With the arrival of the U.S. International Development Finance Corporation (DFC) to Belgrade with a budget of over USD 60 billion, which is expected to “spill over” enough to benefit Serbia, it is now known that the opening of the American office will incite investors, cheap loans and political and economic leadership of Serbia in the region. However, experts warn that we should wait before the decision is deemed “historic”.
Let us remind that a bilateral agreement was signed with the USA in Washington on September 4 on the normalization of the economic relations of Belgrade and Pristina
. In addition to Pristina's obligation to join the “mini-Schengen” and the agreed construction of highways and a railway to Pristina, an important segment of the agreement concerns the DFC office in Belgrade, whose opening has been rated as very positive. Accordingly, the credibility of the process of economic development of the country will be secured, the credit rating will be helped and new investors will be brought.What is DFC?
The DFC was established through the passing of the Better Utilization of Investments Leading to Development (BUILD) Act in 2018, but officially started operating this January. It incites private investments in developing countries in various sectors, including infrastructure, energy and healthcare.
Also, it is considered the most significant change of the ecosystem of foreign help of the USA in this century and a critical tool for countering China, Ivan Nikolic of the Faculty of Economics in Belgrade says for our portal.
He explains that, formally, the DFC is a successor of the powerful OPIC (Overseas Private Investment Corporation), a U.S. government agency which was formed in 1971 to support, that is secure, investments of the private sector of the U.S. in developing countries, and it also included the activities of the Development Credit Authority of the United States Agency for International Development (USAID).
– The DFC has an ever stronger development mandate than the OPIC. The new development possibilities include a greater financial capacity (USD 60 billion, compared to the OPIC's USD 29 billion), an increased accent on inter-agency cooperation, greater flexibility in working with non-U.S. Companies, authority for capital financing and ability to issue loans and guarantees in the local currency so as to protect the investors from the risk of currency change. The DFC incites private investments in developing countries in a wide range of sectors, including infrastructure, energy and healthcare – Nikolic explains.USA-China arm wrestling
The decision to open a DFC office in Belgrade is seen by political analysts as a decisive move of the USA toward increasing economic and political ties with the region and creating the possibility for American companies to counter the increasing influence of China in the region in more concrete terms. However, how will this influence the cooperation of Serbia with other countries such as China, but also Russia, as well as their investments?
Milan Krstic, an assistant professor at the Faculty of Political Sciences in Belgrade, says that the opening of the DFC office in Serbia is certainly a good thing that will benefit the business community and points out that the presence of the DFC in Serbia is not a point of contention for either Moscow or Beijing.