Energy for Growth Hub
Memo Aug 26, 2025

Aligning US National Security with Global Economic Development: 10 recommendations for DFC reauthorization
Katie Auth, Todd Moss
Making Markets Work

BLUF: Both political parties generally agree on the importance of making the Development Finance Corporation (DFC) larger, faster, and better aligned with strategic US foreign policy goals. The key area still under debate is how to balance DFC’s national security interests with its other core mandate: catalyzing economic development in lower-income countries. We offer 10 recommendations to align these two goals and make the agency more effective.

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Note: This memo is an updated version of “BUILDing a DFC Fit for Purpose: Eight recommendations for a robust reauthorization of America’s development finance institution,” originally published on November 14, 2023. 

Urgency: DFC authorization expires October 7, 2025, unless Congress passes new legislation.

Relevance: With USAID dismantled and MCC’s future uncertain, maintaining DFC’s foundational focus on economic development is more important than ever. Using DFC’s unique tools to create jobs and spark economic growth in Asia, Latin America, and Africa is in America’s direct strategic interest. DFC enhances US influence at a moment when strategic competitors, like China, are doubling down. The highest priority changes boil down to three big things:

  • Release the shackles. Outdated rules and unnecessary bureaucracy stand in the way of DFC’s effectiveness. Congress should prioritize changes to improve the agency’s flexibility, simplicity, and speed.
  • Keep the focus on development. DFC should align with US foreign policy and national interests. But it must keep the bulk of its attention on promoting private sector solutions to improving economic outcomes in the world’s poorest markets. Congress should create strong incentives to strike the right balance.
  • Equip DFC to tackle energy security. Global energy markets are changing rapidly. Energy security, affordability, and reliability have never been more important. Congress should ensure the agency has the necessary tools and resources to improve energy supply, quality, and costs around the world.

The 10 Crucial Items on Our Reauthorization Priority List

Release the Shackles

  1. Unlock more capital by raising the maximum contingent liability to at least $200 billion. Expanding DFC lending capacity from $60 billion to $200 billion (or $250 billion as the White House proposes) would create space to engage in more projects. A larger envelope would come at zero cost to taxpayers, because DFC makes net profits on its loan portfolio. This is not asking Congress to spend more money, but rather asking Congress to raise DFC’s credit limit with the Treasury. A higher overall maximum would also allow the agency to invest in larger projects, since DFC’s founding legislation, the BUILD Act, limits any single transaction to 5% of the total portfolio. This is particularly crucial for strategic infrastructure and energy investments, especially in minerals and nuclear power.
  2. Establish a revolving fund for equity investments. Unlocking DFC’s ability to take equity stakes in projects has long been a shared bipartisan goal–stymied by the quirks of federal accounting rules. With a budget scoring fix languishing for years, key parties are coalescing around an alternative proposal to establish a revolving fund at the Treasury Department to enable equity investments. This workaround is a crucial step forward.
  3. Streamline approvals by raising the threshold for Congressional Notification to $50 million. DFC is currently required to notify Congress for informal approval whenever it considers providing a loan or guarantee greater than $10 million. But in recent years, at least two-thirds of DFC’s portfolio surpassed this threshold. This significantly slows the approval process and creates significant uncertainty for the agency’s private sector partners–especially during a period of political polarization. Raising the limit to $50 million would retain Congressional oversight for large projects, while smoothing approvals for the bulk of the agency’s portfolio.
  4. Bolster market confidence by extending reauthorization for 10 years. Uncertainty over DFC’s future has hurt US credibility by making us look like unreliable partners. If permanent authorization is off the table, ten years would provide more stability. Five is the bare minimum.

Keep the Focus on Development

  1. Limit investments in high-income countries to 5% of total exposure. The goal of opening up DFC support to high-income countries should be to ensure the agency has the necessary flexibility to make truly strategic investments that directly advance US interests—not to crowd out or minimize its primary focus on spurring growth in lower-income economies. Limiting investments in high-income countries to no more than 5% of the agency’s total portfolio would enhance flexibility while ensuring the bulk of investment stays focused on development. Congress should also insist on full transparency, with DFC reporting each year on investments by region and income group.
  2. Encourage DFC to take more risk. Historically, DFC (and its predecessor, OPIC) have worked to ensure that every project earns money back for the US taxpayer, often because it fears Congressional backlash. This prevents the agency from being able to engage in riskier—but highly strategic—sectors and geographies, including mining and minerals processing. Congress should include language encouraging DFC to responsibly increase its risk tolerance by using tools like equity and subordinated debt more often, and in riskier contexts. Congress could also clarify that the agency should ensure it makes money for the US taxpayer on a portfolio basis rather than avoiding risk on every individual project.

Equip DFC to Tackle Energy Security

  1. Free up the use of technical assistance. DFC officials have narrowly interpreted the use of grants to be allowed only when tied to specific commercial transactions in the pipeline. This unnecessarily hinders project development in a sector where much more attention should go  to building a pipeline of bankable deals. Congress should clarify that DFC technical assistance may be used for promising early-stage technologies and business models, even without a definitive pathway to specific future DFC financing.
  2. Encourage the agency to establish a team dedicated to early-stage project support. Energy has been a top priority for DFC under both Presidents Trump and Biden. But DFC struggles to finance energy projects because the pipeline of investment-ready transactions is limited. Congress should direct DFC to prioritize technical support for early-stage energy projects and propose mechanisms to build its own energy project pipeline.
  3. Accommodate nuclear projects by increasing the size limit on any single project from $1 billion to at least $5 billion. This would enable DFC to support an emerging energy technology in which US firms have a real shot at global leadership, if the US helps them prove their models, scale production, and export.
  4. Encourage the agency to cultivate technical expertise in key energy technologies. A dedicated liaison with expertise in key emerging energy technologies—particularly those in which US firms have a competitive advantage (including battery storage, advanced nuclear, enhanced geothermal) would help private firms streamline engagement and navigate US rules and requirements.