A Senate plan for DFC reauthorization

As the clock ticks on the U.S. International Development Finance Corporation’s reauthorization, lawmakers and Trump administration officials are laying out their vision for what the agency should look like moving forward. Early this month, Sen. James Risch, the Republican from Idaho who chairs the Senate Foreign Relations Committee, introduced the DFC Modernization and Reauthorization Act of 2025 as an amendment to the National Defense Authorization Act, rather than as a stand-alone bill. It is a common practice to attach smaller pieces of legislation to larger must-pass bills. DFC, created by the 2018 BUILD Act, was authorized for seven years, with its mandate set to expire on Oct. 6, 2025. With only a few legislative days left, concerns are rising about whether it can be reauthorized in time — or whether, at minimum, a temporary extension will be approved to keep the agency operating. The Risch proposal shares some features with the Trump administration’s reauthorization plan, but key differences reveal diverging views over the agency’s role and how much oversight Congress will have. The Senate bill would expand DFC’s maximum contingent liability — to $240 billion from $60 billion — and allow investments in more countries, including high-income ones. Thus far, the DFC’s authority has been limited primarily to low- and lower-middle-income countries, with exceptions for upper-middle-income countries. The Trump administration proposed a broad authority to invest in high-income countries with little mention of development. But the Senate plan sets some guardrails and seems to seek to maintain the development focus. The bill would cap DFC’s contribution to any project in high-income countries at 25% of total project costs and limit such investments to 8% of the agency’s overall portfolio or maximum contingent liability. It would also require DFC to notify and justify high-income investments to Congress and provide an annual list of the countries where it plans to invest. “The corporation shall prioritize the provision of support … in less developed countries,” the bill states, defining those as nations with income levels at or below the World Bank’s graduation threshold — which still includes upper-middle income countries. DFC would also be required to create policies to evaluate the benefits of high- and advancing-income investments against criteria such as national security, strategic economic competitiveness, impact on the poorest populations, and private sector mobilization. DFC would be required to produce a strategic priorities plan every two years, guided in part by a new Congressional Strategic Advisory Group that would advise on investments, strategic priorities, and policies. For the two years starting Oct. 1, the Risch bill recommends that the agency focus on critical minerals, telecommunications, and opening or maintaining regional offices outside of the U.S. One of the thorniest issues in this reauthorization is equity. Under the current government financial “scoring,” equity is treated in a way that severely limits how many investments DFC can make. To address this, the Senate proposes creating a Development Finance Corporate Equity Investment Fund capitalized with $3 billion over several years, with authority to retain and reinvest earnings. The Trump administration has also recommended a similar revolving equity fund. While the administration sought less congressional oversight, the Senate plan has pushed back on those efforts. That includes maintaining current congressional reporting standards requiring notification for projects over $10 million rather than raising the threshold to projects over $100 million, as the administration had proposed. Other provisions of the bill: • Annual reports that include details about private capital mobilization, funding by income category, risk appetite — particularly in less developed countries and sectors. The report would require reporting on efforts by the CEO to incentivize calculated risk-taking by DFC staff, including through performance reviews and awards. • Prohibits investments in any “country of concern,” which includes Venezuela, Cuba, North Korea, Iran, China, Russia, and Belarus. • Requires compliance with the Government in Sunshine Act transparency requirements, including at least two public hearings annually. • Mandates a user-friendly, publicly available, machine-readable database with project-level information. • Retains the chief development officer role and adds a chief strategic investment officer. • Expands authority to hire outside the government pay scales to 70 from 50 positions. • Mandates an independent accountability mechanism with at least four full-time staff and an independent budget. • Requires prioritizing small- and medium-sized foreign financial institutions; institutions managing over $2 billion face additional reporting. • Authorizes grants up to $1 million for legal and technical assessments needed to prepare investments. • Allows subordinated loans under specific conditions — co-financing with other DFIs, greater private sector mobilization, or advancing development goals. Other loans should be provided on a senior basis or on equal terms to other senior debt. • Permits acceptance of environmental impact assessments from other vetted multilateral development institutions to streamline project reviews. • Requires DFC to maintain staffing levels sufficient to meet obligations and notify Congress before reducing staff or funding.