The Development Credit Authority (DCA) was the authority the

United States Agency for International Development The United States Agency for International Development (USAID) is an independent agency of the U.S. federal government that is primarily responsible for administering civilian foreign aid and development assistance. With a budget of over $27 b ...

(USAID) used to issue

loan guarantee A loan guarantee, in finance, is a promise by one party (the guarantor) to assume the debt obligation of a borrower if that borrower defaults. A guarantee can be limited or unlimited, making the guarantor liable for only a portion or all of the d ...

s backed by the full faith and credit of the U.S. government to private lenders, particularly for loans made in local currency. It merged with the

Overseas Private Investment Corporation The Overseas Private Investment Corporation (OPIC) was the United States Government's Development finance institution until it merged with the Development Credit Authority (DCA) of the United States Agency for International Development (USAID ...

(OPIC) to form the U.S. International Development Finance Corporation (DFC) on December 20, 2019. The partial loan guarantees extended by USAID, and now through the DFC, allow the U.S. Government to use credit to pursue the development purposes specified under the

Foreign Assistance Act The Foreign Assistance Act (, et seq.) is a United States law governing foreign aid policy. It outlined the political and ideological principles of U.S. foreign aid, significantly overhauled and reorganized the structure U.S. foreign assistance ...

(FAA) of 1961, as amended. These guarantees typically cover up to 50% of the principal of loans to entrepreneurs, small-, and medium-sized businesses, and other projects that advance the U.S. Government's international development objectives. Credit assistance's been used in areas such as microenterprise and small enterprise,

privatization Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...

of public services, infrastructure, efficient and renewable energy, and

climate change In common usage, climate change describes global warming—the ongoing increase in global average temperature—and its effects on Earth's climate system. Climate change in a broader sense also includes previous long-term changes to ...

. DCAs do not cover interest income lost: In a country that has, for example, a 30% interest rate, the interest income would represent almost 50% of the total loan value and is not insured via the DCA. In this case, the DCA covers 50% of the principal, but only 25% of the total loan exposure.

References

{{reflist

External links

* https://www.usaid.gov/sites/default/files/documents/1865/DCA_One-Pager_48.pdf * https://usaid-credit.exposure.co/ United States Agency for International Development Development finance institutions