Overview:
The U.S. International Development Finance Corp. is making its first major investment push into the Pacific, offering expanded financing tools while seeking projects that match the economic priorities of Pacific island governments.
By L.N. Reklai
KOROR, Palau (August 31, 2026) — The U.S. International Development Finance Corp. is making its first major push into the Pacific, bringing expanded financing tools and a mandate to support economic development while seeking investment opportunities that reflect the priorities of Pacific island governments.
“We are now open. So we’re very excited about this, and really want to build our pipeline of investment opportunities here in the Pacific Islands,” Chief Policy Officer Caroline Vik said in an interview during the Pacific Islands Forum Leaders Meeting in Palau.
The Development Finance Corp., known as DFC, is the U.S. government’s international investment arm. Vik said the agency now has $205 billion available to deploy globally, following congressional action that significantly increased its financing capacity and expanded the countries in which it can operate.
For Pacific island countries, the change represents a significant shift. Vik said the DFC had previously been restricted from investing in many Pacific countries because they were categorized as high-income countries.
“For DFC, a lot of these markets are brand new,” she said.
The agency offers a range of financial tools, including debt, equity, political risk insurance, loan guarantees and project development funds. The latter can provide grants for early-stage work such as feasibility studies to help projects become ready for follow-on financing.
Vik said the DFC has also become more flexible in how it structures investments, including through joint ventures, convertible notes and other arrangements. It can now work with state-owned enterprises and public companies.
The DFC’s global priorities include helping U.S. allies and partners achieve economic growth while advancing U.S. foreign policy objectives, addressing supply-chain vulnerabilities and generating financial returns for U.S. taxpayers.
Its priority sectors include health care, critical minerals, infrastructure, energy, food and agriculture, financial services and digital infrastructure.
In the Pacific, Vik said the agency is particularly interested in energy and infrastructure projects, including geothermal energy, grid modernization, fuel storage and battery storage.
Digital infrastructure is another area of focus, including subsea cables, telecommunications, data centers and terrestrial fiber networks.
“We’re looking across all of those pieces,” Vik said of the region’s energy needs.
The approach, however, is not to impose a U.S. investment agenda on Pacific countries. Vik said the DFC intends to begin by listening to governments and identifying where their priorities overlap with the agency’s investment mandate.
“Our approach really here in the Pacific Islands, which is a major regional priority for us, is to come here, meet with leadership, understand what are the government’s priorities,” she said.
“For any given country, what are the sectors they really want to focus on? Are there specific projects that are a priority to them? And then where those intersect with our priorities is sort of where we’ll focus our efforts.”
While the DFC works closely with governments to identify priorities, its investments are made with private-sector counterparties.
“We work hand-in-hand with government, but all of our counterparties, the people that we lend to or invest with, are all private sector,” Vik said.
The agency can invest directly in private companies through debt or equity, provide political risk insurance and support project development. In financial services, it can also lend to local banks, which can then provide financing to smaller companies or individual borrowers.
Vik said the DFC does not have a statutory minimum investment amount, giving it flexibility to work with smaller Pacific economies. Where individual projects are too small for direct financing, the agency could potentially work through banks to reach multiple businesses.
The central requirement is that projects must be commercially viable.
“We can only do sort of deals that make commercial sense,” Vik said.
The DFC also is not limited to U.S. companies. Although it prefers to work with American businesses, Vik said it can invest in local companies and companies from allied and partner countries.
The agency is already examining projects across the Pacific, although Vik declined to provide details about projects currently undergoing due diligence.
She said a DFC business development representative spent July traveling through Pacific island countries, meeting with businesses and looking for potential investments.
“We are hunting for deals,” Vik said.
The agency’s participation in the Forum gathering is intended to deepen that effort by allowing it to hear directly from Pacific leaders about their economic priorities and identify potential projects.
Vik said the DFC is also prepared to work with government agencies, allies and partner governments on projects where joint financing makes sense.
Vik emphasized that the agency does not need to be persuaded of the Pacific’s investment potential.
“We don’t need to be convinced,” she said. “The Pacific Islands is a major priority for us. We are very interested and determined to find good projects here.”
The task now, she said, is to understand what Pacific governments want to achieve and find commercially viable investments that can help deliver those priorities.
The DFC’s entry into the region therefore marks not simply an expansion of U.S. financing, but an effort to establish a new investment relationship with Pacific countries — one built around their identified development needs and the private-sector projects capable of meeting them.