The Overseas Private Investment Corporation: Background and Legislative Issues
Congressional research reportDec 22, 2016
Ask Donna
What actually matters in this document.
Text
The Overseas Private Investment Corporation:
Background and Legislative Issues
Shayerah Ilias Akhtar
Specialist in International Trade and Finance
Updated December 22, 2016
Congressional Research Service
7-....
www.crs.gov
98-567
The Overseas Private Investment Corporation: Background and Legislative Issues
Summary
The Overseas Private Investment Corporation (OPIC), a wholly owned U.S. government
corporation, is referred to as the U.S. development finance institution (DFI). It provides political
risk insurance, project and investment funds financing, and other services to promote U.S. direct
investment in developing countries and emerging economies that will have a development
impact. It operates under the foreign policy guidance of the Secretary of State. OPIC’s governing
legislation is the Foreign Assistance Act of 1961, as amended (22 U.S.C. §2191 et seq.).
Congress periodically has extended OPIC’s authority to conduct its programs. Over the past
several years, Congress has extended OPIC’s authority through appropriations law, most recently
through April 28, 2017 (FY2017 further continuing resolution, P.L. 114-254). The last multi-year,
stand-alone reauthorization took place in 2003 with legislation extending OPIC’s authority until
September 30, 2007 (P.L. 108-158). Congress also has appropriations, oversight, and other
legislative responsibilities related to OPIC.
OPIC’s programs are intended to promote U.S. private investment in developing countries by
mitigating risks, such as political risks (including currency inconvertibility, expropriation, and
political violence). Its financing and insurance are backed by the full faith and credit of the U.S.
government. Congress places statutory requirements on OPIC’s activities, such as those related to
the economic and environmental impacts of projects. OPIC support is available in over 160
countries around the world and across a range of economic sectors. According to OPIC, it
extended $4.4 billion in financing and insurance commitments in FY2015. OPIC also reported a
record high total exposure of nearly $20 billion at the end of that year. OPIC estimates that since
its inception in 1974, it has contributed to about $80 billion in U.S. exports and supported over
280,000 U.S. jobs.
The international context in which OPIC operates has evolved. Foreign direct investment (FDI)
flows have overtaken official development assistance (ODA) flows as a primary source of
external financing to developing countries. DFIs are playing a more active role in supporting
private sector capital flows to developing countries. The composition of DFI players, historically
dominated by developed countries, also has evolved, with emerging markets such as China
becoming more prominent.
OPIC states that it operates on a “self-sustaining basis,” using its own revenues, which include
user fees and interest from U.S. Treasury securities. Congress annually sets in legislation OPIC’s
maximum spending levels for its administrative and program expenses. The FY2016
appropriations act provided $62.8 million for OPIC’s administrative expenses to carry out its
credit and insurance programs and a transfer of $20 million from its noncredit account for credit
program costs. In FY2016, OPIC had a staff of 289 full-time equivalents (estimate).
OPIC presents a number of possible issues for Congress, a key one being whether to renew
OPIC’s authority and, if so, under what terms. Supporters highlight OPIC’s role in filling gaps in
private sector investment financing and political risk insurance and helping to level the playing
field for U.S. businesses vis-à-vis foreign competitors, while critics argue that OPIC is a form of
“corporate welfare,” with the private sector better suited to conduct such services, and question
OPIC’s development benefits. Other issues include OPIC’s financial product offerings, policies,
activity composition, and organizational structure.
Congressional Research Service
The Overseas Private Investment Corporation: Background and Legislative Issues
Contents
Background ..................................................................................................................................... 2
Origins ....................................................................................................................................... 2
Authorization Status .................................................................................................................. 3
Programs ................................................................................................................................... 3
Political Risk Insurance ...................................................................................................... 4
Investment Financing .......................................................................................................... 5
Investment Funds ................................................................................................................ 5
Other Activities ................................................................................................................... 6
Statutory and Policy Conditions for OPIC-Supported Projects ................................................ 6
Portfolio Exposure .................................................................................................................... 9
Commitments of Finance and Insurance Support .................................................................... 11
Budget ..................................................................................................................................... 13
Risk Management.................................................................................................................... 14
International Context for Development Finance ........................................................................... 15
Issues for Congress ........................................................................................................................ 19
Reauthorization ....................................................................................................................... 19
Product Offerings .................................................................................................................... 21
Policies .................................................................................................................................... 21
Activity Areas.......................................................................................................................... 22
Organizational Structure ......................................................................................................... 23
Figures
Figure 1. OPIC Portfolio Exposure: Statutory Limit and Actual Level, FY2000-2015 .................. 9
Figure 2. Composition of OPIC Portfolio Exposure, FY2015 ...................................................... 10
Figure 3. Change in Composition of OPIC’s Portfolio Exposure, FY2000 and FY2015 ............. 10
Figure 4. Net Official Development Assistance (ODA) and Foreign Direct Investment
(FDI), 1998-2015 ....................................................................................................................... 16
Tables
Table 1. Overview of Selected Statutory and Policy Requirements for OPIC ................................ 7
Table 2. Regional Distribution of OPIC’s New Commitments, FY2015 ....................................... 11
Table 3. OPIC Appropriations, FY2011-FY2017 .......................................................................... 14
Table A-1. OPIC Original Acts and Extensions of Authority, 1961-2007 ..................................... 26
Table B-1. Selected Development Finance Institutions (DFIs) ..................................................... 31
Appendixes
Appendix A. OPIC Authorization History..................................................................................... 25
Appendix B. Illustrative DFIs ....................................................................................................... 31
Congressional Research Service
The Overseas Private Investment Corporation: Background and Legislative Issues
Contacts
Author Contact Information .......................................................................................................... 32
Acknowledgments ......................................................................................................................... 32
Congressional Research Service
The Overseas Private Investment Corporation: Background and Legislative Issues
he Overseas Private Investment Corporation (OPIC) is a wholly owned U.S. government
corporation that seeks to promote economic growth in less developed economies through
the mobilization of private capital, in support of U.S. foreign policy goals.1 It is often
referred to as the U.S. government’s development finance institution (DFI).2
T
OPIC’s enabling legislation is the Foreign Assistance Act of 1961 (P.L. 87-195), as amended.3
The Foreign Assistance Act provides OPIC with authority to conduct its activities for a renewable
period of time (see Appendix A).4 Over the past several years, Congress has extended OPIC’s
authority through appropriations law. Most recently, an FY2017 continuing resolution extended
OPIC’s authority through April 28, 2017 (P.L. 114-254).
The Foreign Assistance Act directs OPIC to “mobilize and facilitate the participation of United
States private capital and skills in the economic and social development of less developed
countries and areas, and countries in transition from nonmarket to market economies ... under the
policy guidance of the Secretary of State.”5 OPIC works to fulfill its mandate by providing
political risk insurance, project and investment funds financing, and other services to promote
U.S. direct investment overseas. Its services are intended to mitigate the risks affecting U.S.
international investment, such as political risks (including currency inconvertibility,
expropriation, and political violence), for U.S. firms making qualified investments overseas.6
OPIC characterizes itself as “demand-driven,” providing services based on user interest. OPIC’s
activities may support U.S. exports, and it is involved in U.S. trade promotion interagency
processes and initiatives.7
Congress does not approve individual OPIC projects, but has authorization, appropriations,
oversight, and other legislative responsibilities related to the agency and its activities. Congress
authorizes OPIC’s ability to conduct its credit and insurance programs for a period of time that it
chooses; can amend or change its governing legislation as it deems appropriate; and approves an
annual appropriation for OPIC that sets an upper limit on the agency’s administrative and
program expenses, which are covered by OPIC’s own funds. The Senate confirms presidential
appointments to OPIC’s Board of Directors and to the OPIC positions of president and executive
vice president. The 115th Congress may take up a number of issues related to OPIC, chief of
1 For additional information, see OPIC’s website: http://www.opic.gov/.
2 As used in this report, the term DFI refers to an entity that provides officially backed (or government-backed) support
(e.g., through direct loans, loan guarantees, or insurance) for private sector investment in developing countries.
Development finance also can take place by other means that do not directly involve supporting the private sector. For
example, the World Bank Group’s International Bank for Reconstruction and Development (IBRD) and International
Development Association (IDA) provide financial support to middle- and/or low-income governments for development
purposes. For more information, see CRS Report R41170, Multilateral Development Banks: Overview and Issues for
Congress, by Rebecca M. Nelson. As another example, the U.S. Agency for International Development (USAID)
supports activities in developing countries working through recipient country governments and non-governmental
organizations, rather than directly with private investors. However, within the OPIC context, the term DFI generally
refers to the involvement of the private sector.
3 22 U.S.C. §2191 et seq.
4 22 U.S.C. §2195(a)(2). Appendix A, co-authored by Keigh E. Hammond, Research Librarian, provides a compilation
of original acts and extensions of authority for OPIC.
5 22 U.S.C. §2191.
6 U.S. Congress, House Committee on Foreign Affairs, Subcommittee on Terrorism, Nonproliferation, and Trade,
Testimony by Elizabeth Littlefield, President and CEO, OPIC, Hearing on “Trade Promotion Agencies and U.S.
Foreign Policy,” 114th Cong., 1st sess., May 19, 2015.
7 For example, OPIC has been a part of the interagency Trade Promotion Coordinating Committee (TPCC) (P.L. 102429) and the President’s Export Promotion Cabinet (“National Export Initiative,” Executive Order 13534 of March 11,
2010, 75 Federal Register 12433, March 16, 2010).
Congressional Research Service
98-567 · VERSION 39 · UPDATED
1
The Overseas Private Investment Corporation: Background and Legislative Issues
which could be whether to renew OPIC’s authority and, if so, under what terms. Congress also
may examine OPIC’s financial product offerings, policies, activity composition, and
organizational structure, among other issues.
This report is structured into three parts: (1) OPIC background; (2) international context for
development finance; and (3) key issues for Congress related to OPIC.
Background
Origins
The U.S. government’s role in overseas investment financing predates the formal establishment
of OPIC. The Foreign Assistance Act of 1961 (P.L. 87-195) authorized the President to issue
investment guarantees to support economic development overseas until June 30, 1964. Annual
Foreign Assistance Acts for 1964-1968 extended this authority on a single-year basis.
Then, in the Foreign Assistance Act of 1969 (P.L. 91-175), Congress established OPIC in law,
authorizing it until June 30, 1974. OPIC began operations in 1971 as a development finance
institution amid an atmosphere of congressional disillusionment overall with U.S. aid programs,
especially large infrastructure projects.8 In his first message to Congress on aid, President Nixon
recommended the creation of OPIC to assume the investment guaranty and promotion functions
that were being conducted by the U.S. Agency for International Development (USAID). President
Nixon also directed that OPIC would provide “businesslike management of investment
incentives” to contribute to the economic and social progress of developing nations.9
In creating OPIC, the Nixon Administration indicated that it was not attempting to end official
U.S. foreign assistance, because “private capital and technical assistance cannot substitute for
government assistance programs,” a combination that can provide “official aid on the one hand,
and private investment and technical assistance on the other.” Private investment activities,
however, were meant to complement the official assistance programs and, thereby, multiply the
benefits of both. In addition, market-oriented private investment was viewed as an antidote to the
government-oriented aid projects that were considered by some to be costly and inefficient. OPIC
was created as a first step in the eventual overhaul of the entire U.S. aid program. In 1973, this
overhaul was completed, as the United States largely abandoned infrastructure building and other
large capital projects in favor of humanitarian aid to meet basic human needs.10
8 On January 19, 1971, the President transferred rights and responsibilities, outlined in the Foreign Assistance Act, to
OPIC. See Executive Order 11579, “Overseas Private Investment Corporation,” 36 Federal Register 969, January 19,
1971.
9 Public Papers of the Presidents: Richard Nixon, Washington, U.S. Government Printing Office, 1969, p. 412.
10 More generally, U.S. foreign assistance continues to evolve. See CRS Report R40213, Foreign Aid: An Introduction
to U.S. Programs and Policy, by Curt Tarnoff and Marian L. Lawson.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
2
The Overseas Private Investment Corporation: Background and Legislative Issues
Authorization Status
OPIC operates on a renewable basis under the
Foreign Assistance Act of 1961, as amended
(22 U.S.C. §2191 et seq.). The Foreign
Assistance Act includes a provision
authorizing OPIC to perform certain functions
until its sunset date, which Congress has
periodically extended. That provision, in 22
U.S.C. §2195(a)(2), currently states, “The
authority of subsections (a), (b), and (c)
of section 2194 of this title [political risk
insurance, loan guarantees, and direct loans,
respectively] shall continue until September
30, 2007.”
