By Virginia Furness
LONDON (Reuters) -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.
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.
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 seen by Reuters.
Officials at the White House and the DFC did not immediately respond to requests for comment.
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.
BIGGER SECURITY FOCUS
The DFC was formed in 2019 with a mandate to mobilize private capital to address development challenges and advance U.S. foreign policy priorities in developing countries.
It committed $12 billion of investments in projects across food, energy, health and critical infrastructure in fiscal year 2024 and has total outstanding commitments of $49 billion.
DFC is now set to play a key role in a deal signed by the United States and Ukraine earlier this year that will give the United States preferential access to new Ukrainian mineral deals, in return for continued U.S. support for Ukraine’s response to the Russian invasion.
Ukraine is classified by the World Bank as an upper middle-income country.
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 fund will invest in strategically important sectors, particularly mining, hydrocarbons and infrastructure, the RFP said.
(Reporting by Virginia Furness; Editing by Richard Valdmanis and David Holmes)
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