1994R2728 — EN — 01.01.2000 — 001.001 — 1
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
►B COUNCIL REGULATION (EC,EURATOM) No 2728/94
of 31 October 1994
establishing a Guarantee Fund for external actions
(OJ L 293, 12.11.1994, p. 1)
Amended by:
Official Journal
No page date
►M1 Council Regulation (EC, Euratom) No 1149/1999 of 25 May 1999 L 139 1 2.6.1999
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COUNCIL REGULATION (EC,EURATOM) No 2728/94
of 31 October 1994
establishing a Guarantee Fund for external actions
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty establishing the European Community, and
in particular Article 235 thereof,
Having regard to the Treaty establishing the European Atomic Energy
Community, and in particular Article 203 thereof,
Having regard to the proposal from the Commission (1),
Having regard to the opinion of the European Parliament (2),
Having regard to the opinion of the Court of Auditors (3),
Whereas the general budget of the European Communities is exposed to
increased financial risk as a result of the guarantees covering loans tothird countries;
Whereas the European Council on 11 and 12 December 1992 concluded
that considerations of prudent budgetary management and financialdiscipline called for the establishment of a new financial mechanism,and that accordingly a Guarantee Fund should be set up in order tocover the risks related to loans and guarantees covering loans granted tothird countries or for projects executed in third countries; whereas it ispossible to meet this need by the establishment of a Guarantee Fundwhich may be drawn on to pay the Community’s creditors direct;
Whereas the institutions have agreed, pursuant to the Interinstitutional
Agreement of 29 October 1993, to enter into the budget a reserverelating to lending and guarantee operations for the benefit of and inthird countries;
Whereas mechanisms currently exist for honouring guarantees when
they are activated, in particular by drawing provisionally on cashresources, as provided for in Article 12 of Council Regulation (EEC,Euratom) No 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities’ ownresources (
4);
Whereas the Guarantee Fund should be constituted by the gradual
payment of resources; whereas the Fund will subsequently also receiveinterest on its invested resources and amounts recovered from defaultingdebtors where the Fund has already honoured the guarantee;
Whereas, by reference to the practice of international financial institu-
tions, a ratio of 10 % between the Guarantee Fund’s resources andguaranteed liabilities in principal, increased by unpaid interest due,would seem adequate;
Whereas payments to the Guarantee Fund equal to 14 % of the amount
of each operation would seem appropriate to attain this target amount;whereas the arrangements for making such payments must be defined;
Whereas, once the target amount is attained, the provisioning rate will
be reviewed, whereas if the Guarantee Fund exceeds the target amountthe surplus will be paid back to the general budget of the EuropeanCommunities;
Whereas the financial management of the Guarantee Fund should be
entrusted to the European Investment Bank (EIB); whereas the financialmanagement of the Fund should be subject to audit by the Court of
(1) OJ No C 68, 11. 3. 1993, p. 10.
(2) OJ No C 315, 22. 11. 1993, p. 235.
(3) OJ No C 170, 21. 6. 1993, p. 25.
(4) OJ No L 155, 7. 6. 1989, p. 1. Regulation as last amended by Regulation
(EC, Euratom) No 2729/94 (see page 5 of this Official Journal).
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Auditors in accordance with procedures to be agreed upon by the Courtof Auditors, the Commission and the European Investment Bank;
Whereas the Treaties do not provide any powers other than those
pursuant to Article 235 of the EC Treaty and Article 203 of the EAECTreaty for the adoption of this Regulation,
HAS ADOPTED THIS REGULATION:
Article 1
A Guarantee Fund, hereinafter referred to as ‘Fund', shall be estab-
lished, whose resources shall be used to repay the Comunity’s creditorsin the event of default by the beneficiary of a loan granted or guaran-teed by the Community.
The lending and guarantee operations referred to in the first paragraph,
hereinafter refered to as ‘operations', shall be those carried out for thebenefit of a third country or for the purpose of financing projects inthird countries.
Article 2
The Fund shall be endowed by:
— payments from the general budget of the European Communities
pursuant to Article 4,
— interest on Fund resources invested,— amounts recovered from defaulting debtors where the Fund has
already honoured the guarantee.
Article 3
The Fund shall rise to an appropriate level, hereinafter referred to as
‘the target amount'.