Historical Trends
During 1961-2007, Congress extended OPIC’s
authority on numerous occasions on a multi-year basis,
generally ranging from two to four years. On some
occasions, Congress extended OPIC’s authority for a
shorter period during this time frame. (See Appendix
A for authorization legislation for the 1961-2007 time
frame.)
Extensions of OPIC’s authority occurred in various
forms, but appear to have had substantially the same
effect of allowing OPIC to continue operating. Some
extensions were through laws specifically listed in the
“Amendments” section to 22 U.S.C. §2195 (thus
amending the Foreign Assistance Act). These included
extensions in OPIC-specific legislation, legislation
focused on foreign affairs or international trade more
broadly, and appropriations legislation. Other
extensions, particularly in more recent years, took the
form of authorization “waivers” (as characterized by
OPIC) in appropriations acts that allowed OPIC’s
functions to remain in effect but did not amend OPIC’s
sunset date in the Foreign Assistance Act.
There appear to be a few “gaps” in legislation extending
OPIC’s sunset date, such as in 1981, 1985, and 1992.
These possible gaps in authority appear to have been
for a few weeks to a few months. Unlike the gap in
2008 (noted above), it is not clear whether these
possible gaps affected OPIC’s authority to conduct its
functions.
This sunset date reflects the last extension of
OPIC’s authority on a multi-year basis; the
OPIC Amendments Act of 2003 (P.L. 108158) extended OPIC’s authority for nearly
four years until September 30, 2007. Since
2007, OPIC generally has continued operating
based on extensions of its authority in
appropriations law, which OPIC has
characterized as authorization “waivers.”11
(One exception was a six-month period in
2008 when its authority lapsed.)12 These
“waivers” have occurred through consolidated
appropriations acts and continuing resolutions
(CRs). For instance, Section 7061(b) of the FY2016 Consolidated Appropriations Act extended
OPIC’s authority until September 30, 2016; it stated, “Notwithstanding section 235(a)(2) of the
Foreign Assistance Act of 1961, the authority of subsections (a) through (c) of section 234 of such
Act shall remain in effect until September 30, 2016” (P.L. 114-113). FY2017 CRs subsequently
extended OPIC’s authority, most recently through April 28, 2017.
Programs
OPIC categorizes its operations into three main programs—insurance, finance, and investment
funds—that are intended to promote U.S. private investment in less developed countries by
mitigating risks, such as political risks, for U.S. firms making qualified investment overseas.
OPIC’s authority to guarantee and insure U.S. investments abroad is backed by the full faith and
credit of the U.S. government and OPIC’s own financial resources.
While private sector markets exist for financing and insuring U.S. direct investment overseas,
there may be gaps in them due to “market failures” such as imperfect information, barriers to
entry, risk levels, and financial crises. OPIC’s primary objective in operating its programs is to
11 See, for example, OPIC, FY2017 Congressional Budget Justification, p. 17.
12 In 2008, OPIC’s authority expired for about six months (April-September 2008), during which time OPIC was able
to disburse funds for already committed projects, but unable to sign contracts for new projects. See OPIC, FY2009
Congressional Budget Justification, p. iii.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
3
The Overseas Private Investment Corporation: Background and Legislative Issues
promote economic development in low-income countries by supporting investment in projects,
economic sectors, regions, and countries that are underserved by private markets; and mobilizing
private investment in countries with viable project environments, but low credit ratings. For
example, individual firms may attach more risk to investing in developing economies due to
imperfect information and, thus, be unwilling to commit resources to investments in the least
developed countries without risk mitigation by OPIC through its programs.13
Political Risk Insurance
OPIC provides political risk insurance to safeguard investments against certain political risks
involved in investing in developing countries in three broad areas:
Currency inconvertibility coverage compensates investors if new currency
restrictions are imposed which prevent the conversion and transfer of remittances
from insured investments, but does not protect against currency devaluation.
Expropriation coverage protects U.S. firms against the nationalization,
confiscation, or expropriation of an enterprise, including actions by foreign
governments that deprive an investor of fundamental rights or financial interests
in a project for a period of at least six months. This coverage excludes losses that
may arise from lawful regulatory or revenue actions by a foreign government and
actions instigated or provoked by the investor or foreign firm.
Political violence coverage compensates U.S. citizens and firms for property and
income losses directly caused by various kinds of violence, including declared or
undeclared wars, hostile actions by national or international forces, civil war,
revolution, insurrection, and civil strife (including politically motivated terrorism
and sabotage). Income loss insurance protects the investor’s share of income
from losses that result from damage to the insured property caused by political
violence. Assets coverage compensates U.S. citizens and firms for losses of or
damage to tangible property caused by political violence. OPIC also has a
number of special programs that protect U.S. banks from political violence. This
type of insurance reduces risks for banks and other institutional investors, which
allows them to play a more active role in financing projects in developing
countries. Specialized types of insurance coverage also are available for U.S.
investors involved with certain contracting, exporting, licensing, or leasing
transactions that are undertaken in a developing country.
OPIC provides political risk insurance with terms of up to $250 million per project for up to 20
years, with premium rates guaranteed for the life of the contract. OPIC can insure up to 90% of a
qualifying investment; OPIC’s enabling legislation generally requires that investors bear at least
10% of the risk of loss.14 Political risk insurance from OPIC is available to U.S. citizens, U.S.
firms that are at least majority beneficially owned by U.S. citizens, foreign subsidiaries of U.S.
13 The role that OPIC plays in mitigating risks of investing overseas has some parallels to protections offered to
investors under U.S. international investment agreements (IIAs), which commonly take the form of bilateral investment
treaties (BITs) and investment chapters of free trade agreements (FTAs). For more information, see CRS Report
R44015, International Investment Agreements (IIAs): Frequently Asked Questions, coordinated by Martin A. Weiss.
14 22 U.S.C. §2197(f). See also, OPIC, “Political Risk Insurance: Extent of Coverage,” https://www.opic.gov/what-weoffer/political-risk-insurance/extent-of-coverage.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
4
The Overseas Private Investment Corporation: Background and Legislative Issues
firms as long as the foreign subsidiary is at least 95% owned by U.S. entities or citizens, or other
foreign entities that are 100% owned by U.S. entities or citizens.15
Investment Financing
OPIC’s investment financing program operates like an investment bank, customizing and
structuring a complete package for individual projects in countries where conventional financing
institutions often are unwilling or unable to lend on a basis that is competitively advantageous for
investors. OPIC provides financing to investors through direct loans and loan guarantees of up to
$50 million for up to 20 years. It has specific programs for small- and medium-sized enterprises
(SMEs). Most OPIC financing for a “non-financial” industry project (e.g., energy, manufacturing,
transportation) is used to cover capital costs, such as facility construction or leasehold
improvements, equipment, and design and engineering services associated with establishing or
expanding a project. For a financial industry project, OPIC may provide financing to support
lending capacity expansion, such as for microfinance, SME lending, or mortgage lending.16
To obtain OPIC financing, the venture must be commercially and financially sound and have
meaningful U.S. involvement. OPIC generally defines “U.S. involvement” as a U.S.-organized
entity that is 25% or more U.S.-owned, a foreign-organized entity that is majority U.S.-owned,
U.S. citizens, lawful permanent residents, and U.S.-organized non-profit organizations. U.S.
involvement in the project must be, at a minimum, equivalent to 25% of the project company’s
equity, which can be satisfied through equity investment, long-term debt investment, and/or other
U.S. contracts, such as franchises.17
The amount of OPIC’s participation may vary taking into consideration financial risks and
benefits. In general, OPIC limits its support to 50% of the total investment, but may provide up to
75% in certain circumstances. Rates and conditions on loans and guarantees depend on financial
market conditions at the time and on OPIC’s assessment of the financial and political risks
involved. Consistent with commercial lending practices, OPIC charges up-front, commitment,
and cancellation fees, and reimbursement is required for project-related expenses.
Investment Funds
Investment funds are privately owned and managed sources of capital that make direct equity
investments in portfolio companies in new, expanding, or privatizing companies in developing or
emerging markets. OPIC supports these funds through financing to supplement the equity that the
funds privately raise. In most instances, OPIC provides up to one-third of the fund’s total capital,
and receives debt returns on its investment. OPIC takes a senior creditor position.
OPIC supports these funds in situations where U.S. firms either cannot allocate or cannot raise
sufficient capital to start or expand their businesses overseas. OPIC solicits these funds through a
competitive “Call for Proposals” process that seeks investment funds focusing on the agency’s
development priorities, particularly in areas where investments have been difficult to obtain.
OPIC uses the “Call for Proposals” process to select fund managers with private equity
investment capability and experience. OPIC-supported investment funds cover a range of
15 OPIC, “U.S. Connection Requirements for OPIC-Supported Projects,” fact sheet, January 2016,
https://www.opic.gov/sites/default/files/files/us-nexus-fact-sheet-2016.pdf; and OPIC, “Insurance Eligibility
Checklist,” https://www.opic.gov/doing-business-us/applicant-screener/insurance-eligibility-checklist.
16 OPIC, “Financial Products,” https://www.opic.gov/what-we-offer/financial-products.
17 OPIC, “U.S. Connect Requirements for OPIC-Supported Projects,” fact sheet, January 2016.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
5
The Overseas Private Investment Corporation: Background and Legislative Issues
economic sectors, including financial services, insurance, housing, renewable energy, and
information technology.18
OPIC approved its first investment fund in 1987.19 The investment funds program has been
restructured periodically, such as in 2002, leading to the incorporation of the competitive
selection process through the “Call for Proposals” (discussed above).20
Other Activities
OPIC conducts outreach to raise awareness of its programs and services for U.S. investors. For
instance, OPIC offers workshops and seminars as part of its Expanding Horizons program to
address concerns over political risks in emerging markets and share information about its
programs and resources to support overseas investment. Expanding Horizons includes a focus on
supporting U.S. small businesses in expanding to overseas markets.21
Statutory and Policy Conditions for OPIC-Supported Projects
Congress does not approve individual OPIC projects, but sets forth specific statutory
requirements for OPIC in the Foreign Assistance Act of 1961 (22 U.S.C. §2191 et seq.), as
amended. OPIC also has various policy requirements for its support (see Table 1).
OPIC investment support falls outside of the international rules of the OECD Arrangement on
Officially Supported Export Credits (the Arrangement)—which establishes guidelines for
member countries’ export credit agencies (ECAs), such as the Export-Import Bank of the United
States (Ex-Im Bank).22 The Arrangement establishes limitations on terms and conditions of
ECAs, including on minimum interest rates, maximum repayment terms, notification procedures,
and reporting requirements for government-supported export credit activity that is directly tied to
exports.23 Among other things, the Arrangement does not apply to investment support not directly
linked or tied to procurement from the United States.24 Although OPIC’s activities are considered
to fall outside of the OECD Arrangement, they nevertheless may contribute to U.S. exports.
18 OPIC, “Investment Funds,” http://www.opic.gov/what-we-offer/investment-funds.
19 U.S. General Accounting Office (now General Accountability Office, GAO), Overseas Investment: The Overseas
Private Investment Corporation’s Investment Funds Program, GAO/NSIAD-00-159BR, May 2000.
20 Ibid.
21 OPIC, “Expanding Horizons,” http://www.opic.gov/media-connections/events-speakers/expanding-horizons.
22 According to the OECD, an ECA is an “agency in a creditor country that provides insurance, guarantees, or loans for
the export of goods and services.” ECA activities may be in low-income countries but generally do not have
development-related objectives, although they may have a development impact. See Kaori Miyamoto and Kim Biousse,
Official Support for Private Sector Participation in Developing Country Infrastructure, OECD, OECD Development
Co-operation Working Papers No. 19, 2014, p. 16.
23 The role of the OECD Arrangement is to help “level the playing field” so that decisions to purchase goods and
services are based on price and quality, rather than financing terms. See CRS Report R43671, Export-Import Bank:
Frequently Asked Questions, coordinated by Shayerah Ilias Akhtar.
