Ideas to Action:
Independent research for global prosperity
These proposals would cost money (and so the need to work with Congress), but all are tied to America’s strategic interests and all would help the world exit the COVID pandemic and global recession with greater speed and resiliency.
Not only is Ambassador Power a high-profile pick who will bring clout and deep foreign policy experience to USAID, but the announcement itself also conveyed a clear message that the Biden administration is keen to elevate global development. Here are some of the priorities Ambassador Power has highlighted and how they will translate to US development policy.
Last week DFC announced that it signed a framework agreement with the government of Ecuador to refinance up to $3.5 billion of the country’s external debt to China. In exchange, according to reporting by the Financial Times, the Ecuadorian government will commit to exclude Chinese companies from its telecom networks.
Last week, DFC held its fourth and final board meeting concluding its first year in operation. DFC approved close to $8 billion in 2020, a significant rise from OPIC annual program which stood at $3-4 billion in recent years. This year the institution also deployed its new equity instrument to the tune of $171 million, expanded its portfolio in Africa, and launched new initiatives to address the economic and health consequences of the COVID-19 pandemic.
It’s also become increasingly clear that while regional compacts represent an important new tool in MCC’s toolbox, they’re likely to remain a limited part of the agency’s overall portfolio, in large part because of MCC’s country eligibility requirements. This blog outlines the limitations and poses some questions the agency will need to address when considering its next regional investments.
On December 15, the Millennium Challenge Corporation’s board of directors will hold its annual country selection meeting (the last of the Trump administration), identifying which countries will be made newly eligible for the agency’s funding. Every year CGD’s US Development Policy team highlights key issues the board will grapple with and predicts which countries the board will choose for compacts—large, five-year grant programs—and which it will select for threshold programs—smaller, more limited grant agreements.
When President-Elect Biden takes office in January, he will face a daunting set of challenges in the US wrought by the COVID-19 pandemic. His administration’s core agenda will necessarily be shaped by the twin imperatives of containing the virus itself and supporting Americans as they weather the economic effects of the crisis. Both tasks will be considerably more difficult if US policy doesn’t also pivot toward constructive engagement with the rest of the world.
The Biden administration has a unique opportunity to push the new agency towards a greener mandate which could help mobilize billions more in climate finance. Here are a few pathways incoming DFC leadership could consider.
While reflecting on DFC’s progress in implementing its core development mandate, and confronting the challenges posed the COVID-19 pandemic, we reached out to Senator Chris Coons (D-DE), a lead sponsor of the BUILD Act and a member of the Senate Foreign Relations Committee. We asked Senator Coons for his take on how the newest US development agency is faring and what he hopes to see in DFC’s future.
In this monitor, we look at how the latest batch of projects help shift DFC’s overall portfolio balance towards lower-income markets and examine the agency’s COVID-19 response so far which remain largely focused on the provision of liquidity to financial intermediaries.
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