WASHINGTON (Reuters) - The U.S. Congress is developing legislation to overhaul the way the government lends money for foreign development projects, something lawmakers said on Wednesday was necessary to counter China’s growing influence.
The House of Representatives is expected in the coming weeks to vote on, and likely pass, the Better Utilization of Investments Leading to Development Act and would create a new organization - the U.S. Development Finance Institution (DFI) - consolidating the Overseas Private Investment Corporation (OPIC) and other development finance organizations.
They lend money for projects in developing countries such as energy, port and water infrastructure.
A companion bill has also been introduced in the Senate. Both measures have bipartisan support.
Members of the House Foreign Affairs Committee told a hearing on Wednesday that OPIC needed to be modernized to keep up with China’s increasing investment in Africa and throughout the world.
“The U.S. can’t and shouldn’t match China’s investments dollar for dollar, but we can and should do more to support international economic development with partners who have embraced the private sector-driven development model,” Representative Ed Royce, the committee’s Republican chairman, said.
Last month, then-Secretary of State Rex Tillerson said on a trip to Africa that nations there should be careful not to forfeit their sovereignty when they accept loans from China. The United States is Africa’s leading aid donor, but China is the continent’s biggest trading partner.
Republican Representative Ted Yoho, an author of the bill, said Washington’s relationships needed to shift “from aid to trade.”
“We just need a vehicle that we can change the dynamics. And we haven’t had a major reform to OPIC, which was started in ‘71, for the last 40, 50 years,” he said.
OPIC, which aims to advance U.S. interests by lending to overseas business ventures, has come under fire from critics who say private banks are best suited to make investment decisions. Last year, President Donald Trump proposed cutting funding for any new OPIC projects, although the agency makes money for the U.S. government.
This year, his administration has been pushing for the creation of the DFI.
The administration asked Congress for $96 million in administrative expenses and $38 million for credit programming and other tools for the new organization. However, Ray Washburne, OPIC’s president, testified to the committee on Wednesday that it is expected the DFI would make hundreds of millions of dollars for the U.S. Treasury.
Reporting by Patricia Zengerle; Editing by Cynthia Osterman