24 Ex-Im Bank, Report the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United
States, for the period January 1, 2014 through December 31, 2014, June 2015, p. 7.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
6
The Overseas Private Investment Corporation: Background and Legislative Issues
Table 1. Overview of Selected Statutory and Policy Requirements for OPIC
Requirement
Description
Statutory Basis
Mandate
OPIC’s mandate is “[t]o mobilize and facilitate the participation of
United States private capital and skills in the economic and social
development of less developed countries and areas, and countries in
transition from nonmarket to market economies, thereby
complementing the development assistance objectives of the United
States... under the foreign policy guidance of the Secretary of State.”
22 U.S.C. §2191
Repayment
OPIC is directed to operate “on a self-sustaining basis, taking into
account in its financing operations the economic and financial
soundness of projects[.]”
22 U.S.C. §2191(a)
OVERALL
TRANSACTION-SPECIFIC
U.S.
Connection
According to OPIC, projects that it supports must have “meaningful
involvement” by a U.S. citizen or business. OPIC’s enabling legislation
defines the term “eligible investor,” and its policies provide further
specifications.
22 U.S.C. §2198(c)
Economic
Impact
In determining whether to provide support, OPIC shall “be guided by
the economic and social impact and benefits” of the project, and seek
to support “those developmental projects having positive trade
benefits for the United States[.]” OPIC must decline support if it
determines that overseas investment may reduce employment in the
United States, either because the U.S. firm shifts part of its production
abroad, or because output from overseas investment will be shipped to
the United States and “reduce substantially the positive trade benefits”
of the investment.
22 U.S.C. §2191(1);
22 U.S.C. §2191(i),
(k)-(m)
Environmental
Impact
OPIC generally is barred from participating in projects that pose an
“unreasonable or major environmental health, or safety, hazard....” The
Board of Directors cannot vote in favor of any project likely to have
"significant adverse environmental impacts that are sensitive, diverse,
or unprecedented" unless at least 60 days before the date of the vote,
an environmental impact assessment of the project is conducted and
made publicly available.
22 U.S.C. §2191(n);
22 U.S. §2191a(b)
Worker Rights
Projects can be implemented only in countries that currently have, or
are taking steps to adopt and implement, laws that uphold
internationally recognized worker rights. A national economic interest
determination waiver is possible by the President of the United States.
22 U.S.C. §2191a(a)
Human Rights
OPIC is required to take into account in conducting its programs in a
country, in consultation with the Secretary of State, “all available
information about observance of and respect for human rights and
fundamental freedoms in such country and the effect the operation of
such programs will have on human rights and fundamental freedoms in
such country.”
22 U.S.C. §2199(i)
Small Business
To the “maximum degree possible consistent with its purposes,” OPIC
must give preferential consideration to projects involving U.S. small
business and to increase the proportion of projects significantly
involving U.S. small business to at least 30% of certain of its activity.
22 U.S.C. §2191(e)
Congressional Research Service
98-567 · VERSION 39 · UPDATED
7
The Overseas Private Investment Corporation: Background and Legislative Issues
Requirement
Description
Statutory Basis
Additionality
It is OPIC policy that its activities should complement, rather than
compete with, the private sector, i.e., transactions that would
otherwise be impossible or unlikely without its support.
FOCUS AREAS AND LIMITATIONS
Less
Developed
Countries
OPIC must give preferential consideration to investment projects in
less developed countries and restrict its support in other higherincome countries. However, OPIC, based on legislative history,
interprets the statutory requirement as allowing it to support projects
in higher income countries that are highly developmental, focus on
underserved areas or populations, or support U.S. small business.
22 U.S.C. §2191(2)
Renewable
Energy
FY2010 appropriations language directed OPIC to “issue a report, not
later than 180 days after December 16, 2009, highlighting its substantial
commitment to invest in renewable and other clean energy
technologies and plans to significantly reduce greenhouse gas emissions
from its portfolio,” with the proviso that “such commitment shall
include implementing a revised climate change mitigation plan to
reduce greenhouse gas emissions associated with projects and subprojects in the agency’s portfolio as of June 30, 2008 by at least 30
percent over a 10-year period and by at least 50 percent over a 15year period.” (See “Coal-fired Power Plants” section immediately
below.)
P.L. 111-117,
§7079(b); 22 U.S.C.
§2191b
Coal-fired
Power Plants
Since FY2014, appropriations legislation has prohibited the use of
OPIC funds under certain conditions, for the enforcement of any rule,
regulation, policy, or guidelines implemented pursuant to:
See, e.g., P.L. 114-113
, §7080(4)
OPIC's greenhouse gas emissions reductions policy, based on
FY2010 appropriations language (see above); and
OPIC's proposed modification to its Environmental and Social
Policy Statement (ESPS) related to coal.
Sub-Saharan
Africa
The Board of Directors is directed to take “prompt measures” to
increase OPIC programs and financial commitments in sub-Saharan
Africa.
Country
Restrictions
“From time to time, statutory and policy constraints may limit the
availability of OPIC programs in certain countries, or countries where
programs were previously unavailable may become eligible.”
Sectoral and
Product
Restrictions
OPIC has “categorically prohibited sectors” based on economic,
environmental, and other policy, e.g., projects established as a result of
reducing or terminating U.S.-based operations.
22 U.S.C. §2193(e)
Source: OPIC’s enabling legislation (22 U.S.C. §2191 et seq.), OPIC publications, GAO, Overseas Private
Investment Corporation: Additional Acts Could Improve Monitoring Processes, GAO-16-64, December 2015, p. 10.
Notes: Descriptions provide summaries of the requirements and may not be comprehensive.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
8
The Overseas Private Investment Corporation: Background and Legislative Issues
Portfolio Exposure
The statutory limit on the total contingent liability (“portfolio exposure”) for OPIC’s financing
and insurance is $29 billion.25 In FY2015, OPIC’s portfolio had a total exposure of nearly $20
billion, distributed across geographic regions (see Figure 1 and Figure 2).26 OPIC attributes the
growth in its exposure in recent years to a combination of OPIC’s efforts to “extend its
development reach, capitalize on the growing appreciate for development finance and collaborate
with more partners.”27
Figure 1. OPIC Portfolio Exposure: Statutory Limit and Actual Level, FY2000-2015
Source: CRS, based on data from OPIC annual reports, various years.
Notes: OPIC’s statutory limit on its exposure is provided in 22 U.S.C. §2195(a).
25 22 U.S.C. §2195(a). According to OPIC, its exposure includes undisbursed commitments (obligations) and
maximum contingent liability under OPIC’s current insurance contracts.
26 Annual Management Report of the Overseas Private Investment Corporation for Fiscal Years 2015 and 2014, p. 3.
27 OPIC 2015 Annual Report, p. 12.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
9
The Overseas Private Investment Corporation: Background and Legislative Issues
Figure 2. Composition of OPIC Portfolio Exposure, FY2015
Source: CRS, based on OPIC FY2015 data.
Notes: OPIC reported an overall portfolio exposure of $19.93 billion at the end of FY2015. According to OPIC,
the insurance stop-loss adjustment “represents the difference between the aggregate coverage amount and
OPIC’s actual exposure under these contracts.”
The composition of OPIC’s portfolio by financial product type has evolved. In earlier years,
political risk insurance constituted the larger share of OPIC’s portfolio, but this share has
declined as the global private political risk insurance market has developed and expanded.28 In
contrast, investment financing has constituted the larger share of OPIC’s portfolio (see Figure
3).29
Figure 3. Change in Composition of OPIC’s Portfolio Exposure, FY2000 and FY2015
Billions of U.S. Dollars
Source: CRS, based on OPIC data.
28 OPIC, “Why Political Risk Insurance is Critical to the Global Economy,” OPIC blog, February 23, 2016.
29 OPIC 2015 Annual Report, p. 30. Investment financing reflects combination of investment funds and finance.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
10
The Overseas Private Investment Corporation: Background and Legislative Issues
Note: “Investment Finance” includes direct loans, loan guarantees, and investment funds.
Commitments of Finance and Insurance Support
In FY2015, OPIC made $4.4 billion in new commitments for investment projects. OPIC
estimates that the 100 new projects it supported in FY2015 will bring $14.2 billion in new
investment in 38 developing or emerging markets and create 20,000 permanent jobs in these host
countries over the next five years. In terms of U.S. benefits, OPIC expects that its FY2015
commitments will support, over a five-year period, 401 U.S. jobs through the procurement of
$264 million in goods and services from the United States.30 OPIC prioritizes its works based on
U.S. foreign policy and development objectives, but is also demand-driven.
In FY2015, OPIC support was available in 161 developing and emerging economies and OPIC
had active projects in about 100 countries.31 In terms of regions, sub-Saharan Africa represented
the largest share of OPIC’s new commitments both by value and number of commitments,
followed by the Asia-Pacific region (see Table 2).
Table 2. Regional Distribution of OPIC’s New Commitments, FY2015
Value ($ millions)
Number
Sub-Saharan Africa
$1,830
26
Asia and the Pacific
$1,050
17
Middle East and North Africa
$558
12
Latin America and the Caribbean
$423
23
Eastern Europe
$144
12
Multiple Regions
Not specified
10
Source: OPIC, FY2015 annual report and annual development impact report.
Notes: Regional categories vary among the two reports.
According to OPIC, the world’s poorest countries (e.g., Rwanda, Cambodia, and Haiti)
constituted close to half of its financial commitments in FY2015.32 OPIC reported that about onethird of its new FY2015 commitments by number were for projects in low-income countries
(33%), the rest being in middle-income countries (46%) and high-income countries (21%)—
based on statutorily defined country-income levels for OPIC.33 Regarding prior years, according
to GAO, between FY2008 and FY2014, OPIC’s new commitments for projects in low per capita
income countries constituted about 34% of its total new commitments by number and 25% by
value, with the remainder directed middle- and high- per capita income countries (also based on
30 OPIC, Annual Report on Development Impact, Fiscal Year 2015, pp. 2-3, 16.
31 According to OPIC, “[f]rom time to time, statutory and policy constraints may limit the availability of OPIC
programs in certain countries, or countries where programs were previously unavailable may become eligible.” For
example, OPIC suspended its programs in China following the 1989 crackdown on Tiananmen Square protestors.
Department of State, 2015 Investment Climate Statement China, July 5, 2016.
32 OPIC 2015 Annual Report, p. 5. OPIC does not specify if this is financial commitments by number or value.
33 OPIC 2015 Annual Report, p. 7. Section 231 of the FAA of 1961, as amended (U.S.C. §2191(2)), defines lowincome countries as those with per capita incomes (gross national product, GNP) of $984 or less in 1986 dollars. OPIC
considers middle-income countries as those with per capita GNP of $984 to $4,268 in 1986 dollars, and high-income
countries as those with per capita GNP above $4,268 in 1986 dollars.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
11
The Overseas Private Investment Corporation: Background and Legislative Issues
the statutorily defined country-income levels).34 In comparison, a separate study observes that
when using World Bank-based classifications of country-income level, on a year-on-year basis for
2000-2014, the share of OPIC’s commitments directed to the poorest countries has trended
downward, while the share of OPIC’s commitments directed toward higher-income countries in
the OECD (e.g., Chile, Israel, Mexico, Turkey) has increased, with much of the support focused
on renewable energy projects.35 According to the study, the decline in the share of the poorest
countries could be attributed to certain “macro-level trends,” the existence of fewer low-income
countries now than before as countries develop economically, and many of the remaining lowincome countries being small, fragile states.
OPIC is active in a range of economic sectors. In FY2015, the financial services sector accounted
for the largest share (49%) of OPIC projects, with the majority of such projects focused on
supporting SME and microfinance institution lending. The second-largest sector for OPIC
projects was energy (19%).36 OPIC reported committing close to $1.1 billion for renewable
energy projects specifically in FY2015.37 Other sectors in which OPIC is involved include
manufacturing, infrastructure, services, agriculture, education, information technology, and
health.
OPIC aims to expand U.S. SME involvement in overseas investment. In FY2015, U.S. SMEs
accounted for nearly 75% of projects receiving OPIC support. OPIC also has focused on
expanding financing available to SMEs in developing countries and emerging markets.
