A4-0254/96

Resolution on the report from the Commission on guarantees covered by the general budget - situation at 30 June 1995 (COM(95)0625 - C4-0064/96)

The European Parliament,

- having regard to the report from the Commission on guarantees covered by the general budget - situation at 30 June 1995 (COM(95)0625 - C4-0064/96),

- having regard to the communication from the Commission to the Council on limits imposed by the Guarantee Fund mechanism on Community loans and loan guarantees in respect of third countries (COM(95)0404),

- having regard to the report of the Committee on Budgets and the opinion of the Committee on Budgetary Control (A4-0254/96),

A. whereas the report from the Commission to the Council on guarantees covered by the general budget at 30 June 1995 is the ninth of its kind going back to a request made by Parliament in its resolution of 15 May 1991 on the draft supplementary and amending budget 1/1991, as amended by the Council ((OJ C 158, 17.6.1991, p. 89.)) to report to the budgetary authority twice a year,

B. whereas the report of the Commission covers both the borrowing and lending operations inside the Community and outside,

C. whereas the European Council in Cannes decided to increase the Community's lending and borrowing activities in order to strengthen economic ties and trade relations,

D. whereas the borrowing and lending activities of the Community appear at present to be stagnating due to constraints imposed by the Guarantee Fund mechanism,

E. whereas the guarantees for loans and risk coverage for lending and borrowing activities is an increasingly important issue for the general budget of the Community as more and more countries of the former Soviet Union - often hit by internal conflicts and severe economic and social difficulties - require macro-financial assistance, timely repayments of which are more and more in danger of default,

F. whereas it is imperative to draw on the instrument of the Guarantee Fund in the event of default in order to protect the general budget from transfers from other budget items according to Article 12 of Council Regulation (EEC, Euratom) 1552/89 of 29 May 1989 implementing Decision 88/376/EEC, Euratom on the system of the Communities own resources ((OJ L 155, 7.6.1989, p. 1.)) and to avoid the exposure of the general budget to increasing loan risks,

G. whereas the Commission's report on the guarantee situation is mainly descriptive of both the situation and the guarantee procedures, lacking any analysis of the perspectives and future developments,

H. whereas the situation of guarantees can only be fully evaluated when considered in relation with the situation of the Guarantee Fund,

I. whereas it is imperative to include in the evaluation of the guarantee situation an evaluation of the Guarantee Fund mechanism as shown by the Commission in its above-mentioned communication,

J. whereas the Guarantee Fund only entered into force in October 1994 and payments for loans from the guarantee reserve to the Guarantee Fund have only been provisioned for loans concluded after 1 January 1993,

K. whereas by the end of 1996 and at the beginning of 1997 a number of loan allocations which had been concluded before 1 January 1993 will have to be renewed; whereas the provisioning of the Guarantee Fund will require funds beyond the limits of the guarantee reserve,

L. whereas the European Council in Cannes asked for an extension of the lending and borrowing activities of the Community in order to help develop third countries and to strengthen economic ties and trade relations between them and the Community,

M. whereas the current limits imposed by the guarantee reserve will neither allow for extending lending and borrowing activities nor the maintenance of current levels of allocation,

N. whereas the situation of the Guarantee Fund mechanism can be influenced by changing one or more of the following four factors: the level of lending and borrowing activities (1), the amount of the guarantee reserve in the general budget (2), the rate of risk coverage for lending activities by the general budget (3), and the provisioning rate of the Guarantee Fund for loans disbursed (4),

O. whereas, since modification of any of the four factors may be contested by either the Member States, the budgetary authority or the EIB, a settlement of the critical situation could be sought in a mixture of measures modifying more than only one factor of the Guarantee Fund mechanism,

P. whereas the Commission has been asked by the Council to present a proposal before the end of 1996 for a settlement of the situation,

1. Notes that the Commission has presented, in accordance with Parliament's above-mentioned resolution, the ninth report on guarantees covered by the general budget as of 30 June 1995;

2. Notes the figures and the situation for lending and borrowing activities inside and outside the Community described in this report;

3. Regrets that the Commission presented only a descriptive assessment with no analytical approach and no regard to future perspectives and developments;

4. Reminds the Commission that the situation of the Guarantee Fund mechanism is - according to its own analysis in another communication - a particularly critical one;

5. Would have expected that any evaluation of the guarantee situation, especially concerning loans outside the Community, would be undertaken in relation to the Guarantee Fund mechanism;

6. Notes that a report on the guarantee situation containing no mention of the limitations imposed by the guarantee reserve for loans to third countries is tantamount to presenting misleading statements;

7. Reminds Commission and Council that they should have known for over a year that the lending and borrowing activities of the Community will by 1997 face a situation when not even the present level of allocations can be maintained given the level of the guarantee reserve in the Financial Perspective;

8. Notes that the European Council at its summit meeting in Cannes decided an extension of lending and borrowing activities of the Community to third countries;

9. Supports, in principle, this proposal of an extension of lending activities to third countries since this will strengthen economic ties and trade relations and is in the interest of both the recipient countries and the Community;

10. Reminds the Commission and Council that implementation of the Cannes conclusions requires a modification of the Guarantee Fund mechanism, either in respect of the total volume of loans, the amount of the guarantee reserve in the Financial Perspectives, the level of risk coverage for loans, or the provisioning rate of the Guarantee Fund;

11. Declares that any modification of the Guarantee Fund mechanism must neither be undertaken unilaterally at the expense of an increased exposure of the general budget to higher loan risks nor solely at the expense of a slower provisioning of the Guarantee Fund;

12. Calls for compulsory and binding consultation of the budgetary authority before any Community budget guarantee is made available, in the course of which, complete information shall be provided on the budgetary situation of the loan beneficiary;

13. Asks the Commission to reconsider the mechanism whereby it informs the budgetary authority of defaults on guaranteed loans, paying particular attention to the question of whether confidentiality is necessary, helpful or realistic;

14. Asks the Commission and Council to propose a revision of the Guarantee Fund mechanism which contains an adequate balance between an increase of the Guarantee reserve by way of a revision of the Financial Perspective as well as a flexible application of the risk coverage by the Guarantee Fund and of its provisioning rate; the volume of lending and borrowing activities must then be adapted accordingly;

15. Asks Commission and Council to include the European Parliament from the outset in its deliberations on a settlement of the problems with the Guarantee Fund mechanism;

16. Regrets that the Commission has failed to include a revision of the guarantee reserve in its recent proposal for a revision of the Financial Perspective;

17. Asks the Commission to present its report for a revision of the Guarantee Fund mechanism - due before the end of 1996 - well before that date and as soon as possible, since at the turn from 1996 to 1997 loan decisions will have to be taken and it may be too late for procedures to revise the determining factors of the Guarantee Fund mechanism;

18. Instructs its President to forward this resolution to the Commission, the Council and the governments of the Member States.