Congress set to pass foreign development aid overhaul

Congress set to pass foreign development aid overhaul
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Congress is expected to pass this week a bipartisan overhaul of the federal government’s development aid agency through crucial funding legislation due before the end of the month.

The House is slated to vote Tuesday on a bill to expand the types and amount of financial aid the U.S. government can provide for economic development projects in poorer nations. The measure is included in a bill to fund the Federal Aviation Administration (FAA) unveiled Friday by bipartisan House and Senate leaders.

Funding for the FAA expires on Sept. 30, and lawmakers are eager to avoid a shutdown at the agency or pass a stop-gap spending bill. The bill is expected to pass the House easily on Tuesday and clear the Senate by the end of the week.

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The Trump administration has backed the measure despite calling for steep cuts to other foreign aid programs in its annual budget proposals. But the White House and the bill’s supporters say the new agency would play a crucial role in curbing China’s efforts to expand its influence and acquire strategic ports and infrastructure centers near the U.S.

The development aid overhaul, known as the BUILD Act, would consolidate two foreign aid agencies into a new entity with broader and deeper financing power. The new agency would focus on projects that boost local economies in volatile regions, primarily targeting Central America, Africa and Southeast Asia.

The bill would create a new U.S. International Development Finance Corporation (IDFC) to replace the Overseas Private Investment Corporation (OPIC), which invests in and draws private capital to international development projects meant to advance U.S. interests. 

OPIC would be combined with several funds at the U.S. Agency for International Development that now support projects meant to boost economic growth in poor countries.

The new IDFC would be allowed to provide up to $60 billion in financing through a seven-year authorization and a new suite of financial tools to support power plants, ports and other infrastructure. While OPIC can only offer loans and political risk insurance, the IDFC could acquire equity in projects to help support them.

"We're getting left out of a lot of projects because we didn't have the ability to put equity into the projects,” OPIC President Ray Washburne told The Hill in May. "OPIC really hadn't changed since 1971, but financial tools in the world have changed dramatically in that time. Like anything, it's time for it to be reformed and redone."

Updated on Sept. 25, 2018 to correct the new agency's funding level.