Examples of OPIC Participation in Administration Foreign Policy Initiatives
In response to political change in the MENA region, OPIC pledged $2 billion of financial support to “catalyze
private sector development” in the region and an additional $1 billion to support infrastructure and job creation
specifically in Egypt.38 As part of these efforts, OPIC, for example, approved $500 million in lending to Egypt and
Jordan ($250 million to each country) to support small businesses in those countries.39
The U.S.-Africa Clean Energy Finance (ACEF) Initiative—a joint mechanism by OPIC, along with the
Department of State and the Trade and Development Agency (TDA)—is a four-year, $20 million program
launched in June 2012 to catalyze private sector investment in the African clean energy sector by identifying and
providing financing for project development costs. In 2013, OPIC dedicated a staff member for South Africa to
support the initiative.40
The U.S.-Asia Pacific Comprehensive Partnership for a Sustainable Energy Future, announced during the
2012 East Asia Summit, is an initiative that includes up to $6 billion from federal trade and investment promotion
34 GAO, Overseas Private Investment Corporation: Additional Actions Could Improve Monitoring Processes, GAO-
16-64, December 2015, pp. 9-11.
35 Benjamin Leo and Todd Moss, Inside the Portfolio of the Overseas Private Investment Corporation, Center for
Global Development (CDG), CGD Policy Paper 81, April 2016, pp. 9-10.
36 OPIC, Annual Report on Development Impact, Fiscal Year 2015, p. 9. The report does not specify whether the
sectoral breakdown is by number or value of new commitments. However, past annual development impact reports
typically have focused on the number of new commitments.
37 OPIC 2015 Annual Report, p. 6.
38 OPIC, “OPIC to Provide Up to $2 Billion for Investment in Middle East and North Africa,” press release, March 11,
2011; and Office of the Press Secretary, “Remarks by the President on the Middle East and North Africa,” The White
House, State Department, Washington, DC, May 19, 2011.
39 OPIC, “OPIC Board Approves $500 Million for Small Business Lending in Egypt and Jordan,” press release, July 1,
2011.
40 John Morton, “U.S.-Africa Clean Energy Finance Initiative – Supporting renewable energy to power Africa,” OPIC,
blog, January 13, 2015; and U.S. Diplomatic Mission to South Africa, “OPIC to dedicate staff member for South Africa
in 2013,” press release, October 16, 2012.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
12
The Overseas Private Investment Corporation: Background and Legislative Issues
agencies to finance exports and investments related to energy infrastructure in the region.41 OPIC stated that it
will provide up to $1 billion in financing for sustainable power and infrastructure projects in the region, in support
of the initiative.42
Power Africa, announced by the President in June 2013, is an initiative to double access to power in sub-Saharan
Africa through U.S. government commitments of more than $7 billion. OPIC has surpassed its initial target of $1.5
billion in commitments and now has an enhanced goal of committing an additional $1 billion for the initiative by
2018.43
Look South, announced in January 2014, is a Department of Commerce-led federal government initiative to help
more companies do business with Mexico and the United States’ other free trade agreement partners in Latin
America. Among other things, it aims to increase availability and awareness of investment tools through OPIC.44
Budget
Congress directs OPIC to operate “on a self-sustaining basis, taking into account in its financing
operations the economic and financial soundness of projects.”45 OPIC’s budget is funded from its
offsetting collections, which are derived from the premiums, interest, and fees generated from its
insurance and finance services and the accumulated interest generated from the agency’s
investment in U.S. Treasury securities.46 Its budget is composed of noncredit and credit accounts,
in conformity with the standards set out in the Federal Credit Reform Act of 1990 (FCRA). The
noncredit portion relates to OPIC’s political risk insurance program, while the credit portion is
comprised of OPIC’s direct and guaranteed loans. OPIC uses premium income and the interest it
accrues from the assets in its noncredit account to fund the direct and indirect expenses in its
noncredit and credit accounts.
While OPIC has the authority to spend from its own revenue to cover its operations, Congress
and the President set OPIC’s maximum spending levels for its administrative and program
expenses through the annual appropriations process. The FY2016 appropriations act provided
$62.8 million for OPIC’s administrative expenses to carry out its credit and insurance programs
and a transfer of $20 million from its noncredit account for credit program costs. In FY2016,
OPIC had a staff of 289 full-time equivalents (estimate) (see Table 3).
41 The White House, “Fact Sheet on the U.S.-Asia Pacific Comprehensive Partnership for a Sustainable Energy,” press
release, November 20, 2012.
42 OPIC, Congressional Budget Justification – Fiscal Year 2016, p. 16.
43 For more information, see CRS Report R43593, Powering Africa: Challenges of and U.S. Aid for Electrification in
Africa, by Nicolas Cook et al.
44 Department of Commerce, “Fact Sheet: Look South Initiative,” January 9, 2014.
45 22 U.S.C. §2191(a).
46 Prior to FY1992, OPIC relied exclusively on resources controlled outside the annual appropriations process (fees and
interest on Treasury securities) to fund its operations. With federal government credit reform, however, OPIC was
required to receive an appropriation based on an estimate of its credit programs (direct loans and guarantees). From
1992 to 1994, OPIC received an appropriation to cover its operations from the General Fund of the U.S. Treasury and
reimbursed the amount of that appropriation from its collections. For FY1998 and beyond, OPIC’s appropriations
language provides OPIC with the authority to spend their own collections, without the need for a General Fund
appropriation.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
13
The Overseas Private Investment Corporation: Background and Legislative Issues
Table 3. OPIC Appropriations, FY2011-FY2017
FY11
FY12
FY13a
FY14
FY15
FY16
FY17
Amount requested
$53.9
$57.9
$60.8
$71.8
$71.8
$83.5
$88.0
Amount appropriated
$52.3
$54.99
$54.99
$62.6
$62.8
$62.8
CRb
Amount requested
$29.0
$31.0
$31.0
$31.0
$25.0
$20.0
$20.0
Amount appropriated
$18.1
$25.0
$25.0
$27.4
$25.0
$25.0
CRb
205
220
229
223
257
289c
350c
Noncredit Account:
Administrative expenses ($mn)
Credit Account:
Program expenses ($mn)
Staff
Direct civilian full-time equivalents
Source: Budget of the United States Government and appropriations legislation, various years.
Notes:
a. Data for amounts appropriated do not reflect sequestration reduction.
b. CR: The further continuing resolution through April 28, 2017 (P.L. 114-254) contains an across-the-board
reduction of 0.1901% in the rate of operations from the amount provided in FY2016 appropriations.
c. Estimate.
OPIC has a net negative budget authority; its offsets to budget authority have been greater than its
appropriations. According to OPIC, it generated $434 million in “deficit reduction” for the U.S.
government in FY2015, representing its 38th consecutive year of generating negative outlays.47
OPIC’s loan disbursements are financed through two sources: the long-term loan subsidy costs
are financed by its collections, and the remaining non-subsidized portion of the loans is financed
by borrowings from the Treasury. OPIC finances investment guarantees by issuing certificates of
participation in U.S. debt capital markets. OPIC repays the Treasury through collection of loan
fees, repayments, and default recoveries. OPIC uses nonbudgetary “financing accounts” to
account for credit program cash flow. The subsidy expense for a direct loan or loan guarantee is
estimated when it is first disbursed. OPIC reestimates its total subsidy cost at regular intervals
based on updated assumptions. Permanent indefinite authority is available to fund any
reestimated increase of subsidy costs that occurs after the year in which a loan is disbursed.
Reestimated reductions of subsidy costs are returned to the Treasury.48
Risk Management
OPIC seeks to promote private sector investment in developing and emerging economies through
offering financial products that help to mitigate the political and commercial risks of making
qualified investments overseas. As such, OPIC faces certain risks in its activities. Congress
directs OPIC to “conduct its insurance operations with due regard to the principles of risk
management....”49 OPIC assesses the credit and other risks of proposed transactions; monitors
47 Annual Management Report of the Overseas Private Investment Corporation for Fiscal Year 2014, p. 3. This amount
is on a cash basis, and is different than the amount calculated on a budgetary basis.
48 OPIC, “Financial Products,” https://www.opic.gov/what-we-offer/financial-products/products. See also Annual
Management Report of the Overseas Private Investment Corporation for Fiscal Year 2014, pp. 23-26.
49 22 U.S.C. §2191(d).
Congressional Research Service
98-567 · VERSION 39 · UPDATED
14
The Overseas Private Investment Corporation: Background and Legislative Issues
current commitments for risks; and seeks recoveries in instances where it pays or settles valid
claims.50 OPIC also states that it budgets and accounts for risk in its credit portfolio through
FCRA. Additionally, OPIC says that it offsets any potential future losses with reserves
(comprised of U.S. Treasury securities), which cumulatively totaled $5.6 billion in FY2015.51
In its 44 years of operations, OPIC reports that it has expended more cash than it collected in two
fiscal years.52 Based on its historical record and risk management practices, OPIC recognizes but
considers unlikely the possibility, “that a significant credit or insurance event affecting multiple
transactions could trigger net losses in [OPIC’s] portfolio,” resulting in costs exceeding
collections in a future fiscal year.53
International Context for Development Finance
External financial flows to developing countries come through a number of channels. One is
official development assistance (ODA) from foreign governments (e.g., grants, concessional
lending).54 Another is private capital flows from foreign companies, including through foreign
direct investment (FDI).55 In developing countries, ODA historically was the main source of
external financing. Over time, FDI flows have grown relative to ODA flows (see Figure 4).56
Traditionally, FDI largely has flowed from developed countries to developing countries, but
emerging markets and developing countries also are becoming significant FDI sources.57
50 For more information, see OPIC, 2015 Annual Claims Report, September 30, 2015,
https://www.opic.gov/sites/default/files/files/2015-Annual-Claims-Report.pdf.
51 Annual Management Report of the Overseas Private Investment Corporation for Fiscal Year 2015, p. 5.
52 Ibid.
53 Ibid.
54 See OECD, Development Co-operation Directorate (DCD-DAC), http://www.oecd.org/dac/stats/data.htm.
55 Foreign direct investment (FDI) takes place when a resident (including a company) of one country obtains a lasting
interest in, and a degree of influence over the management of, a business enterprise in another country.
56 Official development assistance (ODA), as defined and reported by the OECD, differs from U.S. government
measures of foreign assistance because it excludes all military assistance and assistance to developed countries, among
other things. For more information, see CRS Report R40213, Foreign Aid: An Introduction to U.S. Programs and
Policy, by Curt Tarnoff and Marian L. Lawson.
57 For background, see United Nations Conference on Trade and Development (UNCTAD), World Investment Report
2016 – Investor Nationality: Policy Challenges.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
15
The Overseas Private Investment Corporation: Background and Legislative Issues
Figure 4. Net Official Development Assistance (ODA) and Foreign Direct
Investment (FDI), 1998-2015
Source: CRS, data from OECD and United Nations Conference on Trade and Development (UNCTAD).
Notes: Net official ODA disbursed to all recipients by Development Assistant Committee (DAC) donors and
FDI outflows.
Along with the changing international investment landscape, the international development policy
landscape has evolved with bilateral and multilateral development financing institutions (DFIs)
playing a more active role. DFIs are used here to refer to entities that provide officially backed (or
government-backed) support (e.g., through direct loans, loan guarantees, or insurance) for private
sector investment in less developed countries.58
It is difficult to find centralized, comprehensive sources of information on DFI activities.
Officially backed investment financing activities are outside of the scope of the OECD
Arrangement on Officially Supported Export Credits (“the Arrangement”), which includes
notification procedures and reporting requirements on activity. Countries vary in terms of how
much information they publish on their DFI activities.
The International Finance Corporation, using its database, estimated that private sector
commitments (not including political risk insurance) by certain international financial institutions
to developing countries grew from about $10 billion in 2002 to over $40 billion in 2010.59 A
58 Development finance can take place through other means that do not directly involve supporting the private sector.
For example, the World Bank Group’s International Bank for Reconstruction and Development (IBRD) and
International Development Association (IDA) provide financial support to middle- and/or low-income governments for
development purposes. See CRS Report R41170, Multilateral Development Banks: Overview and Issues for Congress,
by Rebecca M. Nelson. As another example, USAID supports activities in developing countries working through
recipient country governments and non-governmental organizations, rather than directly with private investors.
