude fossil‑fuel projects where those resources are the viable route to reliable baseload power in developing economies. Mosbacher and other witnesses argued for a pragmatic approach that balances environmental safeguards with host‑country energy needs, while preserving standards that avoid harmful social or environmental outcomes.

Witnesses emphasized DFC tools beyond lending and equity: political risk insurance was cited as critical for mobilizing private investors in fragile or conflict‑affected states, including Ukraine, where the panel noted DFC recently committed additional political risk insurance to support private investment. Members also discussed workforce needs at DFC, noting the agency’s target staffing and the challenge of recruiting market‑rate technical specialists needed to underwrite complex infrastructure and critical minerals projects.

Transparency and data availability drew questions from members worried about oversight. Committee members were directed to DFC’s public project datasets and to the foreignassistance.gov reporting requirements under the Foreign Aid Transparency and Accountability Act (FATA). Witnesses and members asked the agency to merge and improve project‑level data, publish ex post evaluations and provide timely reporting to Congress on portfolio composition by income level and region.

The hearing produced no formal votes. Lawmakers and witnesses left a clear common ground: Congress should move quickly on reauthorization and consider legislative and administrative fixes to equity scoring, a higher contingent liability cap, clarified country‑eligibility paths, improved transparency and stronger operational links with other development institutions to better crowd in private capital and compete with state‑led financing initiatives.

Looking ahead, members said subcommittee staff will continue to work with witnesses and the agency on drafting changes and that additional questions for the record will be circulated to the witnesses after the hearing ends.