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The target amount shall be 9 % of the Community total outstandingcapital liabilities arising from each operation, increased by unpaidinterest due.
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If, at the end of a year, the target amount is exceeded, the surplus shallbe paid back to a special heading in the statement of revenue in thegeneral budget of the European Communities.
Article 4
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1. The payments provided for under the first indent of Article 2 shallbe equivalent to 9 % of the capital value of the operations.
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2. Payments into the Fund shall be made in accordance with thearrangements indicated in the Annex.
Article 5
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If, as a result of the activation of guarantees following default, resourcesin the Fund stand below 75 % of the target amount, the rate of provi-sioning on new operations shall be raised to 10 % until the targetamounthas once more been reached.
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If, as a result of the activation of guarantees on one or more majordefaults, resources in the Fund fall below 50 % of the target amount, theCommission shall submita reporton except ional measures t hatmightbe required to replenish the Fund.
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Article 6
The Commission shall entrust the financial management of the Fund to
the EIB under a brief on the Community’s behalf.
Article 7
The Commission shall, by no later than 31 March of the following
financial year, send to the European Parliament, the Council and theCourt of Auditors an annual report on the situation of the Fund and themanagement thereof in the previous year.
Article 8
The revenue and expenditure account and the balance sheet relating to
the Fund shall be attached to the Communities’ revenue and expenditureaccountand balance sheet .
Article 9
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The Commission shall submit to the European Parliament and theCouncil comprehensive reports on the functioning of the Fund, both atthe time of the conclusion of the first accession agreement with theapplicant States, and before 31 December 2006. The Commission shall,if necessary, submit to the Council appropriate proposals for modifica-tion of the parameters of the Fund.
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Article 10
This Regulation shall enter into force on the seventh day following its
publication in the Official Journal of the European Communities .
Article 4 shall apply to operations decided on and committed as from 1
January 1993.
This Regulation shall be binding in its entirety and directly applicable in
all Member States.
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ANNEX
Arrangements for the payments stipulated in the first indent of Article 2
1. Payments into the Fund will be made in accordance with the arrangements set
out in paragraphs 2 and 3, depending on whether the operations concernedare:
(a) Community borrowing/lending operations or guarantees to financial
bodies, whether made in one or more than one tranche, except thosecovered by (b) (
1);
(b) Community borrowing/lending operations or guarantees to financial
bodies under a framework facility spread over a number of years and witha micro-economic and structural purpose (
2).
2. For the operations referred to under point 1 (a) the Comission will start the
procedure for making the payments into the Fund as soon as the Council hasformally adopted the basic decision. The amount to be paid into the Fund willbe calculated on the basis of the total amount for the operation decided on bythe Council.
3. For the operations referred to under point 1 (b), payments into the Fund will
be made in annual tranches calculated on the basis of the annual amountsindicated in the financial statement attached to the Commission proposal,adapted where appropriate in the light of the Council decision.
The Commission will start the procedure for making payments into the Fund
as soon as the Council has formally adopted the basic decision, or at thebeginning of the following financial year if no operation is programmed forthe current financial year. For subsequent financial years the Commission willstart the payment procedure at the beginning of the financial year.
As from the second year, the amounts to be paid into the Fund will be
corrected by the difference recorded on 31 December of the previous yearbetween the estimates that were taken as a basis for the previous payment andthe actual figure for the loans signed during that year. Any difference relatingto the previous year will give rise to a payment in the following year.
4. When it starts a payment procedure the Commission will check the situation
with regard to the performance of the operations which were the subject ofprevious payments and, where the commitment deadlines originally laid downhave not been met, will propose that this be taken into acount in calculatingthe first payment to be made at the start of the following financial year foroperations already under way.
5. For operations decided on by the Council as from 1 January 1993 the
Commission will start the procedure for making payments into the Fund assoon as possible after the entry into force of the Regulation, in accordancewith the arrangements set out in the preceding paragraphs.
(1) Examples of this type of operation: loans for the balance of payments of third coun-
tries or the guarantee granted to a consortium of commercial banks to finance thepurchase of food products in third countries.
(
2) Examples of this type of operation: Euratom loans to third countries and the guaran-
tees granted to the EIB for its loans in the developing countries in Latin Americaand Asia (DCLAA) and the central and eastern European countries (CEEC).