59 International Finance Corporation (IFC), International Finance Institutions and Development Through the Private
Sector, A joint report of 31 multilateral and bilateral development finance institutions, 2011, p. 36,
http://www.developmentandtheprivatesector.org/. The IFC data reflects commitments from the IFC, the European Bank
for Reconstruction and Development (EBRD), the European Investment Bank (EIB), OPIC, EDFI, and other
multilateral development banks. According to the IFC, over 90% of private sector finance by international financial
institutions is estimated to be covered in its database.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
16
The Overseas Private Investment Corporation: Background and Legislative Issues
subsequent estimate by the Center for Strategic & International Studies (CSIS), which it said was
based on the same set of institutions, pegged that total at about $68 billion in 2013.60
The level of DFI support through political risk insurance also may be significant. The Berne
Union, an international group of private and state export credit and foreign investment insurers,
maintains statistics on political risk insurance provided by its members linked to FDI. 61 However,
these data may include investment support not related to development finance, given the group’s
membership. According to the Berne Union, its members’ newly underwritten investment
insurance transactions reached $97 billion in 2015.62
While developed countries, such as the United States (through OPIC) and some other G-7
countries, traditionally have been the sources of development finance, emerging economies such
as China, Brazil, and India also have become significant players in this space (see Appendix B).
The growing number of development finance players and volumes of investment financing have
resulted in greater and varied competition for U.S. businesses—competition from firms in both
developed countries and in emerging economies as they move up the value chain. U.S. companies
may seek OPIC assistance to counter the officially backed investment support that their
competitors receive. At the same time, from an economic perspective, the role of governmentbacked financing and its impact on markets is debated.
Below are some general comparisons of OPIC and selected other DFIs; these comparisons are
illustrative of the DFI landscape and not comprehensive.
Ownership: OPIC and certain other DFIs are owned exclusively by the public
sector, such as CDC (United Kingdom) and DEG (Germany). Others, such as
FMO (the Netherlands) and Proparco (France), have joint public and private
ownership. Regional and multilateral DFIs (such as EBRD and IFC) have
multiple shareholders from various countries.
Organizational Structure: Countries vary in how they organize their investment
and export financing functions. The United States houses investment and export
financing functions in separate entities, OPIC and Ex-Im Bank respectively. The
two agencies have different missions—with OPIC focused more on foreign
policy and development goals and Ex-Im Bank geared toward commercial
goals—although they do coordinate on certain transactions. By comparison,
some other countries house these functions in the same entity.63 For example,
JBIC (Japan) conducts both investment and export financing operations.
International Rules: As discussed earlier, the investment financing activities of
DFIs fall outside of the forms of financing regulated by international disciplines
through the OECD Arrangement on Officially Supported Export Credits. The
Arrangement includes limitations on financial terms and conditions in areas such
as down payments, repayment terms, interest rates and premia, and country risk
classifications. It contains notification procedures and reporting requirements for
countries’ export credit activities to encourage transparency. Among other things,
60 Daniel F. Runde and Helen Moser, DFI Finance Increases to One Half of ODA, CSIS, July 13, 2015.
61 The Berne Union has over 70 member companies (including the Berne Union Prague Club). OPIC and Ex-Im Bank
are both members of the Berne Union. For more information, see http://www.berneunion.org/about-the-berne-union/.
62 Berne Union, Statistics 2011-2015, last updated August 9, 2016, http://www.berneunion.org/wpcontent/uploads/2016/08/Berne-Union-2016-Charts-and-numbers-for-website.pdf.
63 Entities where investment and export financing functions are combined can variously be called, in some cases, either
DFIs or export credit agencies (ECAs).
Congressional Research Service
98-567 · VERSION 39 · UPDATED
17
The Overseas Private Investment Corporation: Background and Legislative Issues
the OECD Arrangement does not apply to investment support not directly linked
or tied to procurement from the country providing the official support.64
Financial Instruments: OPIC provides investment support through direct loans,
loan guarantees, and political risk insurance. In contrast, many other DFIs offer a
larger suite of financial products, including participating as a limited partner in
private equity funds. OPIC has previously stated that it is the only one of at least
30 private sector-focused DFIs without the ability to participate as a limited
partner in private equity funds.65 For instance, the portfolios of most members of
the European Development Finance Institutions (EDFI) contained support
through equity or “quasi-equity” instruments at the end of 2015.66 In some cases,
equity or quasi-equity was the primary focus of DFI activity. Additionally, some
DFIs provide “project-specific and general technical assistance.”67 OPIC
provides limited technical support.
Portfolio Size: The size of DFI portfolios varies. For example, OPIC’s
cumulative portfolio totaled nearly $20 billion in FY2015. In comparison, the 15
EDFI members collectively had a total portfolio of €36 billion (about $39 billion)
at the end of 2015.68 In comparison, China appears to have the largest presence in
international development finance, according to a study conducted by Boston
University and the Chinese Academy of Social Sciences. This study estimates
that two Chinese “policy banks” had outstanding loans to overseas borrowers
totaling $684 billion at the end of 2014, making available $106 billion in
development finance. Ex-Im Bank’s annual competitiveness report focuses on
export financing, but includes some data on investment financing. Based on ExIm Bank estimates, in 2015, China’s new investment support alone totaled $49
billion, exceeding that of other ECAs, which had $42 billion combined.69
Portfolio Distribution: DFIs support projects in a range of economic sectors.
DFIs traditionally have favored infrastructure, but have focused more recently on
other sectors such as financial services (see above for OPIC composition). In
2015, the financial sector represented the largest sector of support in the
portfolios of EDFI members collectively (30% of a €36 billion, or about $39
billion, portfolio) followed by power (18%), industry or manufacturing (16%),
other infrastructure (11%), agribusiness (8%), services (5%), and other sectors
64 Ex-Im Bank, Report the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United
States, for the period January 1, 2014 through December 31, 2014, June 2015, p. 7.
65 OPIC, Congressional Budget Justification – Fiscal Year 2016, p. 9.
66 The one exception was Portugal’s DFI. “Quasi-equity” is a financial instrument with both equity and loan elements.
EDFI, Flagship Report 2016, July 7, 2016. EDFI, founded in 1992, aims to strengthen information flow and
cooperation between its members with the European Union institutions, and with other DFIs. It consists of 15 European
DFIs; countries represented are Austria, Belgium (two DFIs), Denmark, Germany, Finland, France, Italy, the
Netherlands, Norway, Portugal, Spain, Switzerland, and the United Kingdom.
67 Daniel F. Runde et al., Sharing Risk in a World of Danger and Opportunities: Strengthening U.S. Development
Finance Capabilities, Center for Strategic and International Studies (CSIS), December 2011. In the United States, other
agencies, such as TDA, provide technical assistance for development projects.
68 Using Federal Reserve exchange rate of 1 euro to $1.0859 (USD) on December 31, 2015, accessed August 5, 2016.
69 Ex-Im Bank, Report to the U.S. Congress on Export Credit Competition and the Export-Import Bank of the United
States, for the period January 1, 2015 through December 31, 2015, June 2016, p. 20. See also data in chapter 5,
http://www.exim.gov/sites/default/files/reports/competitiveness_reports/2015-5-Data-All-Figures.pdf.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
18
The Overseas Private Investment Corporation: Background and Legislative Issues
(12%).70 In contrast, Chinese development finance is aimed mainly at
infrastructure.71 Chinese government loans and related financing have been
directed at constructing roads, rail, hospitals, schools, housing, and water and
energy infrastructure, with the involvement of Chinese firms, including stateowned enterprises.72
Policy Requirements: Requirements that projects must meet in order to receive
support vary by DFI, such as with respect to environmental, worker rights, and
other conditions. OPIC is widely regarded in the development finance
community as having among the most extensive policy requirements for projects
to receive its support. According to OPIC, it has been a leader among DFIs in
“developing and applying environmental and social policies that advance longterm sustainable development.”73 EDFI states that its European DFI members
have adopted a “shared set of principles for responsible financing, which
underlines that respect for human rights and environmental sustainability is a
prerequisite for financing by EDFIs.”74 In terms of China’s development finance
regime, for example, “[d]ue to in-country dynamics, corruption, or disparate
standards frameworks, some Chinese development projects have produced
adverse outcomes for the environment, labor, and local livelihoods...”75
Issues for Congress
OPIC presents a number of possible issues for Congress, chief of which could be a debate about
its reauthorization. Congress also may examine OPIC’s product offerings, policy requirements for
supporting projects, activity composition, and organizational structure.
Reauthorization
Congress may examine whether to reauthorize OPIC and, if so, the length of time for which to
extend its authority and under what terms. In recent years, Members of Congress have introduced
various types of bills concerning OPIC’s authority (see text box). Congressional views differ on
the justifications for and against OPIC.
One issue is the relationship between OPIC and the private sector.76 Supporters argue that OPIC
fills gaps in private sector political risk insurance and financing for investment and helps “level
the playing field” for U.S. businesses competing against foreign companies supported by their
70 EDFI, Investing to Create Jobs, Boost Growth and Fight Poverty, Flagship Report 2016, p. 18. Categories are listed
as provided by EDFI.
71 Sabrina Snell, China’s Development Finance: Outbound, Inbound, and Future Trends in Financial Statecraft, U.S.China Economic and Security Commission, December 16, 2015, p. 2.
72 GAO, Sub-Saharan Africa: Trends in U.S. and Chinese Economic Engagement, GAO-13-199, February 2013, p. 46.
73 See Appendix 1 of OPIC, Overseas Private Investment Corporation 2012 Strategic Sustainability Plan, November
16, 2012, http://www.opic.gov/sites/default/files/files/OPIC_Strategic_Sustainability_Plan_2012.pdf.
74 EDFI, Investing to Create Jobs, Boost Growth and Fight Poverty, Flagship Report 2016, p. 24.
75 Sabrina Snell, China’s Development Finance: Outbound, Inbound, and Future Trends in Financial Statecraft, U.S.China Economic and Security Commission, December 16, 2015, p. 2.
76 For differing views on OPIC, see, for example: Theodore H. Moran, Reforming OPIC for the 21st Century, Peterson
Institute for International Economics, Policy Analyses in International Economics 69, May 2003; Benjamin Leo, Todd
Moss, and Beth Schwanke, OPIC Unleashed: Strengthening US Tolls to Promote Private-Sector Development
Overseas, Center for Global Development, August 2013; Ian Vasquez and John Welborn, Reauthorize or Retire the
Overseas Private Investment Corporation?, CATO Institute, Foreign Policy Briefing No. 78, September 15, 2003.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
19
The Overseas Private Investment Corporation: Background and Legislative Issues
own DFIs, while critics argue that OPIC distorts the flow of capital and resources away from
efficient uses and crowds out viable, private sector alternatives for investment financing and
insurance. Those in favor of OPIC also assert that it provides support for projects, markets, and
sectors where government-backed financing and insurance can make the most difference (e.g.,
large-scale, long-term infrastructure projects, investments by small businesses, projects in
developing countries, and during financial crises), while those critical of OPIC point out that the
majority of U.S. overseas investments occur without OPIC support and question why OPIC
should take on risk when the private sector does not want to.
Other issues include the composition of
Bills Related to OPIC’s Authority
OPIC’s activities and its outcomes. Supporters
Several bills entitled the “Electrify Africa Act of 2015”
argue that U.S. companies of all sizes benefit
were introduced in the 114th Congress. The bills aimed
from OPIC and that OPIC charges interest,
to increase U.S. government support, including through
premia, and other fees for its support, while
OPIC, to assist sub-Saharan African countries in
expanding electricity access to support economic
critics contend that OPIC, as a form of
growth and other goals. Two of the bills, H.R. 2847 and
government intervention, is “corporate
S. 1933, would have extended OPIC’s authority
welfare” and that, by dollar value, larger
through FY2018. In contrast, S. 2152 did not include
companies are the primary beneficiaries.
any extension of OPIC’s authority; this bill became law
Supporters note OPIC’s risk management
in February 2016 (P.L. 114-121).
practices and record, while critics express
concern about the potential risks that OPIC’s activities pose to U.S. taxpayers. Also, supporters
argue that OPIC screens projects for “additionality” and that its activities contribute to U.S. jobs
and exports, while critics question OPIC’s opportunity costs and express concern that OPIC
supports companies whose overseas investments may result in the outsourcing of U.S. jobs.
