As Congress works to end the government shutdown, lawmakers must also confront a decision with major implications for U.S. development policy. The U.S. International Development Finance Corporation (DFC) has suspended operations alongside other nonessential agencies, and even after the shutdown ends, it cannot reopen without congressional reauthorization, which expired on October 6. At stake is whether the DFC remains a vehicle for mobilizing private investment in developing economies or instead evolves into a far more powerful instrument of U.S. industrial and strategic policy–one aimed at countering China’s global influence.
A New Mandate?
The DFC was created by the 2018 BUILD Act and began operations in December 2019. The idea behind it was to modernize U.S. development finance by expanding beyond traditional loans and guarantees to include equity investments and other tools, while aligning those efforts more closely with U.S. foreign policy objectives.
Since its inception, the DFC has expanded steadily. In fiscal year 2024, it committed more than $12 billion across 181 transactions (see nearby figure), with about 70 percent of those transactions located in low- and lower-middle–income countries. Its active-projects database includes a broad mix of investments, varying in size, sector, and geography.
DFC’s total portfolio and annual commitments have surged over the past five years, underscoring its growing importance as a tool of U.S. economic policy and diplomacy.
Source: U.S. International Development Finance Corporation, 2024 Annual Report
The DFC’s legal authority expired on October 6. Business groups like the U.S. Chamber of Commerce have urged lawmakers to pass either a short-term extension or a full reauthorization to keep the agency operating. But partisan divisions have stalled progress, driven in part by a Trump administration proposal to expand and reshape the DFC’s mission.
In July 2025, the administration proposed raising DFC’s contingent liability ceiling from $60 billion to $250 billion, while expanding the agency’s capacity to make larger equity investments and operate in higher-income countries. The Trump team also called for easing congressional approval requirements on major equity deals and, in the administration’s fiscal year 2026 budget, requested $3 billion to establish a revolving equity investment fund that would allow the DFC to reinvest its returns rather than rely solely on annual appropriations from Congress.
What’s at Stake
Adding to the debate is a broader White House initiative to increase federal ownership in strategic industries. The government has recently acquired equity stakes in several private firms, including MP Materials in rare earths, Intel in semiconductors, and Lithium Americas in critical minerals. Earlier this year, the Trump administration directed the Treasury and Commerce departments to develop a plan for a U.S. sovereign wealth fund. The proposal appears to have hit legal and structural obstacles, perhaps prompting the renewed focus on reshaping the DFC instead.
Complicating matters, China has recently tightened export controls on several rare-earth elements, restricting shipments critical to semiconductor production. In response, President Trump has threatened to impose steep new tariffs on Chinese imports, escalating the trade standoff and putting U.S. access to strategic minerals squarely at the center of the DFC reauthorization debate.
Without congressional action, the DFC will be forced to wind down its operations just as China asserts its global influence. A lapse in authorization would strip Washington of one of its key tools for mobilizing private investment in sectors such as energy, telecommunications, and critical minerals, areas vital to global development and also to the balance of economic power worldwide.
Even if Congress reauthorizes the agency, how the DFC is structured will determine its effectiveness. With the right reforms, it could better marshal private capital and serve as a credible alternative to China’s state-directed financing. The proposals now under debate offer a chance to modernize the institution and equip it for 21st-century challenges. If Congress acts, the DFC could emerge from the shutdown not weakened, but renewed as a central pillar of U.S. economic strategy abroad.
Source: https://www.forbes.com/sites/jamesbroughel/2025/10/12/americas-ambitious-but-at-risk-development-bank/