From a foreign policy perspective, supporters contend that OPIC’s activities, on a demand-driven
basis, advance U.S. development and national security interests by contributing to economic
development in poor countries, while critics counter that the actual composition of OPIC’s
activities may not reflect U.S. foreign policy priorities and that the development benefits of
OPIC’s activities are questionable.77
From an operational standpoint, some argue that OPIC would benefit from multi-year
authorizations and “that the potential risk of a lapse undermines the private sector’s confidence in
OPIC’s effectiveness, given that clients and projects require long-term planning and exit
horizons.”78 Others argue that shorter extensions may provide opportunity for Congress to weigh
in more frequently on OPIC operations through the lawmaking process. Questions may be raised
about the extent that yearly renewals of authority through the appropriations process affect OPIC
and what issues may be discussed in a broader debate about OPIC’s authority. Congress also may
evaluate the impact of a lapse or expiration of OPIC’s authority. For instance, OPIC’s authority
lapsed during April-September 2008. During this period, OPIC was able to disburse funds for
already committed projects, but was unable to sign contracts for new projects.79 This lapse in
77 For example, OPIC’s work in Afghanistan has been debated. See OPIC, FY2017 Congressional Budget Justification,
for description of activities in Afghanistan, various pages; OPIC, “Supporting Investment in Afghanistan,” blog,
December 10, 2012; and Letter from John F. Spoko, Special Inspector General for Afghanistan Reconstruction
(SIGAR), to Elizabeth L. Littlefield, President and Chief Executive Officer, OPIC, November 14, 2016,
https://www.sigar.mil/pdf/special%20projects/SIGAR-17-13-SP.pdf.
78 Daniel F. Runde et al., Sharing Risk in a World of Danger and Opportunities: Strengthening U.S. Development
Finance Capabilities, CSIS, December 2011, pp. 5-6.
79 OPIC, Congressional Budget Justification – Fiscal Year 2009, p. iii.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
20
The Overseas Private Investment Corporation: Background and Legislative Issues
authority reportedly contributed to a backlog of projects in OPIC’s pipeline of, by one estimate,
about $2 billion of potential transactions.80
Product Offerings
OPIC currently provides political risk insurance, project and investment funds financing through
direct loans and loan guarantees, and other services. Congress may consider whether to adjust
OPIC’s product offering.
Equity Authority. A long-standing topic of debate is whether OPIC should be able to make
equity investments in investment funds, in addition to the current debt financing that it provides
for such funds.81 According to OPIC, it currently does not have resources to make limited
partnership investments.82 OPIC’s FY2017 congressional budget justification includes a request
for authority to use up to $20 million from its Credit Reform Appropriation and $20 million in
transfer authority to invest in private equity funds that serve OPIC’s mission. Proponents argue
that equity authority would enable OPIC to exert greater influence in an investment’s strategic
goals and economic, social, and governance policies; that foreign counterparts, many of whom
have equity authority,83 may be more likely to partner with OPIC on projects, increasing OPIC’s
ability to leverage its resources; and that OPIC could use the higher returns generally associated
with equity investments to support more projects. Critics may raise concerns about the U.S.
government taking an ownership stake in a private enterprise, the greater resources required for
equity investments, and the greater risks and financial exposure that equity investments entail.
Technical Assistance. Another point of debate is whether OPIC should have a consistent ability
to provide grants, such as for technical assistance, for the projects that it supports. Those in favor
of such proposals contend that providing technical assistance would enhance OPIC’s
effectiveness in supporting projects.84 On the other hand, critics contend that providing OPIC
with a significant grant function would duplicate the roles of USAID and TDA in development
assistance.
Policies
In supporting U.S. private sector investment overseas, OPIC seeks to balance multiple policy
objectives, including foreign assistance, development, economic, environmental, and other policy
goals. Congress could evaluate how OPIC might prioritize and balance these various objectives.
OPIC’s environmental policies on greenhouse gas (GHG) emission reductions (which some
stakeholders refer to as a “carbon cap”), in particular, have been the subject of congressional
action and vigorous stakeholder debate (see text box). On one hand, such efforts may serve U.S.
80 Daniel F. Runde et al., Sharing Risk in a World of Danger and Opportunities: Strengthening U.S. Development
Finance Capabilities, CSIS, December 2011, p. 5.
81 OPIC’s enabling legislation provides it authority to establish a four-year pilot program under which it may make
equity investments in projects in sub-Saharan Africa and in certain “Caribbean basin” countries (specified in 19 U.S.C.
§2702) and marine transportation projects, subject to certain limitations and criteria. 22 U.S.C. §2194(g).
82 OPIC, Congressional Budget Justification – Fiscal Year 2017, p. 16.
83 OPIC, Congressional Budget Justification – Fiscal Year 2016, p. 9; and U.S. Congress, House Committee on
Foreign Affairs, Subcommittee on Terrorism, Nonproliferation, and Trade, Testimony by Elizabeth Littlefield,
President and CEO, OPIC, Hearing on “Trade Promotion Agencies and U.S. Foreign Policy,” 114th Cong., 1st sess.,
May 19, 2015, p. 12.
84 For example, see Daniel F. Runde and Ashley Chandler, Making the Case for OPIC, CSIS, May 12, 2011,
http://csis.org/publication/making-case-opic; and Benjamin Leo, Todd Moss, and Beth Schwanke, OPIC Unleashed:
Strengthening US Tools to Promote Private-Sector Development Overseas, CGD, August 2013.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
21
The Overseas Private Investment Corporation: Background and Legislative Issues
environmental policy goals and help to improve the sustainability of OPIC’s activities. On the
other hand, some U.S. businesses argue that the GHG emissions reduction effort can constrain
their ability to utilize OPIC support and place them at a competitive disadvantage vis-à-vis
foreign firms when competing for international project contracts (e.g., major infrastructure
projects in sub-Saharan Africa). Other DFIs generally do not have the same level of policy
restrictions that OPIC has, potentially enabling them to support a broader array of energy-related
projects. From a development perspective, some argue that the GHG emission reduction effort
prevents OPIC from supporting projects likely to have the largest development impact.
OPIC’s Environmental Policy
Based on FY2010 appropriations (P.L. 111-117, §7079(b)) and other factors, OPIC has engaged in efforts to
reduce the direct GHG emissions associated with projects in its active portfolio (i.e., all insurance contracts in
force and all guaranty and direct loans with an outstanding principal balance) by 30% over a 10-year period (June
30, 2008-September 30, 2018) and by 50% over a 15-year period (June 30, 2008-September 30, 2023).85
Since FY2014, appropriations acts have prohibited the use of OPIC funds under certain conditions, until
September 30, 2016, for enforcing any rule or guideline implementing (1) OPIC’s GHG reductions policy; or (2)
OPIC’s proposed modification to its Environmental and Social Policy Statement (ESPS) related to coal. 86 As such,
the use of appropriated funds by OPIC to implement the GHG emissions reduction policy and proposed coalrelated modification to the ESPS is not allowed if the implementation would prohibit (or have the effect of
prohibiting) any coal-fired or other power-generation projects that satisfy two conditions: (1) the project’s
purpose is to “provide affordable electricity in International Development Association (IDA)-eligible countries and
IDA-blend countries”;87 and (2) the project’s purpose is to “increase exports of goods and services from the
United States or to prevent the loss of jobs from the United States.” For example, see the FY2016 appropriations
act (P.L. 114-113 , §7080(4)).
The appropriations ban could lead to more opportunities for OPIC support for overseas coal-related projects in
developing countries. Some stakeholders may favor the prohibition because they view it as giving OPIC greater
flexibility to more effectively meet its development mandate and, in turn, support U.S. jobs and growth, while
others may oppose it for environmental reasons.
Activity Areas
One area of congressional interest could be whether OPIC’s portfolio has an appropriate mix in
terms of its development objectives and is directed sufficiently to those areas in which it may be
most needed. Some stakeholders, for example, have expressed concern about what they see as
OPIC’s shift away from projects in sectors commonly viewed as contributing to poverty
reduction (e.g., agriculture, infrastructure, and transportation) and toward projects in other sectors
where development benefits may be less clear (e.g., finance and hotels). Drivers of such trends
may have been environmental policies constraining support for large-scale infrastructure projects,
as well as the need to balance financial risks and be self-sustaining. Congressional concern was
voiced, for example, about OPIC’s support for projects that do not necessarily, on their face,
appear to align with OPIC’s development mission, such as the construction of a shopping mall in
Jordan, expanded billboard advertising in Ukraine, and hotels in Armenia and Georgia.88 Others
may counter that OPIC conducts development impact assessments of proposed projects and
monitors the development impact of existing projects; they also may point to the development
85 OPIC, OPIC – Environmental and Social Policy Statement, October 15, 2010, p. 26.
86 OPIC’s proposed changes are available at http://www.opic.gov/sites/default/files/files/eisa-changes-policy.pdf.
87 See IDA, “IDA Borrowing Countries,” http://www.worldbank.org/ida/borrowing-countries.html.
88 “McCaskill Seeks Greater Oversight of OPIC, TDA; Questions Funding Food Chains, Hotels,” Bloomberg BNA
International Trade Daily, December 13, 2013.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
22
The Overseas Private Investment Corporation: Background and Legislative Issues
impacts of projects discussed in OPIC’s annual policy reports, for instance in terms of host
country employment.89
Another area of interest could be considering opportunities for enhancing OPIC’s support for
specific geographical areas or sectors that are of U.S. policy priority. For example, the Electrify
Africa Act of 2015 (P.L. 114-121), among other things, directs OPIC to prioritize and expedite its
support for power projects in sub-Saharan Africa. On one hand, greater resources may increase
capacity to promote investment, but on the other hand, federal agencies’ allocation of funds for
trade and investment promotion is generally demand-driven. Thus, for example, if U.S. firms do
not seek such assistance due to lack of sufficient commercial interest, such funds may not be fully
tapped. At the same time, promotion of development finance opportunities by OPIC could
motivate U.S. companies to become more engaged.
Organizational Structure
OPIC’s organizational structure may present possible areas of congressional consideration,
including in the following areas.
Reorganization. During the presidential campaign, President-elect Trump proposed to
consolidate trade-related agencies and departments into one office called the “American Desk”
under the Department of Commerce.90 The general contours of the Trump proposal appear to be
reminiscent of President Obama’s call for reorganization authority to reorganize and consolidate,
into one department, the trade-related functions of OPIC and five other federal entities into one
department to streamline the federal government and make it more effective.91 The proposal,
however, did not gain much traction in Congress, largely due to concerns about its implications
for the U.S. Trade Representative (USTR) and its U.S. trade negotiation and enforcement
functions. Other proposals offered by stakeholders include consolidating federal agencies focused
on promoting international development through private sector tools (such as OPIC, TDA, and
certain elements of USAID), and/or creating a “development finance agency.”92 Such proposals
raise debates about whether reorganization would reduce costs and improve the effectiveness of
trade policy programs, or undermine their effectiveness given the differing missions of federal
trade agencies.93
Privatization or Termination. Other possible options include privatizing or terminating OPIC,
the feasibility of which previously has been analyzed.94 Supporters of such options may argue that
89 For example, see OPIC, Annual Report on Development Impact – Fiscal Year 2013.
90 “Trump proposes new ‘American Desk’ office to handle trade issues,” POLITICO, October 20, 2016. Trump-Pence
campaign, “In Ohio Trump Announces American Desk to Protect Economic Interests of America’s Workers on Trade,”
press release, October 20, 2016, https://www.donaldjtrump.com/press-releases/donald-j.-trump-proposes-americandesk-protect-economic-and-national-intere.
91 The White House, Office of the Press Secretary, “Government Reorganization Fact Sheet,” press release, January 13,
2012. President Obama reiterated the proposal in subsequent budget requests. See, for example, OMB, Budget of the
United States Government, Fiscal Year 2017, “A Government of the Future,” p. 107.
92 For example, see Ben Leo and Todd Moss, Bringing US Development Finance into the 21st Century, Center for
Global Development, July 20, 2015; and Senator Chris Coons, “A Bipartisan Foreign Policy for the Trump
Presidency,” Democracy Journal, December 5, 2016.
93 CRS Report R42555, Trade Reorganization: Overview and Issues for Congress, by Shayerah Ilias Akhtar.
94 For example, see J.P. Morgan Securities, Inc., Overseas Private Investment Corporation: Final Report on the
Feasibility of Privatization, New York, February 7, 1996, cited in GAO, Overseas Investment: Issues Related to the
Overseas Private Investment Corporation's Reauthorization, GAO/NSIAD-97-230, September 1997, p. 24,
http://www.gao.gov/archive/1997/ns97230.pdf.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
23
The Overseas Private Investment Corporation: Background and Legislative Issues
OPIC’s self-sustaining nature is proof that there is no market failure; that OPIC competes with or
crowds out the private sector, which is more efficient and better suited than the federal
government to support investments; and that OPIC’s activities impose potential costs and risks on
U.S. taxpayers, since they are backed by the full faith and credit of the U.S. government.95 Those
in favor of OPIC may argue that the federal government plays a unique role in addressing market
failures; that OPIC’s backing by the full faith and credit of the U.S. government may make
certain transactions more commercially attractive or give OPIC leverage to guarantee repayment
in a way that is not available to the private sector; and that federal investment support is critical
when there is a shortfall in private sector financing and insurance.
Internal Oversight. OPIC’s own internal oversight structure presents another area of interest.
USAID’s Inspector General has legal authority to conduct reviews, investigations, and
inspections of OPIC’s operations and activities, while external auditors conduct audits of OPIC’s
financial statements and report findings to OPIC’s Board of Directors.96 One possibility is
establishing an OPIC-specific Inspector General.97 Some may support this approach given
differences in OPIC’s private sector financing focus and USAID’s grant-making functions.
Opponents may assert that the current OPIC-USAID arrangement suffices or express concern
about the additional resources a new Inspector General could require. Other possibilities include
directing Ex-Im Bank’s Inspector General to conduct OPIC oversight. Some may support this on
the basis that Ex-Im Bank and OPIC offer some similar financing and insurance products, though
others may express concern because of differences in the two agencies’ missions and
stakeholders.
95 For example, see Bryan Riley and Brett D. Schaefer, Time to Privatize OPIC, The Heritage Foundation, May 19,
2014; and Ryan Young, The Case Against the Overseas Private Investment Corporation, Competitive Enterprise
Institute, No. 208, September 24, 2015.
96 22 U.S.C. §2199, parts (e) and (c).
97 See, for example, H.R. 2847 and S. 1933, introduced in the 114th Congress.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
24
The Overseas Private Investment Corporation: Background and Legislative Issues
Appendix A. OPIC Authorization History98
OPIC operates on a renewable basis under the Foreign Assistance Act of 1961, as amended (22
U.S.C. §2191 et seq.). The Foreign Assistance Act includes a provision authorizing OPIC to
perform certain functions until its sunset date, which Congress has periodically extended. That
provision, in 22 U.S.C. §2195(a)(2), currently states, “The authority of subsections (a), (b), and
(c) of section 2194 of this title [political risk insurance, loan guarantees, and direct loans,
respectively] shall continue until September 30, 2007.”
This sunset date reflects the last extension of OPIC’s authority on a multi-year basis; the OPIC
Amendments Act of 2003 (P.L. 108-158) extended OPIC’s authority for nearly four years until
September 30, 2007. Since then, OPIC generally has continued operating based on extensions of
its authority in appropriations law, which OPIC has characterized as authorization “waivers.”99
(One exception was a six-month period in 2008 when its authority lapsed.)100 These “waivers”
have occurred through consolidated appropriations acts and continuing resolutions (CRs). For
instance, Section 7061(b) of the FY2016 Consolidated Appropriations Act extended OPIC’s
authority until September 30, 2016; it stated, “Notwithstanding section 235(a)(2) of the Foreign
Assistance Act of 1961, the authority of subsections (a) through (c) of section 234 of such Act
shall remain in effect until September 30, 2016” (P.L. 114-113). Most recently, an FY2017
continuing resolution extended OPIC’s authority through April 28, 2017 (P.L. 114-254).
Table A-1 provides a list of legislation identified by CRS as creating OPIC and extending its
authority during 1961-2007, as well as the associated statutory text and new sunset date. To
identify the legislation in this table, CRS examined the notes of Title 22 sections 2194 and 2195
of the U.S. Code, and searched Congress.gov and ProQuest Congressional for additional pieces of
legislation extending OPIC’s authority. While all efforts were made to ensure the
comprehensiveness of this list, the presence of any gaps in authorization legislation should not be
regarded as determinative of OPIC’s authorization status.
During 1961-2007, Congress extended OPIC’s authority on numerous occasions on a multi-year
basis, generally ranging from two to four years. On some occasions, Congress extended OPIC’s
authority for a shorter period during this time frame. Extensions of OPIC’s authority occurred in
various forms, but appear to have had substantially the same effect of allowing OPIC to continue
operating. Some extensions were through laws specifically listed in the “Amendments” section to
22 U.S.C. §2195 (thus amending the Foreign Assistance Act). These included extensions in
OPIC-specific legislation, legislation focused on foreign affairs or international trade more
broadly, and appropriations legislation. Other extensions, particularly in more recent years, took
the form of authorization “waivers” (as characterized by OPIC) in appropriations acts that
allowed OPIC’s functions to remain in effect but did not amend OPIC’s sunset date in the Foreign
Assistance Act.
In a few instances, there appear to be “gaps” in legislation extending OPIC’s sunset date, such as
in 1981, 1985, and 1992. These possible gaps in authority appear to have been for a few weeks to
a few months. Unlike the gap in 2008 (noted above), CRS has not been able to determine whether
these possible gaps affected OPIC’s authority to conduct its functions.
98 Co-authored by Keigh E. Hammond, Research Librarian.
99 See, for example, OPIC, FY2017 Congressional Budget Justification, p. 17.
100 In 2008, OPIC’s authority expired for about six months (April-September 2008), during which time OPIC was able
to disburse funds for already committed projects, but was unable to sign contracts for new projects. See OPIC, FY2009
Congressional Budget Justification, p. iii.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
25
The Overseas Private Investment Corporation: Background and Legislative Issues
Table A-1. OPIC Original Acts and Extensions of Authority, 1961-2007
Legislation
Enacted
Sunset Date
Foreign Assistance
Act of 1961
(P.L. 87-195)
September 4, 1961
June 30, 1964
Law authorized President to issue investment
guarantees to support economic development
overseas, prior to establishment of OPIC.
SEC. 221. GENERAL AUTHORITY.— (a) In order
to facilitate and increase the participation of
private enterprise in furthering the development of
the economic resources and productive capacities
of less developed friendly countries and areas, the
President is authorized to issue guaranties as
provided in subsection (b) of this section of
investments in connection with projects, including
expansion, modernization, or development of
existing enterprises, in any friendly country or area
with the government of which the President has
agreed to institute the guaranty program. The
guaranty program authorized by this title shall be
administered under broad criteria, and each
project shall be approved by the President.
...Provided further, That this authority shall
continue until June 30, 1964.
Foreign Assistance
Acts of 1964-1968
(various acts, see
“Enacted” column)
P.L. 88-633, October 7, 1964
P.L. 89-171, September 6, 1965
P.L. 89-583, September 19, 1966
P.L. 90-137, November 14, 1967
P.L. 90-554, October 8, 1968
June 30, 1971 (Annual Foreign Assistance Acts
reauthorized this general authority on a single-year
basis, for 1964-1968. The 1968 Act [P.L 90-554]
reauthorized until June 30, 1971.)
P.L. 90-554: SEC. 103. (a) Section 221(b) of title
III of chapter 2 of part I of the Foreign Assistance
Act of 1961, as amended, which relates to general
authority for investment guaranties, is amended as
follows: ... (C) In the last proviso, strike out "1970"
and substitute '1971--.
Foreign Assistance
Act of 1969
(P.L. 91-175)
December 30, 1969
June 30, 1974
Law specifically established OPIC. H. Rept. 91-611
stated: “this bill creates a new Overseas Private
Investment Corporation to take over the Agency
for International Development’s (AID’s) present
U.S. investment incentive programs and carry out
other activities...” (p. 3).
Sec. 235. Issue Authority Direct Investment Fund
and Reserves.
(4) The authority of section 234 (a) and (b) shall
continue until June 30, 1974.
(On January 19, 1971, the President transferred
rights and responsibilities, outlined in the Foreign
Assistance Act, to OPIC [Executive Order 11579,
January 19, 1971].)
Foreign Assistance
Act of 1973
(P.L. 93-189)
December 17, 1973
December 31, 1974
In section 235(a) (4), strike out “June 30, 1974”
and insert in lieu thereof “December 31, 1974[.]”
Congressional Research Service
98-567 · VERSION 39 · UPDATED
26
The Overseas Private Investment Corporation: Background and Legislative Issues
Legislation
Enacted
Sunset Date
OPIC Amendments
Act of 1974
(P.L. 93-390)
August 27, 1974
December 31, 1977
(3) In section 235---(A) strike out “1974” in
subsection (a)(4) and insert in lieu thereof
“1977[.]”
Foreign Assistance
and Related
Programs
Appropriations Act
1978 (P.L. 95-148)
October 31, 1977
September 30, 1978
Title I: For expenses necessary to enable the
President to carry out the provisions of the Foreign
Assistance Act of 1961, as amended, and for other
purposes, to remain available until September 30,
1978, unless otherwise specified herein, as follows:
...
Title II: ... The Overseas Private Investment
Corporation is authorized to make such
expenditures within the limits of funds available to
it and in accordance with law (including not to
exceed $10,000 for entertainment allowances),
and to make such contracts and commitments
without regard to fiscal year limitations as provided
by section 104 of the Government Corporation
Control Act, as amended (31 U.S.C. 849) as may
be necessary in carrying out the program set forth
in the budget for the current fiscal year.
OPIC Amendments
Act of 1978
(P.L. 95-268)
April 24, 1978
September 30, 1981
SEC. 4. Section 235 of the Foreign Assistance Act
of 1961 is amended—(1) in subsection (a) (2), by
striking out “, of which guaranties of credit union
investment shall not exceed $1,250,000”; and (2)
in subsection (a) (4), by striking out “December
31, 1977” and inserting in lieu thereof
“September 30, 1981[.]”
OPIC Amendments
Act of 1981
(P.L. 97-65)
October 16, 1981
September 30, 1985
Sec. 5... (b)(1) Section 235(a)(5) of such Act, as
redesignated by subsection (a)(2)(A) of this section,
is amended by striking out “September 30, 1981”
and inserting in lieu thereof “September 30,
1985[.]”
OPIC Amendments
Act of 1985
(P.L. 99-204)
December 23, 1985
September 30, 1988
Section 235(a)(5) (22 U.S.C. 2195(a)5)) is
amended by striking out "1985" and inserting in
lieu thereof "1988[.]"
OPIC Amendments
Act of 1988
(H.R. 5263, 100th
Congress, 2nd
session), enacted by
reference in Foreign
Operations, Export
Financing, and
Related Programs
Act, 1989 (P.L. 100461)
October 1, 1988
September 30, 1992
P.L. 100-461: Sec. 555...That title I of H.R. 5263 as
passed by the House of Representatives on
September 20, 1988, is hereby enacted into law:
H.R. 5263 (100th Congress, 2nd Session):
Sec 107. Extending Issuing Authority. Section
235(a)(6) of the Foreign Assistance Act of
1961 (22 U.S.C. 2195(a)(6)) is amended by
striking out “1988” and inserting in lieu
thereof “1992[.]”
Congressional Research Service
98-567 · VERSION 39 · UPDATED
27
The Overseas Private Investment Corporation: Background and Legislative Issues
Legislation
Enacted
Sunset Date
Jobs Through
Exports Act of 1992
(P.L. 102-549)
October 28, 1992
Jobs Through Trade
Expansion Act of
1994 (P.L. 103-392)
October 22, 1994
Omnibus
Consolidated
Appropriations Act,
1997 (P.L. 104-208)
September 30, 1996
September 30, 1997
That section 235(a)(3) of the Foreign Assistance
Act of 1961 (22 U.S.C. 2195(a)(3)) is amended by
striking out ‘‘1996’’ and inserting in lieu thereof
‘‘1997[.]’’
Continuing
Appropriations, 1998
(P.L. 105-46)
September 30, 1997
October 23, 1997
SECTION 101. (a) Such amounts as may be
necessary under the authority and conditions
provided in the applicable appropriations Act for
the fiscal year 1997 for continuing projects or
activities including the costs of direct loans and
loan guarantees (not otherwise specifically provided
for in this joint resolution) which were conducted in
the fiscal year 1997 and for which appropriations,
funds, or other authority would be available in the
following appropriations Acts:
... (6) the Foreign Operations, Export Financing,
and Related Programs Appropriations Act, 1998,
notwithstanding section 10 of Public Law 91–672
and section 15(a) of the State Department Basic
Authorities Act of 1956
... SEC. 106. Unless otherwise provided for in this
joint resolution or in the applicable appropriations
Act, appropriations and funds made available and
authority granted pursuant to this joint resolution
shall be available until: (1) enactment into law of
an appropriation for any project or activity
provided for in this joint resolution; or (2) the
enactment into law of the applicable
appropriations Act by both Houses without any
provision for such project or activity; or (3) October
23, 1997, whichever first occurs.
Further Continuing
Appropriations, 1998
(various CRs, see
“Enacted” column)
P.L. 105-64, October 23, 1997
P.L. 105-69, November 9, 1997
P.L. 105-71, November 10, 1997
P.L. 105-84, November 14, 1997
November 26, 1997 (Short-term CRs extended
OPIC’s authority, ultimately through November 26,
1997.)
P.L. 105-84, enacted on November 14, 1997: That
section 106(3) of Public Law 105–46 is further
amended by striking ‘‘November 14, 1997’’ and
inserting in lieu thereof ‘‘November 26, 1997[.]’
Congressional Research Service
September 30, 1994
SEC. 104. ...(3) TERMINATION OF
AUTHORITY.—The authority of subsections (a)
and (b) of section 234 shall continue until
September 30,1994[.]
September 30, 1996
SEC. 103. EXTENDING ISSUING AUTHORITY.
Section 235(a)(3) of the Foreign Assistance Act of
1961 (22 U.S.C. 2195(a)(3)) is amended by
striking “1994” and inserting “1996[.]”
98-567 · VERSION 39 · UPDATED
28
The Overseas Private Investment Corporation: Background and Legislative Issues
Legislation
Enacted
Sunset Date
Foreign Operations,
Export Financing, and
Related Programs
Appropriations Act,
1998 (P.L. 105-118)
November 26, 1997
September 30, 1999
SEC. 581. (a) IN GENERAL.—Section 235(a) of
the Foreign Assistance Act of 1961 (22 U.S.C.
2195(a)) is amended—
(1) by striking paragraphs (1) and (2)(A) and
inserting the following: ‘‘(1) INSURANCE
AND FINANCING.—(A) The maximum
contingent liability outstanding at any one
time pursuant to insurance issued under
section 234(a), and the amount of financing
issued under sections 234(b) and (c), shall
not exceed in the aggregate
$29,000,000,000.’’;
(2) by redesignating paragraph (3) as
paragraph (2); and
(3) by amending paragraph (2) (as so
redesignated) by striking ‘‘September 30,
1997’’ and inserting ‘‘September 30,
1999[.]’’
(b) CONFORMING AMENDMENT.—Paragraph
(2) of section 235(a) of that Act (22 U.S.C.
2195(a)), as redesignated by subsection (a), is
further amended by striking ‘‘(a) and (b)’’ and
inserting ‘‘(a), (b), and (c)[.]’’
Continuing
Appropriation for FY
2000 (P.L. 106-62)
September 30, 1999
October 21, 1999
SEC. 106. Unless otherwise provided for in this
joint resolution or in the applicable appropriations
Act, appropriations and funds made available and
authority granted pursuant to this joint resolution
shall be available until: (a) enactment into law of
an appropriation for any project or activity
provided for in this joint resolution; (b) the
enactment into law of the applicable
appropriations Act by both Houses without any
provision for such project or activity; or (c) October
21, 1999, whichever first occurs.
SEC. 117. Notwithstanding section 235(a)(2) of
the Foreign Assistance Act of 1961 (22 U.S.C.
2195(a)(2)), the authority of section 234(a) (b)
and (c), of the same Act, shall remain in effect
during the period of this joint resolution.
Continuing
Appropriation for FY
2000 (various CRs,
see “Enacted”
column)
P.L. 106-75, October 21, 1999
P.L. 106-85, October 29, 1999
P.L. 106-88, November 5, 1999
P.L. 106-94, November 10, 1999
P.L. 106-105, November 18, 1999
P.L. 106-106, November 19, 1999
December 2, 1999 (Short-term CRs extended
authority until December 2, 1999.)
P.L. 106-106, enacted on November 19, 1999: Public
Law 106–62 is further amended by striking ‘‘November
18, 1999’’ in section 106(c) and inserting ‘‘December 2,
1999’’, and by striking ‘‘$346,483,754’’ in section 119
and inserting ‘‘$755,719,054[.]’.
Consolidated
Appropriations Act,
2000 (P.L. 106-113)
November 29, 1999
November 1, 2000
Appendix B: OPIC AUTHORIZATION SEC. 599E.
Section 235(a)(2) of the Foreign Assistance Act of
1961 (22 U.S.C. 2195(a)(2)) is amended by
striking ‘‘1999’’ and inserting ‘‘November 1,
2000[.]’.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
29
The Overseas Private Investment Corporation: Background and Legislative Issues
Legislation
Enacted
Sunset Date
Export Enhancement
Act of 1999
(P.L. 106-158)
December 9, 1999
September 30, 2003
SEC. 2. OPIC ISSUING AUTHORITY. Section
235(a)(2) of the Foreign Assistance Act of 1961
(22 U.S.C. 2195a)(3)) is amended by striking
“1999” and inserting “2003[.]”
Continuing
Appropriations for
FY 2004 (P.L. 10884)
September 30, 2003
October 31, 2003
SEC. 107. Unless otherwise provided for in this
joint resolution or in the applicable appropriations
Act, appropriations and funds made available and
authority granted pursuant to this joint resolution
shall be available until (a) enactment into law of
an appropriation for any project or activity
provided for in this joint resolution, or (b) the
enactment into law of the applicable
appropriations Act by both Houses without any
provision for such project or activity, or (c) October
31, 2003, whichever first occurs....
...SEC. 115. Notwithstanding section 235(a)(2) of
the Foreign Assistance Act of 1961 (22 U.S.C.
2195(a)(2)), the authority of subsections (a)
through (c) of section 234 of such Act, shall
remain in effect through the date specified in
section 107(c) of this joint resolution[.]
Continuing
Appropriations for
FY 2004 (various
CRs, see “Enacted”
column)
P.L. 108-104, October 31, 2003
P.L. 108-107, November 7, 2003
P.L. 108-135, November 22, 2003
January 31, 2004 (In three additional CRs, authority
was extended successively to January 31, 2004.)
P.L. 108-135, enacted on November 22, 2003: That
Public Law 108–84 is amended by striking the date
specified in section 107(c) and inserting ‘‘January 31,
2004[.]’’
OPIC Amendments
Act of 2003
(P.L. 108-158)
December 3, 2003
September 30, 2007a
SEC. 2. ISSUING AUTHORITY. Section 235(a)(2)
of the Foreign Assistance Act of 1961 (22 U.S.C.
2195(a)(2)) is amended by striking “November 1,
2000”' and inserting “2007[.]”
Source: CRS, based on searches of Congress.gov, ProQuest Congressional, and Title 22 of the U.S. Code.
Notes: To identify the legislation in this table, CRS examined the notes of Title 22 sections 2194 and 2195 of
the U.S. Code, and searched Congress.gov and ProQuest Congressional for additional pieces of legislation
extending OPIC’s authority. While all efforts were made to ensure the comprehensiveness of this list, the
presence of any gaps in authorization legislation should not be regarded as determinative of OPIC’s authorization
status.
a. The Amendment Notes of the 2000 edition of the U.S. Code (1/6/2003), for section 2195(a)(2) of Title 22
explain: “Subsec. (a)(2). Pub. L. 106–158, which directed the amendment of par. (2) by substituting “2003”
for “1999” could not be executed because “1999” did not appear in text subsequent to amendment by Pub.
L. 106–113. See below ...Pub. L. 106–113, which directed amendment of par. (2) by substituting “November
1, 2000” for “1999”, was executed by making the substitution for “September 30, 1999”, to reflect the
probable intent of Congress.”
Congressional Research Service
98-567 · VERSION 39 · UPDATED
30
The Overseas Private Investment Corporation: Background and Legislative Issues
Appendix B. Illustrative DFIs
Table B-1. Selected Development Finance Institutions (DFIs)
Development Finance Institutions
Sponsor
Bilateral
Overseas Private Investment Corporation (OPIC)
United States
Association of European Development Finance Institutions (EDFI)
Belgian Investment Company for Developing Countries (BIO); Belgian Corporation for
International Investment (SBI-BMI)
Belgium
CDC Group*
United Kingdom
Compañía Española de Financiación del Desarrollo (COFIDES)
Spain
Entrepreneurial Development Cooperation (DEG)
Germany
Finnish Fund for Industrial Cooperation Ltd. (FINNFUND)
Finland
The Investment Fund for Developing Countries (IFU)
Denmark
Netherlands Development Finance Company (FMO)
Netherlands
Norwegian Investment Fund for Developing Countries (Norfund)
Norway
Oesterreichische Entwicklungbank AG (OoEB; The Development Bank of Austria)
Austria
Société de Promotion et de Participation pour la Coopération Economique (Proparco)
France
Swiss Investment Fund for Emerging Markets (SIFEM)
Switzerland
Società Italiana per le Imprese all’Estero (SIMEST)
Italy
Sociedade para o Financiamento do Desenvolvimento (SOFID)
Portugal
Swedfund International AB (Swedfund)
Sweden
Japanese Bank for International Cooperation (JBIC)
Japan
Export-Import Bank of China; China Export and Credit Insurance Corporation (Sinosure);
China Development Bank (CDB)
China
Brazilian Development Bank (BNDES)
Brazil
Export Credit Guarantee Corporation of India (ECGC)
India
Regional
African Development Bank (AfDB); Asian Development Bank (ADB); European Bank for Reconstruction and
Development (EBRD); Inter-American Development Bank (IDB)
Multilateral
International Finance Corporation (IFC)**; Multilateral Investment Guaranty Agency (MIGA)**
Source: CRS compilation from International Finance Corporation (IFC), International Finance Institutions and
Development: Private Sector, 2011; Christian Kingombe, Isabella Massa and Dirk Willem te Velde, Comparing
Development Institutions Literature Review, Overseas Development Institute, January 20, 2011; Association of
European Development Finance Institutions (EDFI) publications; and various other DFI publications and annual
reports.
Notes: * CDC (United Kingdom) formerly was Colonial Development Corporation, then Commonwealth
Development Corporation.
** IFC and MIGA are both part of The World Bank Group.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
31
The Overseas Private Investment Corporation: Background and Legislative Issues
Author Contact Information
Shayerah Ilias Akhtar
Specialist in International Trade and Finance
r[ edacted]@crs.loc.gov , 7-....
Acknowledgments
The author is grateful to Keigh E. Hammond, for her invaluable contributions in researching and compiling
OPIC authorization legislation in Appendix A.
Congressional Research Service
98-567 · VERSION 39 · UPDATED
32
EveryCRSReport.com
The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the
Library of Congress, charged with providing the United States Congress non-partisan advice on
issues that may come before Congress.
EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The
reports are not classified, and Members of Congress routinely make individual reports available to
the public.
Prior to our republication, we redacted phone numbers and email addresses of analysts who
produced the reports. We also added this page to the report. We have not intentionally made any
other changes to any report published on EveryCRSReport.com.
CRS reports, as a work of the United States government, are not subject to copyright protection in
the United States. Any CRS report may be reproduced and distributed in its entirety without
permission from CRS. However, as a CRS report may include copyrighted images or material from a
third party, you may need to obtain permission of the copyright holder if you wish to copy or
otherwise use copyrighted material.
Information in a CRS report should not be relied upon for purposes other than public
understanding of information that has been provided by CRS to members of Congress in
connection with CRS' institutional role.
EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim
copyright on any CRS report we have republished.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.